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FINANCIAL STATEMENT
(Date of Acquisition)
Applicability. . .
All Parent Companies with subsidiaries:
EXCEPT:
A.
- Parent is a Wholly or Partially Owned Subsidiary
- Debt & Equity are not traded
- Not filling FS nor in the process of filling FS with
the SEC
- The Parent Company is preparing Consolidated FS.
Applicability. . .
B.
-Post Employment Benefit Plans or Long
Term Employee Benefits
C.
- Required to Measure the Subsidiaries at
FMV through P & L (Financial Instruments)
CONDITIONS FOR CONSOLIDATED STATEMENT
• THERE MUST BE CONTROL. . .
- Over 50% of the Voting Share
Other Factors:
- Power over the Investee
- Right to a Variable Return
- Ling of Power to the Variable Return
TECHNIQUES FOR CONSOLIDATION
• CONSOLIDATE THE ASSETS OF THE ACQUIRER
(BV) AND THE ASSETS OF THE ACQUIREE (FMV)
• ELIMINATION OF INVESTMENT IN SUBSIDIARY
ACCOUNT & STOCKHOLDER’S EQUITY ACCOUNT
OF THE SUBSIDIARY
A QUICK REVIEW OF THE JOURNAL ENTRIES…
A. Net Asset Acquisition by the Acquirer
Assets @ FMV XXX
Goodwill XXX
Cash / NCA / Payable / SC XXX
Gain on the Acquisition XXX
A QUICK REVIEW OF THE JOURNAL ENTRIES…
B. Stock Acquisition by the Acquirer
CASH 15,000
INVENTORIES 30,000
PPE, NET 153,000 @ FMV
LIABILITIES (15,000)
NET BV 183,000
Gain on the Acquisition 17,000
TO ILLUSTRATE…
Pepper Co. Steak Co.
Cash P450,000 P 15,000
Inventories 300,000 30,000
PPE, net 750,000 105,000
Total Assets P1,500,000 P150,000
CASH 15,000
INVENTORIES 30,000
PPE, NET 153,000 @ FMV
LIABILITIES (15,000)
NET BV 183,000
GOODWILL 87,000
ELIMINATING ENTRY
COMMON STOCK 15,000
SHARE PREMIUM 30,000
RETAINED EARNINGS 90,000
EQUIPMENT 48,000 (153,000 – 105,000)
GOODWILL 87,000
INVESTMENT IN SUBSIDIARIES 243,000
NON CONTROLLING INTERESTS 27,000
SOLUTION…
Pepper Co. Steak Co. ELIMINATING ENTRY
Cash P207,000 P 15,000 222,000
Inventories 300,000 30,000 330,000
PPE, net 750,000 105,000 48,000 903,000
Investment in Subsidiaries 243,000 (243,000) 0
Goodwill 87,000 87,000
Total Assets P1,500,000 P150,000 1,542,000