Accounting - Consolidation
What is the treatment of transaction costs under equity method and acquisition method
Homework Answers
Common Treatment:
Indirect costs are expensed.
Debt issuance expenses are shown as deduction from respective debt balance
stock issuances expenses are debited to Additional paid in capital
Treatment of Direct Costs
Under Acquisition Method these costs are expensed but under Equity Method these costs are added to the cost of acquisition.
while doing the accounting consolidation for parent company and sub company, how to get consolidated net...
while doing the accounting consolidation for parent company and sub company, how to get consolidated net income under equity method if intercompany transaction exists.
question 8 CHAPTER 5 Consolidation Subsequent to Acquisition Done LOS "Under the equity met acquisition earnings...
question 8
CHAPTER 5 Consolidation Subsequent to Acquisition Done LOS "Under the equity met acquisition earnings computed mit method, the investment account is adjusted for the investor's share of post- nings computed by the consolidation method." Explain this statement. the narent's investment account had an anity method halance of $120.000. At
10% Ownership 3. Under which method of accounting used by the parent prior to consolidation will...
10% Ownership 3. Under which method of accounting used by the parent prior to consolidation will the parent's net income equal the consolidated net income? a. Equity Method b. Partial Equity Method c. Initial Value Method d. Fair Value Method 4. Under the equity method, the investor should account for Income from Discontinued Operations from the investees with: a. A footnote disclosure only b. The ordinary income from the investee c. With its Income from discontinued operations d. An adjustment...
c. How does the partial equity method differ from the equity method? a. Under the partial...
c. How does the partial equity method differ from the equity method? a. Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary b. In the total assets reported on the consolidated balance sheet In the treatment of dividends d. In the total liabilities reported on the consolidated balance sheet In a business combination when the fair value of the assets and liabilities assumed exceed...
Inferring consolidation entries from consolidated financial statements—Cost method Assume a parent company acquired a subsidiary on...
Inferring consolidation entries from consolidated financial statements—Cost method Assume a parent company acquired a subsidiary on January 1, 2012. The purchase price was $1,312,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $300,000 20 years Patent 432,000 12 years Goodwill 580,000 Indefinite $1,312,000 The parent company uses the cost method of...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume ...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued...
Consolidation at date of acquisition (purchase price equals book value) 59. Consolidation at date of acquisition...
Consolidation at date of acquisition (purchase price equals book
value)
59. Consolidation at date of acquisition (purchase price equals book value) A parent company acquires its subsidiary by exchanging 30,000 shares of its Common Stock, with a fair value on the acquisition date of $20 per share, for all of the outstanding voting shares of the investee. a. What is the total fair value of the subsidiary on the acquisition date? b. Prepare the consolidation entry or entries on the...
Consolidation spreadsheet for continuous sale of inventory-Equity method
Consolidation spreadsheet for continuous sale of inventory-Equity method Assume a parent company acquired a subsidiary on January 1. 2016. The purchase price was S600,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following AAP assets: The AAP assets with a definite useful life have been amortized as part of the parent's equity method accounting. The Goodwill asset has been tested annually for impairment, and has not been found to...
3. Acquisition Method Prance Company acquired all the assets and liabilities of Seaver Company and properly...
3. Acquisition Method Prance Company acquired all the assets and liabilities of Seaver Company and properly recorded the transaction under the acquisition method. Seaver's balance sheet prior to the transaction was as follows: Book Value Fair Value A/R $ 175,000 $175,000 Inventory 465,000 500,000 20,000 20,000 Equipment Building 90,000 85,000 Land 30,000 60,000 Total Assets $ 780,000 $840.000 Accounts Payable $ 120,000 $130,000 Common Stock ($5 par) 100,000 100,000 Pald in Capital 320,000 310,000 Retained Earnings 240,000 300,000 Total Liab...
1.Under the acquisition method, when are most identifiable assets acquired, liabilities assumed, and non-controlling interests in...
1.Under the acquisition method, when are most identifiable assets acquired, liabilities assumed, and non-controlling interests in the acquiree recognized? Select one: a. When an acquirer is identified b. Acquisition date c. Date of verbal agreement d. 90 days after acquisition date 2.Which of the following is not an example of a transaction cost? Select one: a. Finder's fee b. Investigatory costs c. Depreciation costs d. Facilitatory costs 3.Which of the following is not a step for acquiring a subsidiary? Select...
question 8
CHAPTER 5 Consolidation Subsequent to Acquisition Done LOS "Under the equity met acquisition earnings computed mit method, the investment account is adjusted for the investor's share of post- nings computed by the consolidation method." Explain this statement. the narent's investment account had an anity method halance of $120.000. At
10% Ownership 3. Under which method of accounting used by the parent prior to consolidation will the parent's net income equal the consolidated net income? a. Equity Method b. Partial Equity Method c. Initial Value Method d. Fair Value Method 4. Under the equity method, the investor should account for Income from Discontinued Operations from the investees with: a. A footnote disclosure only b. The ordinary income from the investee c. With its Income from discontinued operations d. An adjustment...
c. How does the partial equity method differ from the equity method? a. Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary b. In the total assets reported on the consolidated balance sheet In the treatment of dividends d. In the total liabilities reported on the consolidated balance sheet In a business combination when the fair value of the assets and liabilities assumed exceed...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued...
Consolidation at date of acquisition (purchase price equals book
value)
59. Consolidation at date of acquisition (purchase price equals book value) A parent company acquires its subsidiary by exchanging 30,000 shares of its Common Stock, with a fair value on the acquisition date of $20 per share, for all of the outstanding voting shares of the investee. a. What is the total fair value of the subsidiary on the acquisition date? b. Prepare the consolidation entry or entries on the...
3. Acquisition Method Prance Company acquired all the assets and liabilities of Seaver Company and properly recorded the transaction under the acquisition method. Seaver's balance sheet prior to the transaction was as follows: Book Value Fair Value A/R $ 175,000 $175,000 Inventory 465,000 500,000 20,000 20,000 Equipment Building 90,000 85,000 Land 30,000 60,000 Total Assets $ 780,000 $840.000 Accounts Payable $ 120,000 $130,000 Common Stock ($5 par) 100,000 100,000 Pald in Capital 320,000 310,000 Retained Earnings 240,000 300,000 Total Liab...
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