高级财务会计（英文版第13版）课件全套 弗洛伊德 第1-23章 企业合并- 遗产与信托

AdvancedAccountingThirteenthEditionChapter1BusinessCombinationsCopyright©2018,2015,2012PearsonEducation,Inc.AllRightsReservedLearningObjectives1.1

Understandtheeconomicmotivationsunderlyingbusiness

combinations.

1.2

Learnaboutthealternativeformsofbusinesscombinations,fromboththelegalandaccountingperspectives.1.3

Introduceaccountingconceptsforbusinesscombinations,

emphasizingtheacquisitionmethod.1.4

Seehowfirmsrecordfairvaluesofassetsandliabilitiesinan

acquisition.1.5

Appendix:Reviewaccountingconceptsforapoolingofinterests.EconomicMotivationsBusinessCombinationsTypesofBusinessCombinationsBusinesscombinationsunitepreviouslyseparatebusinessentities.Horizontalintegration–samebusinesslinesandmarketsVerticalintegration–operationsindifferent,butsuccessive,stagesofproductionordistribution,orbothConglomeration–unrelatedanddiverseproductsorservicesReasonsforCombinationsCostadvantageLowerriskFeweroperatingdelaysAvoidanceoftakeoversAcquisitionofintangibleassetsOther:businessandtaxadvantages,personalreasonsPotentialProhibitions/ObstaclesAntitrustFederalTradeCommissionprohibitedStaples’acquisitionofOfficeDepotRegulationFederalReserveBoardDepartmentofTransportationDepartmentofEnergyFederalCommunicationsCommissionSomestateshaveantitrustexemptionlawstoallowhospitalstopursuecooperativeprojects.FormsofBusinessCombinationsBusinessCombinationsLegalFormsofCombinationMergerOnecorporationtakesoveralltheoperationsofanotherbusinessentityandthatotherentityisdissolved.ConsolidationAnewcorporationisformedtotakeovertheassetsandoperationsoftwoormoreseparatebusinessentitiesanddissolvesthepreviouslyseparateentities.Mergers:

A+B=ACompanyAacquiresthenetassetsofCompanyBforcash,otherassets,orCompanyAdebt/equitysecurities.CompanyBisdissolved;CompanyAsurviveswithCompanyB’sassetsandliabilities.Example:OfficeDepotacquiredOfficeMax.OfficeDepotissued2.69shareofitsstocktoOfficeMaxshareholders.Howmightthishavehelpedbothcompanies?Consolidations:

