The document provides an overview of consolidated financial statements. It discusses how a parent company combines the financial statements of its subsidiaries by eliminating reciprocal accounts and adjusting for the difference between the parent's cost of its investment and the book value of the subsidiary's underlying equity. The objectives covered include recognizing the benefits of consolidated statements, requirements for inclusion of subsidiaries, allocating excess investment costs, preparing consolidated balance sheets at acquisition and subsequent periods, accounting for minority interests, and preparing consolidated income statements.
Leverages one of the most difficult to understand and interpret in financial management.. Here's a short explanation with calculation of financial and operating leverages..
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Leverages one of the most difficult to understand and interpret in financial management.. Here's a short explanation with calculation of financial and operating leverages..
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Presentation on current strategic initiatives and objectives of the International Federation of Accountants (IFAC) by Gabriella Kusz, IFAC Senior Technical Manager, at the United Nations Conference on Trade and Development (UCTAD) and its International Standards of Accounting and Reporting (ISAR) conference on accounting standards, corporate transparency, and developing countries, given on November 2, 2012.
A company declared a $0.25 per share cash dividend. The company ha.docxevonnehoggarth79783
A company declared a $0.25 per share cash dividend. The company has 160,000 shares authorized, 152,000 shares issued, and 6,400 shares in treasury stock. The journal entry to record the dividend declaration is:
Debit Retained Earnings $38,000; credit Common Dividends Payable $38,000.
Debit Retained Earnings $40,000; credit Common Dividends Payable $40,000.
Debit Common Dividends Payable $38,000; credit Cash $38,000.
Debit Retained Earnings $36,400; credit Common Dividends Payable $36,400.
Debit Common Dividends Payable $36,400; credit Cash $36,400.
A company declared a $0.50 per share cash dividend. The company has 460,000 shares authorized, 437,000 shares issued, and 18,400 shares in treasury stock. The journal entry to record the payment of the dividend declaration is:
rev: 02_08_2014_QC_44760
Debit Retained Earnings $218,500; credit Common Dividends Payable $218,500.
Debit Common Dividends Payable $209,300; credit Cash $209,300.
Debit Common Dividends Payable $218,500; credit Cash $218,500.
Debit Retained Earnings $209,300; credit Common Dividends Payable $209,300.
Debit Retained Earnings $230,000; credit Common Dividends Payable $230,000.
A company has earnings per share of $8.70. Its dividend per share is $1.50, its market price per share is $100.92, and its book value per share is $77. Its price-earnings ratio equals:
11.60.
7.60.
8.85.
8.70.
5.80.
Xtreme Sports has $300,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Xtreme Sports also has $700,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $50,000. This dividend should be distributed as follows:
$27,000 preferred; $23,000 common.
$25,000 preferred; $25,000 common.
$0 preferred; $50,000 common.
$12,500 preferred; $37,500 common.
$24,000 preferred; $26,000 common.
A company has net income of $935,000; its weighted-average common shares outstanding are 187,000. Its dividend per share is $0.80, its market price per share is $95, and its book value per share is $86.50. Its price-earnings ratio equals
rev: 03_05_2014_QC_46271
17.30.
19.00.
9.30.
8.50.
7.70.
A company issued 260 shares of $100 par value stock for $31,000 cash. The total amount of paid-in capital in excess of par is:
$100.
$2,600.
$5,000.
$26,000.
$31,000.
A company issued 85 shares of $100 par value stock for $9,500 cash. The total amount of paid-in capital is:
$100.
$1,000.
$850.
$8,500.
$9,500.
The following data were reported by a corporation:
Authorized shares
33,000
Issued shares
28,000
Treasury shares
10,000
The number of outstanding shares is:
43,000.
23,000.
28,000.
18,000.
33,000.
A company's board of directors votes to declare a cash dividend of $1.10 per share. The company has 22,000 shares authorized, 17,000 issued, and 16,500 shares outstanding. The total amount of t.
