Acquisition with NCI
What are the total FV differences?
0
What are the 3 accounting classifications for investments in debt securities?
Held to Maturity; Trading; AFS
Which one of the following accounts would not appear in the consolidated financial statements at the end of the first fiscal period of the business combination?
Goodwill
Equipment
Investment in Subsidiary
Common Stock
Additional Paid-In Capital
3. Investment in Subsidiary
Entry S: Why is this necessary?
Remove equity of subsidiary; and lowers the investment in subsidiary account of parent
Which Netflix docuseries took the world by storm at the start of the Coronavirus pandemic? (Hint: Big meow)
Tiger King
Calculate Goodwill:
200,000
How are each 3 accounting classifications valued (HTM, Trading, AFS); accounting method?
HTM: Amortized Cost
Trading: FV
AFS: FV
Amelia’s Armories acquired 60% of the common stock of Brett’s Beans on January 1, 2019. For the 12 months ended December 31, 2019, Brett’s Beans reported revenues of $810,000 and expenses of $630,000 all incurred evenly throughout the year. There were no fair value versus book value adjustments in connection with the acquisition and there was no goodwill.
What is the effect of including Brett’s Beans in consolidated net income for 2019?
810,000 - 630,000 = $180,000 (+ of net income consolidation)
Entry A: Why is it necessary?
Allocations of fair value differences in acquisitions; and completes the elimination of investment in the sub
Who in summer intensive served in the military?
Royce
Perform the S Entry for the acquisition of Jason's Juuls:
1/1 Dr. C/S 600,000
APIC 300,000
RE 100,000
Cr. *Investment (75%) 750,000
**NCI (25%) 250,000
*(600,000+300,000+100,000=1,000,000*0.75=750,000; **1,000,000-750,000=250,000
Where is the change in fair value recorded (HTM, AFS, Trading)?
HTM: N/A
Trading: I/S
AFS: OCI
Amelia’s Armories acquired 60% of the common stock of Brett’s Beans on January 1, 2019. For the 12 months ended December 31, 2019, Brett’s Beans reported revenues of $810,000 and expenses of $630,000 all incurred evenly throughout the year. There were no fair value versus book value adjustments in connection with the acquisition and there was no goodwill.
What is the amount of Brett’s Beans net income to the controlling interest for 2019?
810,000 - 630,000 = 180,000 * 60% = $108,000
Entry I: What happens/Why?
This entry eliminates the equity income recorded by the parent due to its ownership of the subsidiary. (Sub records income)
Debit equity in subsidiary earnings (assuming that there was income) and credit the investment in subsidiary account.
TA BONUS QUESTION: What's Alex's Doggos Name?
Murphy
Perform the A entries of the acquisition of Jason's Juuls:
1/1 Dr. Goodwill 200,000
Cr. Investment (75%) 150,000
NCI (25%) 50,000
* 200,000*0.75=150,000
** 200,000-150,000=50,000
What else is reported in the income statement for HTM, Trading, AFS?
HTM: Interest Revenue
Trading: Interest Revenue; Gain/Loss on Sale
AFS: Interest Revenue; Gain/Loss on Sale
TA BONUS QUESTION: Where is Isaiah from? (Hint Moana)
Hawaii
Entry D: What happens/Why?
We eliminate any intercompany dividends paid by subsidiary; debit to the investment in subsidiary account and a credit to the dividends paid account.
Who was the big 5 (accounting firms) and who is no longer apart of them?
KPMG, Deloitte, PWC, EY
Arthur Andersen (RIP)
TA BONUS QUESTION: Which TA has not started studying for the CPA exam? (Hint: No hint required)
Nick
TA BONUS QUESTION: Where did Brandon go for undergrad? (Hint Zoey 101)
Pepperdine
Jenny’s Jams acquired 35% of Ryan’s Robots uses the equity method to account for its investment in Ryan’s Robots. In 2017, Ryan’s Robots had net income of $155,000 and paid dividends of $35,000. Prepare Jenny’s Jams journal entries to recognize the 2017 activity for its investment in Ryan’s Robots.
Dr. Investment in Kid Co. 54,250 (155,000 * 35%)
Cr. Equity in Income 54,250 (155,000 * 35%)
Dr. Cash 12,250 (35,000 * 35%)
Cr. Investment in Kid Co. 12,250 (35,000 * 35%)
Entry E: Why?
Recognize amortization expense for the period on the date of acquisition fair value differences
Who is your favorite TA:
1. Alex
2. Plai
3. Brandon
4. Isaiah
5. Nick
6. Mia
7. Katherine
8. Dasol
None of the above