E+F=DCompanyDisformedandacquiresthenetassetsofcompaniesEandFbyissuingCompanyDstock.CompaniesEandFaredissolved.CompanyDsurviveswiththeassetsandliabilitiesofbothdissolvedfirms.Consolidationhadalargeeffectonbanks.Bankswithassetsoflessthan$100milliondeclinedby85%between1985and1993,whilebankswithassetsover$10billionnearlytripledinnumber.KeepingtheTermsStraightInthegeneralbusinesssense,mergersandconsolidationsarebusinesscombinationsandmayormaynotinvolvethedissolutionoftheacquiredfirm(s).InChapter1,mergersandconsolidationswillinvolveonly100%acquisitionswiththedissolutionoftheacquiredfirm(s).Otherscenarioswillbeexploredinlaterchapters.“Consolidation”isalsoanaccountingtermusedtodescribetheprocessofpreparingconsolidatedfinancialstatementsforaparentanditssubsidiaries.AccountingforBusinessCombinationsBusinessCombinationsBusinessCombination(definition)Abusinesscombinationis“atransactionorothereventinwhichanacquirerobtainscontrolofoneormorebusinesses.Transactionssometimesreferredtoastruemergersormergersofequalsalsoarebusinesscombinations.”[FASBASC805-10]Aparent-subsidiaryrelationshipisformedwhen:Lessthan100%ofthefirmisacquired,orTheacquiredfirmisnotdissolved.U.S.GAAPforBusinessCombinationsSincethe1950sboththepoolingofinterestsmethodandthepurchasemethodofaccountingforbusinesscombinationsbecameacceptable.GAAPrequiresthatallbusinesscombinationsinitiatedafterDec15,2008beaccountedusingtheacquisitionmethod.[FASBACS810-10-5-2]InternationalAccountingMostmajoreconomiesprohibittheuseofthepoolingmethod.TheInternationalAccountingStandardsBoardspecificallyprohibitsthepoolingmethodandrequirestheacquisitionmethod.EliminationofpoolingmadeGAAPmoreconsistentwithinternationalaccountingstandards.RecordingGuidelines(1of2)Recordassetsacquiredandliabilitiesassumedusingthefairvalueprinciple.Ifequitysecuritiesareissuedbytheacquirer,chargeregistrationandissuecostsagainstthefairvalueofthesecuritiesissued,usuallyareductioninadditionalpaid-in-capital.Chargeotherdirectcombinationcosts(e.g.,legalfees,finders’fees)andindirectcombinationcosts(e.g.,managementsalaries)toexpense.RecordingGuidelines(2of2)Whentheacquiringfirmtransfersitsassetsotherthancashaspartofthecombination,anygainorlossonthedisposalofthoseassetsisrecordedincurrentincome.Theexcessofcash,otherassets,debt,andequitysecuritiestransferredoverthefairvalueofthenetassets(A–L)acquiredisrecordedasgoodwill.Ifthenetassetsacquiredexceedsthecash,otherassets,debt,andequitysecuritiestransferred,thenagainonthebargainpurchaseisrecordedincurrentincome.Example:PopCorp.(1of3)PopCorp.issues100,000sharesofits$10parvaluecommonstockforSonCorp.Pop’sstockisvaluedat$16pershare(inthousands).InvestmentinSonCorp.(+A)1,600blankCommonstock,$10par(+SE)blank1,000Additionalpaid-in-capital(+SE)blank600Example:PopCorp.(2of3)PopCorp.payscashof$80,000infinder’sandconsultingfeesand$40,000toregisterandissueitscommonstock(inthousands).Investmentexpense(E,-SE)80blankAdditionalpaid-in-capital(-SE)40blankCash(-A)blank120SonCorp.isassumedtohavebeendissolved.So,PopCorp.allocatestheinvestment’scosttothefairvalueoftheidentifiableassetsacquiredandliabilitiesassumed.Theexcesscostisgoodwill.Example:PopCorp.(3of3)Receivables(+A)XXXblankInventories(+A)XXXblankPlantassets(+A)XXXblankGoodwill(+A)XXXblankAccountspayable(+L)blankXXXNotespayable(+L)blankXXXInvestmentinSonCorp.