PART 1 Flashcards
Current cost convention (inventory valuation)
inventory should be valuated at current or replacement costs -> impractical and subjective
Historic cost convention
inventory valuated at the original price levels, taking prices from the books when purchased
LIFO (not) allowed under
not allowed under IFRS
allowed under GAAP
holding company
parent company that has no real activities but only owns stock
subsidiaries
controlled entities by the parent company
Goodwill
the difference between the takeover price and the book value
Mergers
process in which two or more parties pool their activities and resources in a new entity
Aquisition
suggest dominance of one partner over the other
Consolidation
a technique to join the financial statements of the entities making up the group
Financial assets
on balance sheet after takeover?
(on consolidated balance sheet?)
Yes, on balance sheet after takeover
No, not on consolidated balance sheet
Goodwill
on balance sheet after takeover?
(on consolidated balance sheet?)
Yes, on balance sheet after takeover
Yes, on consolidated balance sheet
Minority interest
on balance sheet after takeover?
(on consolidated balance sheet?)
No, not on balance sheet after takeover
Yes, on consolidated balance sheet
Consolidated income statement calculation
Income statement parent company
+ result subsidiary x minority interest %
