This course explains the consolidation process step-by-step, including a subsidiary's acquisition transaction, recognition of goodwill or the bargain purchase gain, the technical aspects of consolidating the financial position and profit & loss statement including elimination conditions and the recognition of Non-controlling Interest (NCI).
This course depends on a case study that simplifies the theory behind the following standards: - ASC 805 Business Combinations, ASC 810 Consolidation, IFRS 3 Business Combination, and IFRS 10 Consolidated Financial Statements.
Course Key Concepts: ASC 805, ASC 810, IFRS 3, IFRS 10, Business Combinations, Consolidation, Consolidated Financial Statements, Goodwill, elimination, non-controlling interest, NCI
Learning Objectives
- Identify the subsidiary's acquisition transaction, and the subsidiary's net assets fair value.
- Recognize the purchase consideration, goodwill, and the gain from a bargain purchase.
- Explore the technical accepts of consolidating the financial statements of a subsidiary entity, including the elimination conditions, intra-entity transactions, and non-controlling interest recognition.
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Prerequisites
No advanced preparation or prerequisites are required for this course.
Education Provider Information
Course Questions and Answers1 Question
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On slide 44, there is a journal entry to Dr. NCI 1,750. However, on slide 43 there is no such elimination entry to Dr. NCI 1,750. If the elimination of NCI 1,750 is correct, wouldn't this make it a net loss on NCI not net profit? Also if we debit NCI 1,750, wouldn't last line of consolidated net profit be 27,250 not 29,000?
Understand that the last line in slide 43 with NCI amounting 1,750 is actually from account closing before elimination process, in which this 1,750 is actually on credit side not debit. I assume that this line is derived from account closing entry as below:
Dr. Subsidiary's net profit 7,000
Cr. Share in Subsidiary's result 5,250
Cr. NCI 1,750
Then during elimination process, you only:
Dr. Share in Subsidiary's result 5,250
Cr. Subsidiary's net profit 5,250
Please kindly advise, correct me if I'm wrong.
Thank you,