(-A)blank1,600RecordingValuesinanAcquisitionBusinessCombinationsIdentifytheNetAssetsAcquiredIdentify:Tangibleassetsacquired,Intangibleassetsacquired,andLiabilitiesassumedInclude:Identifiableintangiblesresultingfromlegalorcontractualrights,orseparablefromtheentityResearchanddevelopmentinprocessContractualcontingenciesSomenoncontractualcontingenciesAssignFairValuestoNetAssetsUsefairvaluesdeterminedinpreferentialorderby:EstablishedmarketpricesPresentvalueofestimatedfuturecashflows,discountedbasedonanobservablemeasure,suchastheprimeinterestrateOtherinternallyderivedestimationsExceptionstoFairValueRuleUsenormalguidancefor:DeferredtaxassetsandliabilitiesPensionsandotherbenefitsOperatingandcapitalleases[FASBASC740]Goodwillonthebooksoftheacquiredfirmisassignednovalue.GoodwillGoodwillistheexcessoftheinvestmentcostoverthefairvalueofnetassetsreceived.Goodwillincludesthesumof:Fairvalueoftheconsiderationtransferred,Fairvalueofanynoncontrollinginterestintheacquiree,andFairvalueofanypreviouslyheldinterestinacquiree,Overthenetassetsacquired.ContingentConsiderationThefairvalueofcontingentconsiderationisdeterminedorestimatedattheacquisitiondate,anditisincludedalongwithotherconsiderationsgivenaspartofthecombination.Classifyingcontingencies:Contingentshareissuancesareequity.Contingentcashpaymentsareliabilities.Estimatedcontingenciesarerevaluedtofairvalueateachsubsequentreportingdate.Example–PamCorp.Data(1of2)PamCorp.acquiresthenetassetsofSunCo.inacombinationconsummatedon12/27/2016.TheassetsandliabilitiesofSunCo.onthisdateattheirbookvaluesandfairvaluesareasfollows(inthousands):Example–PamCorp.Data(2of2)BookValueFairValueCash$50$50Netreceivables150140Inventory200250Land50100Buildings,net300500Equipment,net250350Patents050Totalassets$1,000$1,440Accountspayable$60$60Notespayable150135Otherliabilities4045Totalliabilities$250$240Netassets$750$1,200AcquisitionwithGoodwillPamCorp.pays$400,000cashandissues50,000sharesof$10parcommonstockwithamarketvalueof$20pershareforthenetassetsofSunCo.Totalconsiderationatfairvalue(inthousands): $400+(50sharesx$20) $1,400Fairvalueofnetassetsacquired: $1,200Goodwill $200EntrieswithGoodwill(1of2)Theentrytorecordtheacquisitionofthenetassets:TheentrytorecordSun’sassetsdirectlyonPam’sbooks:InvestmentinSunCo.(+A)1,400blankCash(-A)blank400Commonstock,$10par(+SE)blank500Additionalpaid-in-capital(+SE)blank500EntrieswithGoodwill(2of2)Cash(+A)50blankNetreceivables(+A)140blankInventories(+A)250blankLand(+A)100blankBuildings(+A)500blankEquipment(+A)350blankPatents(+A)50blankGoodwill(+A)200blankAccountspayable(+L)blank60Notespayable(+L)blank135Otherliabilities(+L)blank45InvestmentinSunCo.(-A)blank1,400AcquisitionwithBargainPurchasePamCorp.issues40,000sharesofits$10parcommonstockwithamarketvalueof$20pershare,anditalsogivesa10%,five-yearnotepayablefor$200,000forthenetassetsofSunCo.Fairvalueofnetassetsacquired(inthousands)$1,200Totalconsiderationatfairvalue(40sharesx$20)+$200$1,000Gainfrombargainpurchase$200EntrieswithBargainPurchase(1of2)TheentrytorecordtheacquisitionofthenetassetsTheentrytorecordSun’sassetsdirectlyonPam’sbooks:InvestmentinSunCo.(+A)1,000blank10%Notepayable(+L)blank400Commonstock,$10par(+SE)blank400Additionalpaid-in-capital(+SE)blank200EntrieswithBargainPurchase(2of2)Cash(+A)50blankNetreceivables(+A)140blankInventories(+A)250blankLand(+A)100blankBuildings(+A)500blankEquipment(+A)350blankPatents(+A)50blankAccountspayable(+L)blank60Notespayable(+L)blank135Otherliabilities(+L)blank45

