this liability. The balance of this liability was still considered to be $2,000 at 30 June 2009. At 1 July 2007, Chu Ltd had not recorded any goodwill. Valuation adjustments are made on consolidation and, on realisation of a business combination valuation reserve, a transfer is made to retained earnings on consolidation. (b) During the 2007-2008 year, Chu Ltd transferred $5,000 to its General Reserve from profits earned prior to acquisition date. (c) For the year ending 30 June 2008, the profit after
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CHAPTER 3 CONSOLIDATION SUBSEQUENT TO DATE OF ACQUISITION QUESTION SOLUTIONS 3-1. An 80 percent ownership requires the preparation of consolidated financial statements. Regardless of the method used to account for the investment on the parent’s financial records, the investment income or dividend income is replaced on the consolidated income statement by the subsidiary’s revenue and expense accounts. The equity method is required if the parent prepares separate financial statements. Search term
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Chapter 2 – Consolidation of Financial Information FASB allows reporting for businesses combined using the acquisition method. The acquisition method embraces a fair value measurement attribute. * Adoption of this attribute reflects the FASB’s increasing emphasis on fair value for measuring and assessing business activity. * In the past, reporting standards embraced the cost principle to measure and report the financial effects of business combinations. Expansion Through Corporate
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On 1 July 2007, Neptune Ltd acquired all the shares of Venus Ltd on an ex-div basis. Acquisition related expenses were $5 000. On this date, the equity and liabilities of Venus Ltd included the following balances: Share Capital $200 000 General Reserve 25 000 Retained Earnings 45 000 Dividend payable 10 000 Provisions 204 400 At acquisition date, all the identifiable assets and liabilities of Venus Ltd were recorded at amounts equal to fair value except for: Carrying Fair
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Accounting for Investments under FASB No. 115 – A Review |For commercial enterprises |Presentation on Financial |Change in Fair Value | |(nonprofit entities follow SFAS No.124) |Statements | | | | |Temporary |Other than | |
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Chapter 3 Consolidations – Subsequent to the Date of Acquisition Chapter Outline I. Consolidation — the Effects Created by the Passage of Time A. The present chapter examines the consolidation procedures that must be followed in subsequent periods whenever separate incorporation of the subsidiary is maintained. B. Purchase combinations will continue to require a different set of procedures than a pooling of interests because of allocations and
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CONSOLIDATED FINANCIAL STATEMENTS QUIZ QUESTIONS 1. What are separate financial statements? (1 Mark) 2. Identify two types of parent entities that are NOT required to prepare consolidated financial statements? (2 Marks) 3. What does control mean? (1 Mark) 4. What are consolidated financial statements? (1 Mark) 5. On 1 July 2010, Mint Ltd acquired all the shares of Marjoram Ltd for $355 000. At acquisition date the recorded equity of Marjoram Ltd consisted of: $150 000 share
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SUMMARY OF THE LEARNING OBJECTIVES The preparation of the consolidated financial statements is done using a consolidation worksheet, the left-hand columns of which contain the financial statements of the members of the group. The adjustment columns contain the consolidation worksheet entries that adjust the left-hand columns to form the consolidated financial statements. The adjustment entries have no effect on the actual financial records of the parent and its subsidiaries. At acquisition date,
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acquisition date, was sold on 1 January 2014. Any adjustments for differences between carrying amounts at acquisition date and fair values are made on consolidation. During the year ended 30 June 2013, all inventories on hand at acquisition date were sold, and the land was sold on 1 June 2013. Any valuation reserves created are transferred on consolidation to retained earnings when assets are sold or fully consumed. Additional information: a) On 1 July 2013, Beans Ltd has on hand inventory
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values are unavailable, investment is reported at cost. A. Consolidation: when one firm controls another (e.g., when a parent has a majority interest in the voting stock of a subsidiary or control through variable interests, their financial statements are consolidated and reported for the combined entity. A. Equity method: applied when the investor has the ability to exercise significant influence over operating and financial policies of the investee. 1. Ability to significantly influence
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