C 20 percent fair value of ukss identifiable assets

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(c) 20 percent fair value of UKS’s identifiable assets and liabilities. (d) 20 percent fair value of UKS’s identifiable assets, identifiable liabilities, and goodwill. REVIEW QUESTIONS 1. In the preparation of a consolidated balance sheet, the differences be- tween the fair value and the book value of the subsidiary’s net assets are used. Would these differences be used if the subsidiary applied push-down accounting? Explain. 2. Is a negative acquisition differential the same as negative goodwill? Explain. 3. With respect to the valuation of non-controlling interest, what are the major differences between the proprietary, parent, and entity theories? 4. How does the presentation of non-controlling interest on the consolidated balance sheet differ under the four theories of consolidating a non–wholly owned subsidiary? 5. How is the goodwill appearing on the statement of financial position of a subsidiary prior to a business combination treated in the subsequent prepara- tion of consolidated statements? Explain. 6. Under the entity theory, consolidated goodwill is determined by inference. Describe how this is achieved and comment on its shortcomings. 7. What is non-controlling interest, and how is it reported in the consolidated balance sheet under IFRSs? 8. Explain how changes in the fair value of contingent consideration should be reported assuming that the contingent consideration will be paid in the form of cash. 9. What reporting options related to business combinations are available to private companies? 10. What is negative goodwill and how is it accounted for? 11. Explain whether or not the historical cost principle is applied when accounting for negative goodwill. 12. How is the net income earned by a subsidiary in the year of acquisition incorporated in the consolidated income statement? 13. In whose accounting records are the consolidation elimination entries recorded? Explain. 14. Don Ltd. purchased 80 percent of the outstanding shares of Gunn Ltd. Before the purchase, Gunn had a deferred charge of $10.5 million on its balance
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CHAPTER 4 CONSOLIDATED STATEMENTS ON DATE OF ACQUISITION 149 sheet. This item consisted of organization costs that were being amortized over a 20-year period. What amount should be reported in Don’s consoli- dated statements? Explain briefly. MULTIPLE - CHOICE QUESTIONS 1. Non-controlling interest on a consolidated balance sheet prepared in accor- dance with IAS 27 represents which of the following? a. An equity interest in a subsidiary company that exists because the parent’s interest in the subsidiary is less than 100 percent. b. A liability of the parent company. c. The net amount by which subsidiary assets and liabilities have been revalued following a business combination. d. An equity interest in the subsidiary’s income earned for the year.
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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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