Acquistion Acct and Consolidation less than 100 percent ownership

Acquistion Acct and Consolidation less than 100 percent ownership

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University of Rhode Island BUS 402 Advanced Accounting 2010 - 2011 Joseph M. D’Adamo Course Outline #7: Acquisition Accounting and Consolidations (< 100% Ownership) Page 1 of 24 FASB ASC 810-10 Consolidation - Glossary Noncontrolling Interest The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling  interest is sometimes called a minority interest. I.   Noncontrolling Interest in Subsidiary (formerly referred to as the Minority Interest) A. Overview  1. Description of Noncontrolling Interest Ownership interest in the subsidiary entity NOT HELD by the parent Business Combination   Acquisition only Parent unable to obtain 100% of voting stock  OR  wants to retain some of the Sub’s  existing stockholders  Noncontrolling Interest    Ownership interest in net assets, earnings, cash flows, etc. of  SUB  only No ownership interest in Parent as a result of combination 2. Effects on Consolidated Financial Statements Parent and 100% of Subsidiary consolidated to present one-entity perspective Portion of the Subsidiary  not owned  by Parent Consolidated F/S includes amounts that do not belong to the Parent or its shareholders Amounts must be  measured  and  reported  as  attributable to noncontrolling interest  of  subsidiary 
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Course Outline #7: Acquisition Accounting and Consolidations (< 100% Ownership) Page 2 of 24 3. SFAS160 and SFAS141(R) a. Old Standards   Parent Theory Noncontrolling interest measured as % of sub’s carrying values and reported as a  “quasi-liability”   immediately   before   equity   (“mezzanine”   presentation)   in   the  consolidated   balance   sheet   and   a   non-operating   “expense”   in   the   income  statement b. New Standards   Entity Theory Parent with 90% Interest in Subsidiary One Economic Entity Under Parent’s Control With Two Ownership Interests Parent’s Shareholders Noncontrolling Interest        100% of Parent + 90% of Sub          10% of Sub only SFAS141(R)  Acquisition Accounting measures the Noncontrolling Interest at its  Acquisition-Date Fair Value    Sub’s Net Assets measured and  reported at  full fair value  on acquisition date Acquisition-Date Fair Value  of the  Noncontrolling Interest  used in recognizing and measuring  Goodwill  or 
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Course Outline #7: Acquisition Accounting and Consolidations (< 100% Ownership) Page 3 of 24 Gain from a Bargain Purchase From SFAS141(R) : Measuring the Fair Value of a Noncontrolling Interest in an Acquiree This Statement requires the acquirer to  measure a noncontrolling interest  in the acquiree at 
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This note was uploaded on 04/03/2012 for the course BUS 402 taught by Professor Joshephd'adamo during the Fall '09 term at Rhode Island.

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Acquistion Acct and Consolidation less than 100 percent ownership

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