F4 - M4 - Acquisition Method: Part 1 Flashcards
The acquisition is recorded for the ________ of the consideration paid.
fair value
For Acquisition price of Consolidation - Direct expenses are _______, and securities issuance costs reduce _____________.
expensed; additional paid-in capital
Under the acquisition method, the acquiring corporation records the following during consolidation (CAR IN BIG mnemonic):
Common stock Additional Paid In Capital Retained Earnings Investment in XXX Non- controlling interest B- net assets of Sub at FV I - Intangible assets at FV G - Excess of acquisition cost goodwill
If there is excess of the acquisition cost plus noncontrolling interest over the fair value of the subsidiary, then the excess is recorded as ___________
goodwill
If the acquisition cost is less than the fair value of 100 percent of the underlying assets acquired, then the balance sheet and identifiable intangible assets are still adjusted to fair value and the negative balance is recorded as a ______.
gain
After the acquisition date, the parent uses either _____________ to account for the investment in subsidiary in its accounting records.
the cost method or the equity method
What is the JE to record acquisition for cash for investment over 50%
Dr Investment in Sub XXXX. CR Cash XXXX
What is the JE to record the parents CS
Dr Investment in Sub XXXX CR. Common Stock XXX and APIC - CS. XXXX
________ is an obligation of the parent company to transfer additional asset or equity interest to the former shareholders
Contingent Consideration
Contingent consideration is recorded by the parent on acquisition date by
1) adding an estimate to the investment in Sub & Credited the liability expected value of consideration
For Contingent consideration, changes in the consideration should be adjusted in ________
earnings
