文档介绍：CHAPTER 02 - CONSOLIDATION OF FINANCIAL INFORMATION
CHAPTER 02 - CONSOLIDATION OF FINANCIAL INFORMATION
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2-ire economic entity.
1. If the acquired company is legally dissolved, a permanent consolidation is produced on the date of acquisition by entering all account balances into the financial records of the surviving company.
2. If separate incorporation is maintained, consolidation is periodically simulated whenever financial statements are to be prepared. This process is carried out through the use of worksheets and consolidation entries.
II. The Acquisition Method
A. The acquisition method replaced the purchase method. For combinations resulting in complete ownership, it is distinguished by four characteristics.
CHAPTER 02 - CONSOLIDATION OF FINANCIAL INFORMATION
CHAPTER 02 - CONSOLIDATION OF FINANCIAL INFORMATION
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CHAPTER 02 - CONSOLIDATION OF FINANCIAL INFORMATION
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1. All assets acquired and liabilities assumed in the combination are recognized and measured at their individual fair values (with few exceptions).
2. The fair value of the consideration transferred provides a starting point for valuing and recording a business combination.
The consideration transferred includes cash, securities, and contingent performance obligations.
Direct combination costs are not considered as part of the fair value of the consideration transferred for the acquired firm and are expensed as incurred.
Stock issuance costs are recorded as a reduction in paid-in capital and are not considered to be a component of the consideration transferred.
The fair value of any noncontrolling interest also adds to the valuation of the acquired firm and is covered beginning in Chapter 4 of the text.
3. Any excess of the fair value of the consideration transferred over the net amount assigned to the individual assets acquired and liabilities assumed is recognized by the acquirer as goodwill.
4. Any excess of the net amount assigned