Problem 3-2 (LO 2) Simple equity method adjustments, consolidated .docxsleeperharwell
Problem 3-2 (LO 2) Simple equity method adjustments, consolidated worksheet.
On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and retained earnings of$50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar are as follows:
2015
2016
Net income
$60,000
$90,000
Dividends
20,000
30,000
On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributed to goodwill.
Required
1. Using this information and the information in the following trial balances on December 31, 2016, prepare a value analysis and a determination and distribution of excess schedule:
Paro Company
Solar Company
Inventory, December 31
100,000
50,000
Other Current Assets
136,000
180,000
Investment in Solar Company
400,000
Land
50,000
50,000
Buildingsand Equipment
350,000
320,000
Accumulated Depreciation
(100,000)
(60,000)
Goodwill
Other Intangibles
20,000
Current Liabilities
(120,000)
(40,000)
Bonds Payable
(100,000)
Other Long-Term Liabilities
(200,000)
Common Stock—Paro Company
(200,000)
Other Paid-In Capital in Excess of Par—Paro Company
(100,000)
Retained Earnings—Paro Company
(214,000)
Common Stock—Solar Company
(50,000)
Other Paid-In Capital in Excess of Par—Solar Company
(100,000)
Retained Earnings—Solar Company
(190,000)
Net Sales
(520,000)
(450,000)
Cost of Goods Sold
300,000
260,000
Operating Expenses
120,000
100,000
Subsidiary Income
(72,000)
Dividends Declared—Paro Company
50,000
Dividends Declared—Solar Company
30,000
Totals
0
0
2. Complete a worksheet for consolidated financial statements for 2016. Include columns for eliminations and adjustments, consolidated income, NCI, controlling retained earnings, and consolidated balance sheet.
Problem 3-10 (LO3, 5) 100%, cost method worksheet, several adjustments, third year.
Refer to the preceding information for Paulcraft’s acquisition of Switzer’s common stock. Assume that Paulcraft pays $480,000 for 100% of Switzer common stock. Paulcraft uses the cost method to account for its investment in Switzer. Paulcraft and Switzer have the following trial balances on December 31, 2017 as shown on page 191.
Paulcraft
Switzer
Cash
100,000
110,000
Accounts Receivable
90,000
55,000
Inventory
120,000
86,000
Land
100,000
60,000
Investment in Switzer
480,000
Buildings
800,000
250,000
Accumulated Depreci.
The Art Pastor's Guide to Sabbath | Steve ThomasonSteve Thomason
What is the purpose of the Sabbath Law in the Torah. It is interesting to compare how the context of the law shifts from Exodus to Deuteronomy. Who gets to rest, and why?
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
How to Split Bills in the Odoo 17 POS ModuleCeline George
Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
5. The Reporting Entity
A parent company may acquire a
subsidiary in a very different industry
from its own as a means of diversifying
its overall business risk.
There are also legal reasons for
maintaining separate identities.
10. Consolidation Policy
A subsidiary can be excluded from
consolidation in only two situations:
1 Control is likely to be temporary.
2
Control does not rest with the
majority owner.
12. Parent and Subsidiary with
Different Fiscal Periods
Consolidated statements are prepared for and
as of the end of the parent’s fiscal period.
If the difference does not exceed three months…
it is acceptable to use the subsidiary’s
statements with disclosure.
13. Learning Objective 3
Apply the consolidations concepts
to parent company recording of
the investment in a subsidiary
company at the date of acquisition.
