COMMERCE 4AC3 Chapter Notes - Chapter 4: Book Value, Financial Statement, Extension Method
Document Summary
Consolidated financial statements report the combined results of the parent & all its subsidiaries. L01 entity theory: vie(cid:449)s (cid:272)o(cid:374)solidated e(cid:374)tit(cid:455) as ha(cid:448)i(cid:374)g t(cid:449)o diff. Income projections: control premium, paying premium on price-per-share to get controlling interest, control premiums included in fv of controlling interest, do not affect fv of nci. Investor pays premium over trading price to obtain control of company. Example 1 fv of non-controlling interest as evidenced by market trades: total acquisition fv is made up of, fv of controlling interest + fv of nci. Item-by-item: co(cid:373)(cid:271)i(cid:374)e ca of pa(cid:396)e(cid:374)t (cid:449)/fv of su(cid:271)sidia(cid:396)ies ide(cid:374)tifia(cid:271)le (cid:374)et assets + pa(cid:396)e(cid:374)t"s sha(cid:396)e of subsidiaries goodwill. Ifrs: allows entity theory or parent company extension method. Subsidiary with goodwill: good(cid:449)ill that"s o(cid:374) the b/s as of date of a(cid:272)(cid:395)uisitio(cid:374) is (cid:374)ot (cid:272)a(cid:396)(cid:396)ied fo(cid:396)(cid:449)a(cid:396)d (cid:449)he(cid:374) the (cid:272)o(cid:374)solidated. L05 contingent consideration: contingent consideration should be recorded @ the date of acquisition @ its expected value.
