Module 18 Flashcards
What is a business?
“An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends lower costs or other economic benefits directly to investor or other owners, members or participants”
What is the acquisition date?
The date on which the acquirer obtains control of the acquiree
What happens at the date of acqusition date of the acquiree for recognizing goodwill?
“The assets and liabilities of the acquiree are measureded at fair value including any previously held interestes in the acquiree”
What is the formula for goodwill?
FV of consideration transferred + FV of previously held equity interests in acquiree + FV of noncontrolling interest - FV of net identifiable assets.
Is Goodwill an intangible asset?
“No, you clasiffy it sepeartly.”
How are acquisition related costs treated?
They are expensed in the period in which the costs are incurred.
How are costs of registering and issuing common stock treated?
They are netted against proceeds of the stock and reduce the paid in capital in excess of par account.
Can you consolidate the financial statements of the control is temporary?
“No, you would not be allowed to consolidate.”
What are three types of Intercompany Transactions that must be removed in consolidated statements?
Intercompany Sales, Intercompany sales transactions in fixed assets, and Intercompany debt/equity transactions
In sale of assets, what do you need to remember to remove?
You need to create elimiation entries to make it appear as though the seller still owned the asset, and were depreciating it still. Be sure to adjust the equipment value, gain/loss on sale, A/D, and lastly make sure the new year depreciation were shown on the consolidated report (typicall take old depreciation - new depreciation) And book
What do you elminate if there is a non-controlling interest?
You would still eliminate 100% of stockholders equity, but you would set-up a credit for non-controlling interest (Shares owned * FV of Shares)
How do you get ending Non controlling interest?
Take Beginning balance (Shares owned * FV of Shares) + Sub NI - Sub Dividends paid = ending balance noncontrolling interest