InvestmentinSunCo.(+A)blank1,000

Gainfrombargainpurchase(G,+SE)blank200GoodwillControversiesCapitalizedgoodwillisthepurchasepricenotassignedtoidentifiableassetsandliabilities.Errorsinvaluingassetsandliabilitiesaffecttheamountofgoodwillrecorded.Historically,goodwillinmostindustrializedcountrieswascapitalizedandamortized.CurrentIASBstandards,likeU.S.GAAP,Capitalizegoodwill,Donotamortizeit,andTestitforimpairment.GoodwillImpairmentTestingFirmsmusttestfortheimpairmentofgoodwillatthebusinessunitreportinglevel.Step1:Comparetheunit’snetbookvaluetoitsfairvaluetodetermineiftherehasbeenalossinvalue.Step2:Determinetheimpliedfairvalueofthegoodwillinthesamemannerusedtooriginallyrecordthegoodwill,andcomparetothegoodwillonthebooks.Recordalossiftheimpliedfairvalueislessthanthecarryingvalueofthegoodwill.WhentoTestforImpairmentGoodwillshouldbetestedforimpairmentatleastannually.Morefrequenttestingmaybeneededif:SignificantadversechangeinbusinessAdverseactionbyregulatorUnanticipatedcompetitionLossofkeypersonnelImpairmentorexpecteddisposallossesof:ReportingunitorpartofoneSignificantlong-livedassetgroupSubsidiaryBusinessCombinationDisclosuresBusinesscombinationdisclosuresinclude,butarenotlimitedto,thefollowing:GeneralinformationincludingcompanynamesanddescriptionReasonforcombinationNatureandamountofconsiderationAllocationofpurchasepriceamongassetsandliabilitiesPro-formaresultsofoperationsGoodwillorgainfrombargainpurchaseIntangibleAssetDisclosuresSpecificdisclosuresareneededInthefiscalperiodwhenintangiblesareacquired,Annually,foreachperiodpresented,andInthefiscalperiodthatincludesanimpairment.Disclosuresareneededfor:Intangibleswhichareamortized,Intangibleswhicharenotamortized,Research&developmentacquired,andIntangibleswithrenewalorextensionterms.Sarbanes-OxleyActof2002EstablishesthePCAOBRequires:GreaterindependenceofauditorsandclientsGreaterindependenceofcorporateboardsIndependentauditsofinternalcontrolsIncreaseddisclosuresofoff-balancesheetarrangementsandobligationsMoretypesofdisclosuresonForm8-KSECenforcesSOXandrulesofthePCAOB.Appendix:PoolingofInterestsBusinessCombinationsPoolingofInterestAccountingPoolingofinterestsaccountingforbusinesscombinationsisathingofthepastunderU.S.GAAP(ASC805).Poolingnotallowedforbusinesscombinationsafter2001,butearlierpoolingcombinationsweregrandfatheredin.Poolingwasbasedontheassumptionthatitwaspossibletouniteownershipintereststhroughexchangingequitysecurities.CopyrightFundamentalsofMultinationalFinanceThirteenthEditionChapter2StockInvestments–InvestorAccountingandReportingCopyright©2018,2015,2012PearsonEducation,Inc.AllRightsReservedStockInvestments:Objectives2.1

Recognizeinvestors'varyinglevelsofinfluenceorcontrol,basedonthelevelofstockownership.2.2Understandhowaccountingadjuststoreflecttheeconomicsunderlyingvaryinglevelsofinvestorinfluence.2.3

Identifyfactorsbeyondstockownershipthataffectaninvestor’sabilitytoexertinfluenceorcontroloveraninvestee.2.4

Applythefairvalue/costandequitymethodsofaccountingforstockinvestments.2.5

Applytheequitymethodtostockinvestments.2.6Learnhowtotestgoodwillforimpairment.LevelsofInfluenceorControlStockInvestments–InvestorAccountingandReportingLevelsofInfluenceConsolidatedfinancialstatementsFairvalue(cost)methodEquitymethod<20%presumeslackofsignificantinfluence➔fairvalue(cost)method20%to50%presumessignificantinfluence➔equitymethod>50%presumescontrol➔consolidatedfinancialstatementsAccountingReflectsEconomicsStockInvestments–InvestorAccountingandReportingAccountingfortheInvestmentDegreeofinfluenceInvestment'scarryingvalueInvestmentincomeLackof

