Taking Accounting II and confused regarding consolidation, anyone can help?

To me, it looks like it just wants you to prepare a consolidated balance sheet. The case is asking if you understand the process of consolidation and I think there are some holes in information that got me stuck. Overall, there are steps to consolidation. Step 1 Find goodwill. Goodwill Equals the excess of Sum of acquisition date fair values of consideration transdred, any non controlling interest and nany previously held equity interest in the acquiree minus the net acquisition ate fair values of identifiable asset acquired an liabilities assumed.

Consideration transferred= It is actually hard to find what the consideration transfereed actually is. Is it 80 percent of the equity section at acquisition date? If it is, it is 592,000. But, how would it be because goodwill is supposedly 168,000. Already, the carrying amounts of the assets are 800,000. It would be a bargain purchase.

NCI= none

Previous equity = none

"minus the fv of identifiable assets and liabilities assumed equals goodwill"

excess FV of prop= 50,000 excess Inv= 50,000. In the “what is fair value literature”, fair value can be the value of a transaction on the market. So, if there was a transaction where it was marked up by 25%, then the fair value of inventory is marked up by 25%....I think. Thus the whole marked up of inventory is 50,000.

Carrying amount of assets and liabilities: 1000000-200000= 800,000

Already, the math doesn't work out, so you just have to assume goodwill equals 168000. I have no idea what the actual consideration transferred is since it does not say. You can still complete the information with the chart,

Step 2 Consolidated assets

Current Assets of parent and liabilites Trade receivables = 200000+150000= 350000 Cash =100+50= 150,000 Inventory= 300+200+ 50 – 125= 53750 Assets are reported at 100% fair value even though NC exist. Again,50 is the fair value additional to inventoyry. In the “what is fair value literature”, fair value can be the value of a transaction on the market. So, if there was a transaction where it was marked up by 25%, then the fair value of inventory is marked up by 25%....I think. Thus the whole marked up of inventory is 50,000. In IFRS it looks like you separate or disclose that 50,000 into the NCI and controlling interest, but in FASB you just add the whole crap to invenstory. You don’t even have an NCI column in the FASB version.

1,25 is eliminated cause you bought inventory from yourself. The consolidated balance sheet has to reflect the economic condition of one entity.

Investment needs to be eliminetated so it is 800000-800000.

Step 3 add together liabilities Add together , 750000+200000=950000

Step 4 Noncontrolling interest what is non controlling interest. I have no idea how they got 170,000. This is a mystery. Again, the question is to prepare a balance sheet, and not find how they got these numbers....I think. You need to use that solution key for the case to work or else you would be blind given the information. It doesn't say what the consideration transferred is.

Step 5 Eliminate equity No beta sol eliminate all of the share capital and reserves to reflec the share capital and reserves of only omega 1,500,000 and 500,000 Non controlling interest appears to be adjusted for the 20 percent deprecition taken from the depreciation in ppe. 20 percent is 25 which is 20 percent of the 1.25 of the total PPE depreciation. This expense reduces overall non controlling interest. The rest is already absorved with the controlling interest the (1,00 and 33,60 which is 34,60). They then eliinated that inventory sale from the parent decreasing profit by 1250.

I’m still confused what the consideration transferred actually was. I don’t think its part of the question. It seems like that accompanying eliminating entries list was to help you solve the case.

/r/Accounting Thread