Significant changes in the last two years 1 for

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Significant Changes in the Last Two Years 1. For publicly accountable enterprises, IFRSs have replaced the former sections of the CICA Handbook. The following table shows the IFRSs covered in this chapter along with their counterparts from the former sections of the CICA Handbook: IFRSs CICA Handbook Counterparts IFRS 3: Business Combinations Section 1582: Business Combinations IAS 27: Consolidated and Separate Section 1601: Consolidated Financial Financial Statements Statements Section 1602: Non-controlling Interests No equivalent Section 1625: Comprehensive Revaluation of Assets and Liabilities 2. Push-down accounting is not allowed under IFRSs. Changes Expected in the Next Three Years The definition of control may change again since the IASB and the FASB are work- ing on a joint project related to consolidated financial statements.
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CHAPTER 4 CONSOLIDATED STATEMENTS ON DATE OF ACQUISITION 147 SELF - STUDY PROBLEM On December 31, Year 1, CAN Company takes control over the net assets of UKS Company by purchasing 80 percent of the common shares of UKS Company. CAN Company paid for the purchase by issuing common shares with a market value of $35,200. The following information has been assembled: CAN Company UKS Company Book value Book value Fair value Plant assets $ 80,000 $ 20,000 $26,000 Goodwill 0 0 22,000 Current assets 50,000 15,000 14,000 $130,000 $35,000 $62,000 Shareholders’ equity $ 75,000 $ 18,000 Long-term debt 25,000 7,000 $ 8,000 Current liabilities 30,000 10,000 10,000 $130,000 $35,000 Required: Prepare a consolidated statement of financial position for CAN Company immedi- ately after the combination under the (a) Proprietary theory. (b) Parent company theory. (c) Parent company extension theory. (d) Entity theory. Solution to Self-study Problem CAN COMPANY Balance Sheet At December 31, Year 1 (See notes) (a) (b) (c) (d) Plant assets $100,800 $104,800 $106,000 $106,000 Goodwill 17,600 17,600 17,600 22,000 Current assets 61,200 64,200 64,000 64,000 $179,600 $186,600 $187,600 $192,000 Shareholders’ equity CAN $110,200 $110,200 $110,200 $110,200 Non-controlling interest 8,800 Non-controlling interest 3,600 4,400 Long-term debt 31,400 32,800 33,000 33,000 Current liabilities 38,000 40,000 40,000 40,000 $179,600 $186,600 $187,600 $192,000 Notes: 1. The assets and liabilities are calculated as follows: (a) Book values for CAN and 80 percent of fair values for UKS. (b) Book values for CAN and book values for UKS plus 80 percent of fair value excess for UKS’s identifiable assets and liabilities plus 80 percent of the value of UKS’s goodwill.
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148 CHAPTER 4 CONSOLIDATED STATEMENTS ON DATE OF ACQUISITION (c) Book values for CAN and book values for UKS plus 100 percent of fair value excess for UKS’s identifiable assets and liabilities plus 80 percent of the value of UKS’s goodwill. (d) Book values for CAN and book values for UKS plus 100 percent of fair value excess for UKS’s identifiable assets and liabilities plus 100 percent of the value of UKS’s goodwill. 2. The non-controlling interest is calculated as follows: (b) 20 percent book value of UKS’s identifiable assets and liabilities.
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  • Fall '12
  • Smith
  • Balance Sheet, consolidated balance sheet, S Ltd, acquisition differential, hiL01537_ch04_120-169.indd Page

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