significantinfluenceFairvalue(cost,ifnonmarketable)DividendsdeclaredSignificantinfluenceOriginalcostadjustedtoreflectperiodicearningsanddividends,e.g.,aproportionateshareofinvestee'snetassetsProportionateshareofinvestee'speriodicearnings**TheinvestorcouldmanipulateitsowninvestmentincomeifincomeismeasuredbydividendsSignificantInfluence20%to50%votingstockownershipisapresumptionofsignificantinfluence.Usetheequitymethod.Don'tuseequitymethodifthereisalackofsignificantinfluence.Oppositionbyinvestee,Surrenderofsignificantshareholderrights,Concentrationofmajorityownership,Lackofinformationforequitymethod,andFailuretoobtainboardrepresentationControlMorethan50%votingstockownershipispresumptiveevidenceofcontrol.Prepareconsolidatedfinancialstatements.Don'tconsolidateiftheparentlackscontrolLegalreorganizationorbankruptcySevereforeignrestrictionsFactorsBeyondStockOwnershipthatAffectControlOveranInvesteeStockInvestments–InvestorAccountingandReportingIndicatorsofInabilitytoExertInfluenceOppositionbytheinvesteethatchallengestheinvestor’sinfluenceSurrenderofsignificantstockholderrightsbyagreementbetweeninvestorandinvesteeConcentrationofmajorityownershipInadequateoruntimelyinformationtoapplytheequitymethodFailuretoobtainrepresentationontheinvestee’sboardofdirectorsFairValue/CostMethodStockInvestments–InvestorAccountingandReportingFairValue(Cost)MethodFASBStatementNo.115Popbuys2,000sharesofSonfor$50,000anddoesnothavesignificantinfluenceoverSon.InvestmentinSon(+A)50,000blankCash(-A)blank50,000Popreceives$4,000individendsfromSon.Cash(+A)2,000blankDividendincome(R,+SE)blank2,000FairValue(Cost)Method,atYear-endReducedividendincomerecognized,ifneededDividendincome(-R,-SE)500blankInvestmentinSon(-A)blank500IfPopdeterminesthatcumulativedividendsexceeditscumulativeshareofincomeby$500AdjustinvestmenttofairvalueAllowancetoadjustavailable-for-salesecuritiestomarketvalue(+A)10,500blankUnrealizedgainonavailable-for-salesecurities(+SE)Blank10,500Iffairvalueofthestockincreasesto$60,000,andtheInvestmentinSonaccountbalanceis$49,500EquityMethod(1of2)StockInvestments–InvestorAccountingandReportingEquityMethod(2of2)Atacquisition,Popbuys2,000sharesofSonfor$50,000.InvestmentinSon(+A)50,000blank

Cash(-A)blank50,000Popreceives$4,000individendsfromSon.Cash(+A)2,000blankInvestmentinSon(-A)blank2,000EquityMethod,atYear-endPopdeterminesthatitsshareofSon'sincomeis$2,500.InvestmentinSon(+A)2,500blankIncomefromSon(R,+SE)blank2,500TheendingbalanceintheInvestmentinSonis:$50,000cost-$2,000dividends+$2,500income=$50,500ApplyingtheEquityMethodStockInvestments–InvestorAccountingandReportingAcquisitionCost>FVnetassets,andFVnetassets>BVnetassetsPamacquires30%ofSonfor$5,000,000.Sheen'sidentifiablenetassets(assetslessliabilities)are(inthousands):Fairvalue:A–L=$18,800-$2,800=$16,000Bookvalue:A–L=E=$15,000-$3,000=$12,000$5,000>30%(16,000)

>30%(12,000)$5,000>$4,800

>$3,600DifferencesbetweenFVandBVFairvalue:$16,000Bookvalue:$12,000The$4,000difference($16,000-$12,000)isdueto$1,000undervaluedinventoriessoldthisyear,$200overvaluedothercurrentassetsusedthisyear,$3,000undervaluedequipmentwithalifeof20years,and$200overvaluednotespayableduein5years.AcquisitionofSunStockAtacquisition,Pampays$2,000cashandissuescommonstockwithafairvalueof$3,000andparvalueof$2,000.Pamalsopays$50toregisterthesecuritiesand$100inconsultingfees.InvestmentinSun(+A)5,000blankCommonstock,atpar(+SE)blank2,000Additionalpaidincapital(+SE)blank1,000Cash(-A)blank2,000Investmentexpense(E,-SE)100blankAdditionalpaidincapital(-SE)50blankCash(-A)blank150Cost/BookValueAssignmentInvestmentinSun$5,000Less30%bookvalue=30%($12,000)3,600Excessofcostoverbookvalue$1,400AssignedtoAmountAmortizationInventories30%(+1,000)$3001styearOthercurr.assets30%(-200)(60)1styearEquipment30%(+3,000)90020yearsNotepayable30%(+200)605yearsGoodwill(tobalance)200None

