BU487 Chapter Notes - Chapter 8: Cash Flow Statement, Book Value, Equity Method
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Direct method: only the items affecting cash would be presented in the first place. Indirect method: we start with n/i and show the adjustments to convert it to a cash basis. Major items requiring special attention are: 1. Acquisition-date fair value differences are depreciated in the consolidated i/s: 2. Dividends paid by subsidiaries to the parent company do not change the (cid:272)o(cid:374)solidated e(cid:374)tity"s (cid:272)ash (cid:894)ope(cid:396)ati(cid:374)g o(cid:396) fi(cid:374)a(cid:374)(cid:272)i(cid:374)g(cid:895) Dividends paid to non-controlling shareholders should be disclosed or presented separately: (cid:1007). Cha(cid:374)ge i(cid:374) pa(cid:396)e(cid:374)t"s o(cid:449)(cid:374)e(cid:396)ship % du(cid:396)i(cid:374)g the yea(cid:396) (cid:396)e(cid:395)ui(cid:396)es a (cid:272)a(cid:396)eful a(cid:374)alysis to determine its effect on consolidated assets, liabilities and equities: 4. Year of acquisition, special disclosures are required in the cf statement. Jan 1, yr 2, parent acquired 80% for ,000. Purchase of first block of shares: nov 1, yr 1 10% acquired at ,000. N/t of acquired business was ,000 with no dividends. * under fvtpl, ad at acquisition date is ignored.
