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9 Cards in this Set
- Front
- Back
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What expense related to the business combination should be include in the net income (I/S) of the combined corporation when it's incurred? What is the acquisition cost?
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Legal, due diligence and other fees and expenses. Other than Registration and Issuance fees of Debt securities/ common stock ! (it is capitalized in Investment in sub and reduce APIC) Acquisition cost should be the amount record to Investment in sub: FV of consideration given for the exchange (include registration fee, but no other expense) |
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What amount should be reported as goodwill when acquisition GAAP / IFRS ?
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GAAP: no matter 100% acquire or not, full amount!! Acquisition cost (FV$) >Goodwill/ (Gain) FV of sub net assets > Identifi, intan assets including R&D(FV) BV of sub net asset If acquisition cost < FV of sub net assets after recognizing iden, intangible assets ---Gain!! IFRS: Partial goodwill method to calculate NCI!! only goodwill part,* NCI % or Acquired% |
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What amount should be reported as APIC when acquisition ?
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FV of Invest sub- BV of CS issued
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What's the entries for Co. acquisition ?
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Dr. Investment sub - FV of % net assets Dr. 【Goodwill】 - (1)-FV付了比FV更多的钱因为gw Dr, [Expense( legal fee)] Cr. Cash/ Common stock issued- BV (1) Cr. [Cash paid for all expense] Cr.【APIC】-FV-(1)相当于别人(买你股票)多给你的 |
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What amount should Parent Co report as its share of the earnings from Sub. in I/S ? see pic for B/S of the two companies. Total NI?
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If give B/S: Use Sub's : Beg RE+ NI- Dividend= End RE to squeeze Sub's NI, then*% = Parent's share If give I/S: Parent's NI (includes Sub's NI)= total NI |
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What amount should Parent Co report total stockholder's equity/RE immediately after acquisition in consolidated B/S? at YE? see pic for B/S of the two companies.
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At any time: Con.sh's equity = Parent sh's equity+ Noncontrolling interest (NCI) *if 100% control, Total Conso RE=Parent RE (before acquisition) Because when consolidated, the equity of Sub including sub's RE (dividend) will be eliminated. The conso F/S will include only dividend paid by Parent. But Total NI= Parent NI anytime NCI @YE= NCI Beg. + NCI share of NI- NCI share of dividends = Acquisition cost/ acquired% * NCI%+ Sub's NI (squeeze method) * NCI%- Sub's dividend*NCI% |
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After acquisition, if the acquisition price exceeds the FV of net assets acquired, how should parent Co determine the amount to be reported for the current assets, PPE and Long-term debt acquire from Sub?
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All report as FV!! so total assets/liability @ acquisition date= Parent assets (BV)+ Sub (FV) {=Sub. assets+ Identified Intangible + (FV>BV)} but RE and NI, Consolidated= parent!! if 100%. I don't know why!!!! |
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When sells shares and goes from control to non-control or buys shares from noncontrol to control, what amount of G/L should be recognized on the I/S?
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Rule: FV adjstment to remaining(original) shares Sale: control to noncontrol Recognize: total shares investor have before the sale* difference of FV and BV investor must recognize a gain or loss from the sale and then remeasure the remaining shares to FV!! Purchase: noncontrol to control Investment Beg. (FV)+30% of sub Y1 Earning-30% of sub Y1 dividend.= Investment End (FV)=bening carrying amount
New Carry amount= Bening Carrying amount+ adjustment |
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The acquisition date eliminating journal entry: CAR IN BIG Dr. CAR BIG Cr. IN |
C(CAR): Dr. Equity in Sub-BV 3000 B: B/S adj. to FV 350 I: Identifi. Intan. assets at FV 300 G: Goodwill 150 I: Cr. Investment in Sub-FV 2850 N: NCI-FV 950 |
