Accounting

Document Type
Essay
Pages
41 pages
Word Count
1376 words
School
HKUST
Course Code
ACCT4010
Advanced Accounting
Thirteenth Edition, Global Edition
Chapter 3
An Introduction to
Consolidated Financial
Statements
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.
Intro to Consolidations: Objectives
3.1 Recognize the benefits and limitations of
consolidated financial statements.
3.2 Understand requirements for including a subsidiary
in consolidated financial statements.
3.3 Apply consolidation concepts to parent company
recording of an investment in a subsidiary company
at the date of acquisition.
3.4 Record the fair value of a subsidiary at the date of
acquisition
3.5 Learn the concept of noncontrolling interest when a
parent company acquires less than 100 percent of a
subsidiary's outstanding common stock.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.
Intro to Consolidations: Objectives (continued)
3.6 Prepare consolidated balance sheets subsequent to
the acquisition date, including preparation of
eliminating entries.
3.7 Amortize the excess of the fair value over the book
value in periods subsequent to the acquisition.
3.8 Apply the concepts underlying preparation of a
consolidated income statement.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.
3.1: Benefits and Limitations
An Introduction to Consolidated Financial Statements
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.
Business Acquisitions
Business combinations through stock acquisitions
Acquire controlling interest in voting stock
More than 50%
May have control through indirect ownership
Business combination occurs once
Acquisition of additional subsidiary stock is
simply additional investment.
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.
Consolidated Statements
Primarily benefit the owners and creditors of the
parent
Not primarily intended for the noncontrolling
owners nor the subsidiary’s creditors
Subsidiaries issue separate statements for the
benefit of their owners and creditors.
3.2: Subsidiaries
An Introduction to Consolidated Financial Statements

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