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FAR Additional Practice > Consolidations > Flashcards

Flashcards in Consolidations Deck (8)
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1
Q

What effect does a reduction in retained earnings (such as dividend declaration) have on non-controlling (minority) interest

A

Reduces

2
Q

What effect do gains & losses of the parent company have on the non-controlling interest

A

None

3
Q

What Accounts are eliminated in consolidation?

A

Stockholder’s Equity of the acquired(goes to investment)

Intercompany Sales, payables, etc.

4
Q

Buy 100% of subsidiary with cash JE

A

DR investment in sub

CR Cash

5
Q

JE for buying a company (consolidated adjustment w formulas)

A

DR (Assets at FV)
DR Goodwill(Cash paid - fmv of assets - liabilities
CR Liabilities
CR investment in Sub(cash outlay)

6
Q

What does the parent company report for dividends paid

A

Dividends paid to its own shareholders. Dividends paid to the parent from the subsidiary will be eliminated in consolidation. Additionally, dividends paid to shareholders that are not related to the parent will be reported as an adjustment to the non-controlling interest account

7
Q

When calculating the stockholders equity account for a consolidated entity where the parent owns less than 100 percent of the company what must be considered in the formula

A

Total SE of parent + non-controlling interest of subsidiary

8
Q

How is common stock reported for a non-controlling minority interest in a consolidation

A

Separately from parent common stock as part of non-controlling (minority) interest.