Investing in Others
After the Fact
Business Combo
Potpourri
Name This
100
This method of accounting is used when the investor company's ownership is greater than 50 percent.
What is Consolidated Financial Statements?
100
How is the Consolidated total amount for Revenues determined?
What is the revenues for the parent and subsidiary are added together?
100
Why is the Consolidation Worksheet and preparing worksheet entries necessary?
What is because the related parties keep separate books and the consolidated financial statements should reflect the financial information of the combined entity?
100
This method is continually adjusted to reflect current owner's equity of acquired company. It gives a true representation of consolidation figures.
What is the equity method?
100
The _______ often reflects cash flows from the subsidiary.
What is the initial value method?
200
This company has majority ownership in another company.
What is the Parent?
200
King Corp acquires majority ownership in Queen Company at a premium price. How will the Goodwill resulting from the acquisition be determined for Queen's owners?
What is Goodwill will be allocated to King Corp and NCI owners proportionately, with King receiving a greater amount since a premium was paid? The formula is: FV at acquisition date - Relative FV of Queen's identifiable net assets = Goodwill
200
What is the reasoning behind Consolidation Entry *C?
What is to increase subsidiary's book value and recognized excess amortization expenses? It converts initial value and partial equity method to full equity method.
200
What is the accounting when one related party in a combination owes the other?
What is the related asset and liability amounts must be eliminated on the consolidated worksheet?
200
Adjusted only for accrued income and dividends declared by the acquired company.
What is partial equity method?
300
Investee company
What is a subsidiary?
300
Describe 3 of the 5 elimination entries on the Consolidated Worksheet.
What is S - eliminate beginning stockholder's equity accounts of subsidiary A - to recognize unamortized excess fair value for assets acquired and liabilities assumed in combination, as well as Goodwill. I - to eliminate intra-entity income D - to eliminate intra-entity dividends E - to recognize current year excess fair-value amortizations
300
How do you compute the Net Income attributable to the NCI?
What is Subsidiary's net income adjusted for the intra-entity income and annual amortization?
300
_______ reflects the amounts attributed to outside owners in a subsidiary when a parent owns less than 100%.
What is the NCI (Non Crontrolling Interest)?
300
Majority owners pay above market rate to acquire sufficient shares to gain control of subsidiary company.
What is a Control Premium?
400
Kaye Company paid $800,000 to acquire 100% ownership in Dale Corporation. Dale's total Fair Value on that date was $600,000. At the time of acquisition, the book value of the Equipment with a 5 year remaining life was overvalued by $30,000; Patented Technology with a 10 life was undervalued by $130,000; and Trademarks with an indefinite life was undervalued by $20,000. What was the net annual amortization?
What is $7,000?
400
Kaye Company paid $800,000 to acquire 100% ownership in Dale Corporation. Dale's the total Fair value on that date was $600,000. At the time of acquisition, the book value of the Equipment with a 5 year remaining life was overvalued by $30,000; Patented Technology with a 10 life was undervalued by $130,000; and Trademarks with an indefinite life was undervalued by $20,000. What was the total amount reported on the Consolidated worksheet for Investment in Dale Corp?
What is $0?
400
Company A acquires 75% of Company Z for $500,000 at market value and uses the equity method to account for investment. If Company Z reports $110,000 in Net Income and declare Dividends of $60,000, what is the balance in the Investment account?
What is $537,500?
400
What is the journal entry to record the amortization of excess of Fair Value over Book Value at acquisition date?
What is Identifiable Assets xx Goodwill xx Investment in Sub xx Noncontrolling Interest in Sub xx ?
400
Occurs when subsidiary sells inventory to parent and a portion remains at the end of the period.
What is upstream intra-entity profit?
500
Kaye Company paid $800,000 to acquire 100% ownership in Dale Corporation. Dale's the total Fair value on that date was $600,000. At the time of acquisition, the book value of the Equipment with a 5 year remaining life was overvalued by $30,000; Patented Technology with a 10 life was undervalued by $130,000; and Trademarks with an indefinite life was undervalued by $20,000. What was the amount of Goodwill recognized?
What is $80,000?
500
Kaye Company paid $800,000 to acquire 100% ownership in Dale Corporation. Dale's the total Fair value on that date was $600,000. At the time of acquisition, the book value of the Equipment with a 5 year remaining life was overvalued by $30,000; Patented Technology with a 10 life was undervalued by $130,000; and Trademarks with an indefinite life was undervalued by $20,000. What was the journal entry to record Consolidation Entry A?
What is Trademarks 20,000 Patented Technology 130,000 Goodwill 80,000 Equipment 30,000 Investment in Dale Corp 200,000?
500
Kaye Company paid $800,000 to acquire 100% ownership in Dale Corporation on January 1, 2017. Dale's the total Fair value on that date was $600,000. At the time of acquisition, the book value of the Equipment with a 5 year remaining life was overvalued by $30,000; Patented Technology with a 10 life was undervalued by $130,000; and Trademarks with an indefinite life was undervalued by $20,000. What is the unamortized amount of excess of FV over BV for Patented Technology at the end of 2018?
What is $104,000?
500
How do you determine the balance in the Retained Earnings account of the subsidiary at the end of Year 2?
What is [B. R/E + Net Income (Y1) - Dividends (Y1) + Net Income (Y2) - Dividends (Y2)]?
500
Investment in Sub xx Cost of Goods Sold xx
What is Entry *G, to remove intra-entity gross profit from previous year and recognize in current when downstream transfer exists and equity method is used?
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