Accounting Advanced | Course Paper

Advanced Accounting

Thirteenth Edition, Global Edition

Chapter 8

Consolidations –

Changes in

Ownership Interests

Consolidations – Changes in Ownership

Interests: Objectives

8.1 Apply consolidation procedures to interim (midyear)

acquisitions.

8.2 Prepare consolidated statements when the parent

company’s ownership percentage increases or

decreases during the reporting period.

8.3 Record subsidiary/investee stock issuances and

treasury stock transactions.

8.1: Interim Acquisitions

Consolidations –Changes in Ownership Interests

Changes in Parent Ownership

Increases (acquires or maintains control)

●Parent acquires controlling interest during

interim period.

●Parent acquires controlling interest in stages.

●Parent acquires additional shares from

noncontrolling interest.

Decreases (maintains or loses control)

●Parent sells shares but maintains control.

●Parent sells shares but gives up control.

Interim Acquisition of Control

Parent obtains control

–Determine implied value and allocate excess

–Apply consolidation procedures

Interim Acquisition Where Control is

Maintained

Parent increases its share by buying more stock or

decreases its share by selling some stock.

–Change in Investment in sub is based on the

underlying fair value of equity.

–No gain or loss is recognized; paid in capital is

adjusted.

Interim Sale Where Control is

Relinquished

Parent sells part of its investment and no longer

maintains control