accounting 406 chapter 4

accounting 406 chapter 4 - Chapter 4 1. When total...

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Chapter 4 1. When total ownership exists a. Subsidiary’s assets and liabilities are always consolidated based on their fair values at the date of acquisition with any excess cost assigned to goodwill b. This is not the case in every consolidation situation 2. Economic Unit Concept a. Proposition that the subsidiary and especially the subsidiary’s individual accounts cannot be divided along ownership lines b. Controlled company must always be consolidated as a whole regardless of the parent’s level of ownership c. A noncontrolling interest balance is calculated from the fair value of the company and is reported as a component of SE i. Even though outside owners do not possess an equity interest d. All consolidated asset and liability totals are identical regardless of the degree of parent ownership 3. The Proportionate Consolidation Concept a. Presumes that the ultimate objective of consolidated financial statements is to serve as a report to the stockholders of the company b.
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