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Conso FS at The Date of Acquisition

1. There are three approaches to accounting for non-controlling interest (NCI) in a business combination: 1) fair value or full economic entity approach where NCI is given fair value, 2) fair value approach where NCI is not given and must be calculated, and 3) proportionate or modified economic entity approach where NCI is accounted for based on its proportionate share of identifiable net assets. 2. The combination balances immediately after a business combination are accounted for through a CARLA or CARNLA worksheet where the acquirer records the acquisition at fair value and non-controlling interest is recognized either at fair value or based on its proportionate interest in the identifiable net assets of the acquired business.

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299 views3 pages

Conso FS at The Date of Acquisition

1. There are three approaches to accounting for non-controlling interest (NCI) in a business combination: 1) fair value or full economic entity approach where NCI is given fair value, 2) fair value approach where NCI is not given and must be calculated, and 3) proportionate or modified economic entity approach where NCI is accounted for based on its proportionate share of identifiable net assets. 2. The combination balances immediately after a business combination are accounted for through a CARLA or CARNLA worksheet where the acquirer records the acquisition at fair value and non-controlling interest is recognized either at fair value or based on its proportionate interest in the identifiable net assets of the acquired business.

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guliramsam5
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CONSO FS AT THE DATE OF ACQUISTION

NON-CONTROLLING INTEREST
1. FV OR FULL ECONOMIC ENTITY APPROACH- NCI is given

Parent Non-controlling interest


Acquisition Cost xx xx
w/c ever is higher
Fair Value of Identifiable Asset xx xx
Goodwill or Gain on Bargain Purchase xx xx if result is gain ignore
total goodwill

Note: Parent – Allowed GW & GBP


NCI – GW only

2. FV OR FULL ECONOMIC ENTITY APPROACH- NCI is not given

Parent NCI
AC xx xx AC xx
FINA xx xx Less: Control Premium (xx)
Goodwill or GBP xx xx AC w/o CP xx
divided: Controlling Interest rate ÷ xx%
multiply: NCI rate xx%
NCI xx

3. PROPORTIONATE OR MODIFIED ECONOMIC ENTITY APPROACH

Parent NCI
AC xx -
FINA xx xx consider as NCI
Goodwill or GBP xx -

Note:
NCI @ the date of acquisition is not owned by the business but must appear to Conso FS –
Equity section (SHE)

FINA exclude Goodwill

FV method- Unrealized G/L


Cost/Equity Method- G/L
CONSO FS AT THE DATE OF ACQUISTION

Step Acquisition
- Acquiring control more than one basis
- Previous acquisition must be valued at your latest value FV dapat

Ex. Acquires 25% after three months purchase another 60%


Bali an tanan 85% na

COMBINATION BALANCES IMMEDIATELY AFTER BUSINESS COMBINATION


(CARLA)- use if acquired 100%
(CARNLA)- use if acquired less than 100%, must not have investment income given

C-CAPITAL STOCK
Acquirer: BV of Ordinary Stock of Acquirer
Issued shares at par (an pagacquire gamit han shares)

A- Additional Paid-in Capital


Acquirer: APIC
Excess of par from issued shares
Less: Stock Issuance cost (SIC)- iton SIC dapat tubtub la ha amount han Excess par from issued
shares tas an subra ig iiban ngadto han retained earnings

R- Retained Earnings
Acquirer: RE, beg.
Gain on Bargain Purchases
Less: Direct or Indirect cost
Stock Issuance cost (an salin matapos ig iban ha APIC)

N- Non-controlling Interest

L- Liabilities
Acquirer: BV
Acquired FV
Contingent Consideration
Less: Liabilities related to Acquisition

A- Assets
Acquirer: BV
Acquired FV
Goodwill
Less: Assets used to pay combination
Direct, Indirect, and/or Stock Issuance cost- diri mo na ini igdededuct kun ha FS han acquiree
mayda na investment in sub
CONSO FS AT THE DATE OF ACQUISTION

S- Shareholder’s Equity
Acquirer: BV of Ordinary Stock of Acquirer xx
Add: Issued shares at par (an pagacquire gamit han shares) xx
Retained Earnings xx
NCI xx
Conso Total equity xx

Conso RE attributable to parent


Acquirer RE xx
PAP xx
Less: Dividend declared parent (xx)
Conso RE xx

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