BUS 420 Lecture Notes - Lecture 16: Equity Method, Retained Earnings, Net Income

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 420
• Professor: Daniel Byrne

Document Summary

This chapter focuses on preparing the consolidated statement of comprehensive income, retained earnings statement, and statement of financial position at fiscal year-ends after the date of acquisition. We will learn how the acquisition differential must be amortized and tested for impairment. The following major topics are covered in this chapter: amortization and impairment of acquisition differential, consolidated financial statements in the periods subsequent to acquisition when there is no intercompany profit. Ch a p t e r o u t l i n e: amortization and impairment of acquisition differential, methods of accounting for investment in subsidiary. The cost and equity methods are used in the parent"s own internal records for accounting for investments in subsidiaries. The cost method records income when the investor"s right to receive a dividend is established. The equity method captures the investor"s share of any changes to the investee"s shareholders" equity.