Total$1,400blankDividendsandIncomePamreceives$300dividendsfromSun.Cash(+A)300blankInvestmentinSun(-A)

blank300Sunreportsnetincomeof$3million.Pennywillrecognizeitsshare(30%)ofSheen'sincome,butwilladjustitforamortizationofthedifferencesbetweenbookandfairvalues.AmortizationandInvestmentIncomeCost/bookvaluedifferencesInitialamount1styearamort.Unamortized

excess

atyear-endInventories$300$300)$0Othercurrentassets(60)600Equipment900(45)855Notepayable60(12)48Goodwill2000200Total$1,400($297)$1,103Investmentincomeis30%ofSun'snetincome–amortization30%($3,000)–$297=$603.Year-EndEntry&BalanceRecordtheinvestmentincome(singleentry)InvestmentinSun(+A)603blankIncomefromSun(R,+SE)blank603TheendingbalanceintheInvestmentaccountis:Cost–dividends+investmentincome5,000–300+603=5,303MoreonCost/BookValueAssignmentOnacquisitiondate,compare:Costofacquisition,Bookvalueofnetassets,andFairvalueofidentifiablenetassetsCostoftheinvestmentincludescashpaid,fairvalueofsecuritiesissued,anddebtassumed.Thebookvalueoftheinvestee'snetassets=assets–liabilities,or=stockholders'equityFairValuesUsedinAssignmentIdentifiablenetassetsincludealltheinvestee'sassetsandliabilities,whetherrecordedornotFairvalueofresearchinprogressFairvalueofcontingentliabilitiesFairvalueofunrecordedpatentsException:usebookvalueforpensionsanddeferredtaxes.Ifcost>fairvalue,goodwillexists.Ifcost<fairvalue,abargainpurchaseexists.BargainPurchaseWhentheacquisitioncostislessthanthefairvalueoftheidentifiablenetassets,againisrecognizedontheacquisition.TheinvestmentisrecordedatthefairvalueoftheidentifiablenetassetsInvestmentinABCXXXblankCash,CS,APICblankXXXGainonbargainpurchaseblankXXXInterimAcquisitionsBookvalueofnetassets=BVequityIfequityisgivenasbeginningofyear,addcurrentearningsanddeductdividendstodate.Amortizationforfirstpartialyear:Takefullamortizationforinventoryandothercurrentassetsdisposedofbyyear-end.Takepartialyear'samortizationforequipment,buildings,anddebttobewrittenoffovermultipleyears.Recorddividendsifaftertheacquisitiondate.AcquisitioninStagesAlsocalledastep-by-stepacquisition.Fairvalue(cost)method