14. Consolidated Balance Sheet at Date
of Acquisition (100% at Book
Value)
Assets Penn Skelly Consolidated
Current assets
Cash $ 20,000 $10,000 $ 30,000
Other current assets 45,000 15,000 60,000
Total current assets $ 65,000 $25,000 $ 90,000
Plant assets $ 75,000 $45,000 $120,000
Less: Accum. depr. 15,000 5,000 20,000
Total plant assets $ 60,000 $40,000 $100,000
Investment in Skelly 40,000 0 0
Total assets $165,000 $65,000 $190,000
15. Consolidated Balance Sheet at Date
of Acquisition (100% at Book
Value)
Liabilities Penn Skelly Consolidated
Current liabilities
Accounts payable $ 20,000 $15,000 $ 35,000
Other current liabilities 25,000 10,000 35,000
Total current liabilities $ 45,000 $25,000 $ 70,000
Stockholders’ equity
Capital stock $100,000 $30,000 $100,000
Retained earnings 20,000 10,000 20,000
Total stockholders’ equity$120,000 $40,000 $120,000
Total liabilities and
stockholders’ equity $165,000 $65,000 $190,000
16. Learning Objective 4
Allocate the excess of the
investment cost over the
book value of the subsidiary
at the date of acquisition.
17. Parent Acquires 100% of
Subsidiary with Goodwill
Penn purchased all the stock of Skelly for $50,000.
What is the consolidating (eliminating) entry?
Skelly stockholder’s equity is $40,000.
18. Parent Acquires 100% of
Subsidiary with Goodwill
Capital Stock 30,000
Retained Earnings 10,000
Goodwill 10,000
Investment in Skelly 50,000
To eliminate reciprocal investment and equity
accounts and to assign the excess of investment
cost over book value acquired to goodwill
19. Learning Objective 5
Prepare a consolidated balance
sheet at the date of acquisition,
including preparation
of eliminating entries.
20. Consolidated Balance Sheet at Date
of Acquisition (100% at Book
Value)
Assets Penn Skelly Consolidated
Current assets
Cash $ 10,000 $10,000 $ 20,000
Other current assets 45,000 15,000 60,000
Total current assets $ 55,000 $25,000 $ 80,000
Plant assets $ 75,000 $45,000 $120,000
Less: Accum. depr. 15,000 5,000 20,000
Total plant assets $ 60,000 $40,000 $100,000
Investment in Skelly 50,000
Goodwill 10,000
Total assets $165,000 $65,000 $190,000
21. Consolidated Balance Sheet at Date
of Acquisition (100% at Book
Value)
Liabilities Penn Skelly Consolidated
Current liabilities
Accounts payable $ 20,000 $15,000 $ 35,000
Other current liabilities 25,000 10,000 35,000
Total current liabilities $ 45,000 $25,000 $ 70,000
Stockholders’ equity
Capital stock $100,000 $30,000 $100,000
Retained earnings 20,000 10,000 20,000
Total stockholders’ equity$120,000 $40,000 $120,000
Total liabilities and
stockholders’ equity $165,000 $65,000 $190,000
22. Learning Objective 6
Learn the concept of minority
interest when the parent
company acquires less than
100% of the subsidiary’s
outstanding common stock.
23. Consolidated Balance Sheet at Date
of Acquisition (100% at Book
Value)
Assets Penn Skelly Consolidated
Current assets
Cash $ 10,000 $10,000 $ 20,000
Other current assets 45,000 15,000 60,000
Total current assets $ 55,000 $25,000 $ 80,000
Plant assets $ 75,000 $45,000 $120,000
Less: Accum. depr. 15,000 5,000 20,000
Total plant assets $ 60,000 $40,000 $100,000
Investment in Skelly 50,000
Goodwill 14,000
Total assets $165,000 $65,000 $194,000
24. Consolidated Balance Sheet at Date
of Acquisition (100% at Book
Value)
Liabilities Penn Skelly Consolidated
Current liabilities
Accounts payable $ 20,000 $15,000 $ 35,000
Other current liabilities 25,000 10,000 35,000
Total current liabilities $ 45,000 $25,000 $ 70,000
Minority interest $ 4,000
Stockholders’ equity
Capital stock $100,000 $30,000 $100,000
Retained earnings 20,000 10,000 20,000
Total stockholders’ equity$120,000 $40,000 $120,000
Total liabilities and
stockholders’ equity $165,000 $65,000 $194,000
25. Minority Interest
Minority interest in subsidiaries is generally
shown in a single amount in the liability section
of the consolidated balance sheet.
