Chapter 3: Consolidated Subsequent To Acquistion

Front 1

Simple Equity Method

Back 1

Original cost + Ownership interest x Reported income of subsidiary since acquisition

Hint 1

less : Ownership interest x reported losses of subsidiary since acquision
less: Ownership interest x Dividends declared by subsidiary since acquistion

Front 2

Cost Method

Back 2

invesment in subsidiary account is retained at its original cost of acquistion balance

Hint 2

No adjustment is made to account since income is earned by subsidiary only dividends as received

Front 3

Sophisticated Equity Method

Back 3

company's investment is adjusted for amortization of excess shown on determination and distribution schedule

Front 4

Each years consolidation procedures begin as if there had never been a previous consolidation

Back 4

Consolidation is performed independently each year since the worksheet eliminations of previous years are never recorded by the parent or subsidiary

Front 5

The invesment and subsidiary equity must be at the same point in time

Back 5

The investment account is adjusted through the end of the year and subsidiary retained earnings is still at is January 1 balance.

Hint 5

The excess after eliminating current year entries should always agree with the distribution and determination schedule

Front 6

Amortization of Excess

Back 6

All amortizations of excess are adjusted to the subsidiary's income.

Hint 6

The adjusted income is distributed to the controlling and noncontrolling
interest based on ownership %.

Front 7

Each year's consolidation procedures begin as if the had never been a previous consolidation

Back 7

refer to previous worksheets to save time