9.2-3 lecture_23_Sept_and_25_Sept_Consolidation_One_Year_After_Acquisition

9.2-3 - ACIS 211 Company Accounting 2009 Consolidation One Year After Acquisition Bill Foster Room 619 [email protected] Tutorial

Info iconThis preview shows pages 1–14. Sign up to view the full content.

View Full Document Right Arrow Icon
ACIS 211 Company Accounting 2009 Consolidation One Year After Acquisition Bill Foster Room 619 [email protected]
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Tutorial exercises: week commencing 28 September part 2 One year after acquisition problem 1 In your own time: week commencing 28 September part 2 Deegan & Samkin 25:10 One year after acquisition problem 2
Background image of page 2
Overview I. Income tax considerations II. Review -- date of acquisition balance sheet worksheet logic and elimination entries III. Examine the structure of the consolidation worksheet used after acquisition IV. Form of the worksheet top tier --P owns 80% of S V. Observations about the top tier VI. The second tier of a worksheet after acquisition VII. Observations about the second tier VIII. D & S middle tier—p. 887 H owns 80% of G IX. Observations about the third tier – the balance sheet tier
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
X. Example #1 XI. Worksheet entries summary (and additions) XII. Other Comments --D&S periodic top tier worksheet p. 887 XIII. Observations about the cost of goods sold section on p. 887
Background image of page 4
Reading NZ IAS 27 Deegan & Samkin Chapters 24 & 26 Alfredson Chapter 20 Alfredson Chapter 22
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
I. Income tax considerations In order to facilitate a better understanding of the process of consolidation, we will ignore income tax effects
Background image of page 6
One year after acquisition means that both P and S have been operating for a year Both have revenues and expenses Both are likely to pay dividends In addition to preparing a consolidated balance sheet, we will also need to prepare a consolidated income statement and a consolidated statement of retained earnings
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The worksheet will expand to also incorporate an income statement and a statement of retained earnings The elimination entries will also expand
Background image of page 8
II. Review -- date of acquisition logic and elimination entries Assume P owns 80% of S (1) At acquisition calculate a differential (2) Allocate the differential – use P’s % for the difference between fair and carrying amount for all of S’s specific identifiable assets and liabilities Both (1) and (2) above are workings that are prepared prior to the worksheet
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
(3) If necessary, write S’s assets and liabilities up or down to fair against revaluation surplus on the worksheet A write up looks like (1) PP&E 10,000 Revaluation Surplus-S 10,000 This entry is what S would have done if the revaluation had been recorded directly on S’s books
Background image of page 10
Note that on the prior slide PP&E was written up with a debit for the entire difference between carrying amount and fair Similarly, assets could be written down with a credit, liabilities could be increased to fair with a credit, or drawn down to fair with a debit Also note that the amount for the revaluation entry differs from the amounts that are used to allocate the differential The amount used in the revaluation worksheet entry is the entire difference between the carrying amount and fair – as if S wrote the asset up on its own books
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
On the other hand, the differential is allocated using P’s % The amounts used when we allocate the differential (e.g., 80% of fair minus cost) are used again with P’s full equity method entries
Background image of page 12
(4)
Background image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 14
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/23/2009 for the course BCOM ACIS 211 taught by Professor Susanwild during the Spring '09 term at Canterbury.

Page1 / 90

9.2-3 - ACIS 211 Company Accounting 2009 Consolidation One Year After Acquisition Bill Foster Room 619 [email protected] Tutorial

This preview shows document pages 1 - 14. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online