The alternatives are to include the minority interest
in consolidated stockholders’ equity or to place it
in a separate minority interest section.
26. Minority Interest
The interest of minority
stockholders represents
equity investments in the
consolidated net assets by
stockholders of the company
affiliated with the parent.
27. Learning Objective 7
Prepare consolidated balance
sheets subsequent to the date
of acquisition, including
preparation of eliminating entries.
28. Consolidated Balance Sheet
After Acquisition
1. Penn acquired a 90% interest in Skelly on
January 1 for $50,000 when Skelly’s
stockholders’ equity was $40,000.
2. The accounts payable of Skelly includes
$5,000 owed to Penn.
3. During the year, Skelly had income of
$20,000 and declared $10,000 dividends.
29. Consolidated Balance Sheet
After Acquisition
What is the balance in the investment in
Skelly’s account at December 31?
Original investment January 1 $50,000
+ 90% of Skelly’s net income 18,000
– 90% of Skelly’s dividends – 9,000
Investment account balance $59,000
30. Consolidated Balance Sheet
After Acquisition
Capital Stock 30,000
Retained Earnings 20,000
Goodwill 14,000
Investment in Skelly 59,000
Minority Interest 5,000
To eliminate reciprocal investment and
equity balances, record goodwill, and
enter the minority interest
31. Consolidated Balance Sheet
After Acquisition
Dividends Payable 9,000
Dividends Receivable 9,000
To eliminate reciprocal dividends
receivable and payable
Accounts Payable 5,000
Accounts Receivable 5,000
To eliminate intercompany receivable
and accounts payable
32. The separate books of the affiliated
companies do not record cost/book
value differentials in acquisitions that
create parent-subsidiary relationships.
Working paper procedures are used
to adjust subsidiary book values to
reflect the cost/book differentials.
Effect of Allocation on
Consolidated
Balance Sheet at Acquisition
33. The adjusted amounts appear in the
consolidated balance sheet.
The amount of the adjustment to
individual assets and liabilities is
determined using an investment
cost-allocation schedule.
Effect of Allocation on
Consolidated
Balance Sheet at Acquisition
34. Effect of Allocation on
Consolidated
Balance Sheet at Acquisition
On Dec. 3, 2003, Pilot purchases 90% of Sand
Corporation’s outstanding common stock for
$5,000,000 cash plus 100,000 shares of $10
stock with a market value of $5,000,000.
Additional costs are $300,000.
$200,000 is recorded as cost of the investment.
