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Advanced Accounting: Consolidation and Valuation of Acquisitions

This session offers a comprehensive overview of advanced accounting principles related to acquisitions, focusing on key areas such as revised PCI analysis, G/L entries on the parent’s books, and consolidation working paper entries. Key concepts include calculation bases for FVCI and FVNCI, treatment of goodwill and bargain purchase gains, and the nuances of valutaing non-controlling interests. Participants will learn about necessary entries for eliminating intracompany transactions and recognizing excess allocation expenses, vital for accurate financial reporting and compliance.

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Advanced Accounting: Consolidation and Valuation of Acquisitions

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Presentation Transcript

  1. Session 7-<100% Acquisitions • Revised PCI analysis • G/L entries on the parent’s books • Consolidation w/s entries • Consideration bases Advanced Accounting-Spring 2012

  2. Consideration Bases • FVCI + FVNCI • Same rules for GW and Bargain Purchase Gain • FVNCI valuation • Active trading value of S • CI payment if S is not actively traded Advanced Accounting-Spring 2012

  3. Parent Co. Invest. Analysis Update Advanced Accounting-Spring 2012

  4. Entries on Parent’s G/L • S Co. earnings or loss • S Co. dividends • Parent portion of excess amortization Advanced Accounting-Spring 2012

  5. Consolidation Entries on W/S • See Parrot Company worksheet: • Entry S: Basic subsidiary S/E elimination • Entry A: FV alloc. @ beg. of year • Entry P: Intracompany rec/pay elimination • Entry I: Intracompany income elimination • Entry D: Intracompany dividend elimination • Entry E: Excess allocation expense recognition • Entry N: NCI current year activity • Other factors • Accumulated depreciation balance at acquisition elimination Advanced Accounting-Spring 2012

  6. Goodwill Allocation • Determine respective share of identifiable assets • Allocate goodwill first to CI Advanced Accounting-Spring 2012

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