equitymethodRestateprior-periodstatementsInvestee'sgrowthinretainedearningsisExcessofincomeoverdividendsdeclaredInvestmentaccountdesiredbalanceusingequitymethod=originalcost+shareofgrowthininvestee’sretainedearnings–amortization,ifanyInvestmentinXYZ(+A)XXXblankRetainedearnings(+SE)blankXXXSaleofEquityInterestSaleofinvestmentthatresultsinalackofsignificantinfluenceovertheinvesteeEquitymethodfairvalue(cost)methodProspectivetreatmentForthesaleReducetheinvestmentaccountforaproportionateshareofthestocksoldRecordagainorlossonthesaleApplythefairvalue(cost)methodtoremaininginvestmentStockPurchasedfromInvesteeIfstockispurchasedfromoldshareholders,thepercentageownershipisbasedonthesharesoutstanding,andtheinvestee'sequityisnotchanged.Ifacquireddirectlyfromtheinvestee:Percentageacquired=sharesacquired/(sharesacquired+previouslyoutstandingshares)Investee'snewstockholders'equity=previousequity+valuereceivedfornewsharesInvesteewithPreferredStock(1of2)Comparecostofacquisitiontothebookvalueofthecommonstock.=Totalequity–bookvalueofpreferredstock**BVofPS=callvalue+dividendsinarrearsDividendsreceivedwillbeaportionofthedividendstocommonshareholders.=Totaldividends–currentPSdividendsInvesteewithPreferredStock(2of2)Investmentincomeisbasedonincomeavailabletocommonshareholders.=Investeenetincome–PSdividends****PSDiv.=currentdividendifcumulative,ordividendsdeclaredifnoncumulativeSpecialReportingIssuesIfaccountingforaninvestmentundertheequitymethod,one-lineconsolidationdoesnotapplytothereportingofinvestmentincomewhentheinvestee’sincomeincludesdiscontinuedoperations.Inthiscase,discontinuedoperationsisrecordedasseparatefrominvestmentincome.DisclosuresForsignificantequityinvesteesName,percentownershipAccountingpolicyDifferencebetweeninvestmentcarryingvalueandunderlyingequityinnetassetsAggregatemarketvalueSummarizedassets,liabilities,resultsofoperationsRelatedpartydisclosures FASBASC850-10-50-5GoodwillImpairment(1of2)StockInvestments–InvestorAccountingandReportingGoodwillImpairment(2of2)Testannually,andifsignificanteventsoccur,thenusethistwo-stepprocess:Ifthefairvalueofthewholereportingunit<thecarryingvalueofthereportingunitincludingitsgoodwill,theremightbeimpairment.Ifnoimpliedimpairment,step2isnotneeded.Usequotedmarketpricesofreportingunit,orvaluationtechniquesappliedtosimilargroupsofassetsandliabilities.Iftheimpliedfairvalueofthegoodwill<thecarryingvalueofthegoodwill,recordanimpairmentlossforthedifference.2011AmendmentbyFASB:Theamendmentgivescompaniesanoptionofmakingaqualitativeevaluationtodetermineifthefirststepisneeded.IfitismorelikelythannotthatFMV<carryingamount,thecompanyneednotperformthetwo-steptest.ImpairmentofEquityInvestmentsGoodwillimpliedinequityinvestmentsisnottestedforimpairment.Theinvestmentitselfistestedforimpairment.Example:Samhasa30%interestinLake,withacarryingvalueof$4,200;thisincludesimpliedgoodwillof$350.The$350impliedgoodwillisnottestedforimpairment.IfSam’sinteresthasafairvalueoflessthan$4,200,animpairmentlossontheInvestmentinLakeisrecorded.CopyrightAdvancedAccountingThirteenthEditionChapter3AnIntroductionto

ConsolidatedFinancialStatementsCopyright©2018,2015,2012PearsonEducation,Inc.AllRightsReservedIntrotoConsolidations:Objectives(1of2)3.1Recognizethebenefitsandlimitationsofconsolidatedfinancialstatements.3.2

Understandrequirementsforincludingasubsidiaryinconsolidatedfinancialstatements.3.3Applyconsolidationconceptstoparentcompanyrecordingofaninvestmentinasubsidiarycompanyatthedateofacquisition.3.4

Recordthefairvalueofasubsidiaryatthedateofacquisition.3.5Learntheconceptofnoncontrollinginterestwhenaparentcompanyacquireslessthan100percentofasubsidiary'soutstandingcommonstock.3.6Prepareconsolidatedbalancesheetssubsequenttotheacquisitiondate,includingpreparationofeliminatingentries.IntrotoConsolidations:Objectives(2of2)3.7Amortizetheexcessofthefairvalueoverthebookvalueinperiodssubsequenttotheacquisition.3.8Applytheconceptsunderlyingpreparationofaconsolidatedincomestatement.3.9Introducetheconceptofpush-downaccounting.3.10FortheStudents:Createanelectronicspreadsheettoprepareaconsolidatedbalancesheet.

BenefitsandLimitationsAnIntroductiontoConsolidatedFinancialStatementsBusinessAcquisitionsBusinesscombinationsthroughstockacquisitionsAcquirecontrollinginterestinvotingstockMorethan50%MayhavecontrolthroughindirectownershipBusinesscombinationoccursonceAcquisitionofadditionalsubsidiarystockissimply