Partnership an association of two or more persons to carry on as co-owners of a business for
Attributes of a Partnership
1. Agreement, expressed or implied
2. Operated for making a profit
3. Members must be co-workers
Advantages of a
PAIL #1 Chapter 1
1. What is the purpose of FASB 141R and FASB 160?
The purpose of these statements was to improve the relevance, comparability and
transparency of business combinations financial information and to aid in the
PAIL #14 Chapter 15
1. What is a partnership? Distinguish between a General Partnership and a Limited
It is defined as an association of two or more persons to carry on as co-owners a
business for profit. There are 3 things
PAIL #4 Chapter 3
1. What is a stock acquisition?
A stock acquisition is when one company controls the activities of another company
through the direct or indirect ownership of some or all of its voting stock. The
PAIL #15 Chapter 15
1. What is meant by the dissolution of a partnership?
Dissolution of a partnership is when the partnership ceases to exist. Either a partner
dies, or decides they do not want to participate in the partnership anymore.
PAIL #13 Chapter 12
1. What is a derivative instrument?
It is a financial instrument that by its terms at inception or upon occurrence of a
specified event provides the holder with the right to participate in some or all of the
PAIL #12 Chapter 12
1. What is a direct exchange rate?
A direct exchange rate is when the exchange rate is quoted in terms of how many
units of the domestic currency can be converted into one unit of foreign currency.
For example, 1 Brit
PAIL #5 Chapter 3
1. Discuss the current guidelines for recording an investment at the date of
If cash is used to make the acquisition then the parent company should record the
transaction at cost, what cash they paid for it
PAIL #10 Chapter 5
1. If the investor is using the Partial Equity Method to account for its investment in
the stock of a subsidiary, will the allocation of difference between IV and BV to
depreciable assets have any impact on the entries
PAIL #7 Chapter 4
The chapter discusses 3 methods that can be used to account for a stock acquisition.
Identify and define each of these methods.
1. Cost Method:
The method used to account for stock acquisitions of another company in whi
PAIL #8 Chapter 4
1. The consolidated financial statements at the date of acquisition would include
which of the financial statements?
Only the balance sheet would be consolidated on the date of acquisition. The
consolidated balance shee
PAIL #9 Chapter 5
1. Explain proper practice for allocating differences between IV and BV?
If you own 100% of a subsidiary, the implied value equals the acquisition price. The
first step is to find the difference between implied and book
PAIL #2 Chapter 2
1. According to SFAS No 142, what is the current treatment of Goodwill and
Other Intangible Assets? Distinguish between public and private companies.
Intangible assets received in a group with other assets or singularly
PAIL #6 Chapter 3
In dealing with Business Combinations, the concepts of Implied Value and Book
Value are discussed.
1. What is your concept of the Implied Value of the firm? Discuss.
Implied value is the value of the firm based on how m
PAIL #11 Chapter 6
1. What is meant by Upstream and Downstream sales of merchandise?
Upstream is sales from the subsidiary to the parent. Downstream is sales from the
parent to one or more subsidiaries.
2. What affect will intercompany s
Total Cost and Expense
Retained Earnings Statement
Retained Earnings, 1/1/_
Equity from Sub. Income
Total Cost and Expense
TO FIND OFFERING PRICE
1. Normal Earnings = FV of Assets
FV Net Assets * Normal Rate of return = Normal Earnings
2. Take each year
a. Subtract out Depreciation if over stated
b. Add back in Extraordinary losses
c. Subtract out Extraordinary
PAIL #3 Chapter 2
1. What are pro-forma statements?
They are also called as-if statements. They are defined as statements prepared to
show the effect of planned or contemplated transactions by showing how they might
have affected financi