Business Combination & Consolidation Flashcards
What is a current year period expense, not subject to amortization?
legal fees
due diligence cost
recognition of goodwill
result of a business combination in which the total of the fair values of consideration, noncontrolling interests, retained investments exceeds the fair value of the underlying net assets of the acquiree.
amount reported for retained earnings in the consolidated financial statements would be
equal to the parent’s retained earnings balance
Costs incurred in the acquisition, such as the consulting fee
are expensed
Under the acquisition method, direct costs associated with the acquisition are recognized as expense in the period incurred
Costs of registering and issuing securities
do not increase the acquisition price but, instead, reduce the amount recorded as additional paid-in capital.
under the acquisition method consolidated stockholders’ equity will be equal to
the stockholders’ equity of the parent.
How should the acquirer recognize a bargain purchase in a business acquisition
As a gain in earnings at the acquisition date
D: investment 100
C: cash 80
C: gain on bargain purchase 20
Consolidated stockholders’ equity consists of the
stockholders’ equity accounts of the PARENT’S plus the noncontrolling interest
Additional paid-in capital on consolidated financial statements is always equal
to the parent’s amount
total current liabilities
will include the parent’s amount PLUS the subsidiary’s amount, adjusted to fair value if appropriate, plus any new current liabilities incurred in the combination.
goodwill
difference between the total of the fair values of consideration given PLUS FV OF NON CONTROLLING INTEREST and the fair value of underlying net assets
consolidated bond payable of parent and subsidiary ?
will equal parents + sub minus and intercompany holding.
sub is 200 B/p. parent buys half. then consolidated is 100 for b/p
