RSM321H1 Chapter Notes - Chapter 4: Share Capital, Control Premium, Business Valuation

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Published on 23 Mar 2016
School
UTSG
Department
Rotman Commerce
Course
RSM321H1
RSM 321: Textbook Notes
Chapter 4: Consolidation of Non-Wholly Owned Subsidiaries






o !!
"
#!!
!!
o$
o$
o$
o%&'
Method Status
$ $())$
*+!
())$,-./!
*
$ 0())$
1.2,-..
$ )
1.2,-..
% )
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#!
"

&!
o34!+4!+
4
Proprietary Parent
Company
Parent
Company
Extension
Entity
Parent NCI Parent NCI Parent NCI Parent NCI
CV of
subsidiary’
s NA’s
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FV excess
Goodwill
$
o'!$5'

o#!6

o#6
")"2&'"2
!
o7

22'"!"
&'"2!"
'6
oExample on pg. 153
o#89

o#6:-;&'<
"!
$
o&!
=>
4.?"')"
o#2
2'!.--;
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"'
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Document Summary

Consolidated financial statements: statements that represent more than one corporation. Non-controlling shareholders: the shareholders of an entity except the one that has control. Non-controlling interests (nci): the value of the shares attributed to the non- controlling shareholders: represent an additional set of owners who have legal claim to the subsidiary"s net assets. Theories which dictate how to prepare consolidated financial statements for non- wholly owned subsidiaries: proprietary theory, parent company theory, parent company extension theory (net identifiable assets method, entity theory (fv of subsidiary method) Present gaap for consolidating certain types of joint arrangements; was an option under gaap prior to 2013 when consolidating joint ventures. Was gaap for consolidating subsidiaries prior to jan. 1, 2011. An acceptable method for consolidating subsidiaries after jan. 1, 2011. The theories above differ in the valuation of the nci and in how much of the subsidiary"s value pertaining to the nci is brought onto the consolidated financial statements.

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