ACCT 4100 Lecture Notes - Lecture 3: Equity Method, Net Income, Common Stock

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21 Sep 2016
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Only studying when the parent uses the equity method throughout the year. Consolidation entries at ye to fix equity method. To remove subs income and amortization (reverse equity income jes) To remove sub"s dividends dr investment, cr dividends. Tuesday september 20, 2016: fair value allocation 2) acquisition je 3) equity method entries 4) consolidation entries. Missing journal entries for years 2012-2014, cannot prove the account balance using t-accounts with the investment account; must use equity income. Bal amortization of excess: missing years, use remaining amortization (5 year ul, 4 years gone by, 1 remaining) Missing year"s amortization/depreciation expense: dr dep exp cr equip for current year amortization only (update already occurred in entry a) R&d no longer has future economic benefits: removed from entry a and is not used at all (ignore) Test #1: if bv> fv, there is an impairment to goodwill. Fair value net fv of assets+liabilities = excess (end goodwill)

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