Cpa Review- Far 3-8 (Combined Financial Statements/push Down Accounting)

Front 1

Combined Financial Statements

Back 1

Of a group of related companies (not consolidated b/c there is no parent company). Types:
1. Companies are under common control
2. Companies are under common management
3. Unconsolidated subsidiaries are combined

Hint 1

Requires:
1. Intercompany transactions and balances among these companies are eliminated
2. NCI's, etc., be treated like consolidated F/S's
3. Capital stock and R/E's be added across, not eliminated
4. I/S's be added across

Front 2

Push Down Accounting

Back 2

Reports assets and liabilities at FV in separate F/S's of the subsidiary. In effect, consolidation adjustments are pushed down into the records (& separate F/S's) of each Sub.

Hint 2

1. Assets and liabilities are adjusted
2. R/E's of the Sub are transferred to paid-in capital (to the extent of parent company's % of ownership)
3. Net Income of each Sub includes depreciation, amortization, and interest expense based on FV's rather than historical cost
4. The SEC requires push down accounting for each substantially wholly-owned subsidiary.