35. Effect of Allocation on
Consolidated
Balance Sheet at Acquisition
Assets
Cash $ 200 $ 200
Net receivables 300 300
Inventories 500 600
Other current assets 400 400
Land 600 800
Building, net 4,000 5,000
Equipment, net 2,000 1,700
Total assets $8,000 $9,000
Sand Corporation (000) Book Value Fair Value
36. Effect of Allocation on
Consolidated
Balance Sheet at Acquisition
Liabilities
Accounts payable $ 700 $ 700
Notes payable 1,400 1,300
Common stock 4,000
Paid-in capital 1,000
Retained earnings 900
Total liabilities and
stockholders’ equity $8,000
Sand Corporation (000) Book Value Fair Value
37. Investment in Sand 10,000
Common Stock 1,000
Additional Paid-in Capital 4,000
Cash 5,000
To record 90% acquisition of Sand Corporation
Assignment of Excess Cost
over Underlying Equity
38. Investment in Sand 200
Additional Paid-in Capital 100
Cash 300
To record additional costs of combining with
Sand
Assignment of Excess Cost
over Underlying Equity
39. Investment in Sand $10,200,000
Book value of interest acquired
$5,900,000 × 90% = (5,310,000)
Excess of cost over BV $ 4,890,000
Allocation of Excess Cost
over Underlying Equity
40. Allocation of Excess Cost
over Underlying Equity
Inventories 600 500 90
Land 800 600 180
Building net 5,000 4,000 900
Equipment, net 1,700 2,000 (270)
Notes payable 1,300 1,400 90
Total allocated 990
Remainder to goodwill 3,900
Total 4,890
Fair
Value
Book
Value
× 90% =
Excess
Allocated
–
41. Cash
Receivables, net
Inventories
Other current assets
Land
Building, net
Equipment, net
Investment in Sand
Goodwill
Unamortized excess
Total assets
1,300
700
900
600
1,200
8,000
7,000
10,200
29,900
200
300
500
400
600
4,000
2,000
8,000
b 90
b 180
b 900
b 3,900
a 4,890
b 270
a 10,200
b 4,890
1,500
1,000
1,490
1,000
1,980
12,900
8,730
3,900
32,500
Consolidated Working Papers
December 31, 2003
Adjustments and Consolidated
Eliminations Balance
Account Title Pilot Sand Dr. Cr. Sheet
42. Accounts payable
Notes payable
Common stock
Other paid-in capital
Retained earnings
Minority interest
Total liabilities and
stockholders’ equity
2,000
3,700
11,000
8,900
4,300
29,900
700
1,400
4,000
1,000
900
8,000
b 90
a 4,000
a 1,000
a 900
a 590
2,700
5,010
11,000
8,900
4,300
590
32,500
Consolidated Working Papers
December 31, 2003
Adjustments and Consolidated
Eliminations Balance
Account Title Pilot Sand Dr. Cr. Sheet
44. Consolidated Income Statement
The difference between a consolidated and
an unconsolidated income statement of the
parent company lies in the detail presented
rather than the net income amount.
45. Learning Objective 9
Amortize the excess of the
investment cost over the book
value in periods subsequent
to the acquisition.
46. Effect of Amortization on
Consolidated
Balance Sheet after Acquisition
Income for 2004:
Sand’s net income $ 800,000
Pilot’s income
(excluding income from Sand) $2,523,500
47. Effect of Amortization on
Consolidated
Balance Sheet after Acquisition
Dividends Paid:
Sand $ 300,000
Pilot $1,500,000
48. Effect of Amortization on
Consolidated
Balance Sheet after Acquisition
Amortization of excess:
Undervalued inventories sold in 2004
Undervalued land still held
Undervalued building (45 years useful life)
Overvalued equipment (5 years useful life)
Overvalued notes payable retired in 2004
Goodwill (no amortization)
49. Cash
Receivables, net
Inventories
Other current assets
Land
Building, net
Equipment, net
Investment in Sand
Goodwill
Unamortized excess
Total assets
253.5
540
1,300
800
1,200
9,500
8,000
10,504
32,097.5
100
200
600
500
600
3,800
1,800
7,600
b 180
b 880
b 3,900
a 4,744
b 216
a 10,504
b 4,744
353.5
740
1,900
1,300
1,980
12,900
8,730
3,900
33,937.5
Consolidated Working Papers
December 31, 2004
Adjustments and Consolidated
Eliminations Balance
Account Title Pilot Sand Dr. Cr. Sheet
50. Accounts payable
Notes payable
Common stock
Other paid-in capital
Retained earnings
Minority interest
Total liabilities and
stockholders’ equity
2,300
4,000
11,000
8,900
5,897.5
32,097.5
1,200
4,000
1,000
1,400
7,600
a 4,000
a 1,000
a 1,400
a 640
3,500
4,000
11,000
8,900
5,897.5
640
33,937.5
Consolidated Working Papers
December 31, 2004
Adjustments and Consolidated
Eliminations Balance
Account Title Pilot Sand Dr. Cr. Sheet