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14 Cards in this Set
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- Back
- 3rd side (hint)
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Passive under 20% -
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Recorded at cost including brokers fees
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Dividends as declared (except stock dividends)
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Influential 20%-50%
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Recorded at cost including brokers fees
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Ownership share of income or loss (income X% ownership) Shown as investment income. Dividends declared are distributions of income already recorded. they reduce investment account.
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Controliing over 50%
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At cost
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Ownership share of income (or loss) Statements of parent and subsidiary are consolidated Dividends are not income on consolidated statement
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Consolidation is required when company is controlled even when less than 50% ownership
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Controlling interest means consolidation
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Cosolidating Stock Acquistion
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DR Invesment in subsidiary xxxx
CR Cash xxx |
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Elimination of investment for consolidation
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DR Common stock subsidiary xxx
DR Retained earings subsid xxx CR Investment in subsidiary xxxx |
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Distribution of assets acquired
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DR inventory xxx
DR equpment xxx DR goodwill xxx CR Investemtn (excess over book) xxx |
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Consolidation with noncontrolling interest
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price paid is divided by percentage of controlling interest to get implied fair value
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Ie $400,000 price div by 80% means implied value of $500,000
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Fair value of net assets
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all values are adjusted to 100% of fair value regardless of controlling interest
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goodwill is excess of fair value over subsidiary net assets
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Elimination of subsidiary equity purchased is allocated by percent of investment
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ie
DR Common stock 8,000 DR Paid in excess 72,000 DR Retained Earn 48,000 CR Investement in sub 128,000 |
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D series eliminate distribution of the excess
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DR Inventory 5000
DR land 30,000 DR building 100,000 DR Equipment 20,000 DR copyright 50,000 DR goodwill 135,000 CR Investment (remaining excess after EL investment) 272,000 CR Retained Earnings 68,000 NCI is carried over to subsidiary |
Note on consolidated balance sheet total NCI will appear ie 100,000 or 20% that is NCI
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Total NCI can never be less than the NCI percentage of the fair value of the net assets
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NCI value (Company fair value) can be reduced if implied value of goodwill exceeds its fair value
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ie Company fair value is reduced from 100,000 to 90,000. Total NCI cannot be reduced below nci percenate net asset value ie 20% of 365,000 = 73,000
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Prexisting goodwill
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New Good will fair value - book value of old good will)
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Ownership of prior noncontrolling interest. A company adds more to its controlling stack
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previously owned shares are adjusted to fair value and a gain or loss is recorded.
DR Investment in company 00,000 CR unrealized gain on 100,000 |
fair value of previous investment is added to price paid for new shares
DR Invesmement co 1,800,000 CR Cash 1,500,000 CR Investment in co (prior) 300,000 |
