TAILIEUCHUNG - Lecture Advanced accounting (6th Edition): Chapter 3 - Jeter, Chaney

Chapter 3 - Consolidated financial statements: date of acquisition. Chapter 3 explains the method of combination that results in one company owning a majority interest in another company - often called a stock acquisition. This chapter will discuss the elements of controlling interest and noncontrolling interest, why a company might pursue a stock acquisition instead of a merger or consolidation, and how valuation becomes a part of the acquisition. | Consolidated Financial Statements—Date of Acquisition 1 Learning Objectives Understand the concept of control as used in reference to consolidations. Explain the role of a noncontrolling interest in business combinations. Describe the reasons why a company acquires a subsidiary rather than its net assets. Describe the valuation and classification of accounts in consolidated financial statements. List the requirements for inclusion of a subsidiary in consolidated financial statements. 2 Learning Objectives Discuss the limitations of consolidated financial statements. Record the investment in the subsidiary on the parent’s books at the date of acquisition. Prepare the consolidated workpapers and eliminating entries at the date of acquisition. Compute and allocate the difference between implied value and book value of the acquired firm’s equity. Discuss some of the similarities and differences between . GAAP and IFRS with respect to the preparation of consolidated financial statements at the date of acquisition. 3 Stock Acquisitions Chapter Focus - Accounting for Stock Acquisitions When one company controls another company through direct or indirect ownership of some or all of its voting stock. Acquiring company referred to as the parent. Acquired company referred to as the subsidiary. Other shareholders considered noncontrolling interest. Parent records interest in subsidiary as an investment. If a subsidiary owns a controlling interest in one or more other companies, a chain of ownership is forged by which the parent company controls other companies. 4 LO 2 Noncontrolling interest (NCI). Definitions of Subsidiary and Control The Securities and Exchange Commission defines a subsidiary as an affiliate controlled by another entity, directly or indirectly, through one or more intermediaries. Control means the possession, direct or indirect, of the power to direct management and policies of another entity, whether through the ownership of voting shares, by contract, .

• Kế toán - Kiểm toán
• Advanced accounting
• Lecture Advanced accounting
• Kế toán nâng cao
• Consolidated financial statements
• Reasons for subsidiary companies
• Consolidated statements
• Advanced financial accounting
• Financial statements
• Equity method of accounting
• Accounting valuation
• International accounting diversity
• Accounting for legal reorganizations
• Accounting for state
• Accounting for leases
• Accounting for estates
• Investment accounting
• Consolidation of financial information
• Intra entity asset transactions
• Variable interest entities
• Income taxes
• Interim reporting
• Foreign currency transactions
• Foreign currency financial statements
• Exchange commission
• Partnership advantages
• Statement of liquidation