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Flashcards in Deck 4 Deck (20):
1

Other than temporary decline in FMV, record in

Earnings as realized loss

2

When are you required to consolidate?

Greater than 50% (have control, considered an acquisition)

3

Normal balance to record unrealized gain/loss

Unrealized gain: normal credit balance; Loss: normal debit balance

4

Preferred stock uses what method?

Cost method (record dividends as dividend income)

5

Goodwill under equity method =

Difference between purchase price and percentage of FV

6

How are liquidating dividends treated under cost method and equity method?

Reduce investment account

7

Change from Cost method to equity method

Apply equity method to the prior period's old percentage

8

At date of acquisition, consolidated equity will be equal

To the parent company's equity plus FV of any NCI

9

Beginning NCI =

Acquisition price divided by controlling percentage amount; then multiply by NCI percentage

10

CAR IN BIG

(C/S, APIC, RE) - debits; (Investment in Sub, NCI) - credits; (B/S of sub is adjusted to FV, Intangible assets, goodwill or gain) - debits

11

NCI (GAAP) =

FV of subsidiary x NCI %

12

NCI (IFRS) =

FV of subsidiary's net assets x NCI%

13

Goodwill (GAAP) =

FV of subsidiary - FV of sub's net assets

14

Goodwill (IFRS) =

Acquisition cost - (FV of sub's net assets acquired

15

Rules for intracompany eliminations

Elimination 100% of intercompany transactions (even when NCI exists); equity accounts are not eliminated

16

Intercompany profit in COGS and EI

Intercompany profit x COGS/EI %

17

Combined Financial statements

Group of related companies (not consolidated b/c there is no parent company)

18

Push down accounting

Assets and liabilities are reported at FV in separate financial statements

19

Unrealized gross profit =

gross profit percentage x intercompany inventory acquired

20

Gains and losses on fixed assets (including involuntary conversions) are always recorded at what amount?

NBV plus any additional costs