Dear all,

Semoga kita semua selalu dalam keadaan baik dan sehat. Stay safe and just stay at home
yaaaa.....
Pekan ini kita akan belajar dan berdiskusi masih seputaran laporan keuangan konsolidasi.
Pekan lalu kita sdh berdiskusi tentang FS Consolidated at acquisition. Pekan ini kita lanjutkan
bagaiamana cara pelaporan setelah proses akuisisi. 
Berikut uraiannya:
Accounting for Investments by the Cost, Partial Equity, and Complete Equity Methods
A.  Definition of control
                  1.   No significant influence
                        a.   The parent company owns less than 20% of the subsidiary company.
                        b.   The investment is carried at fair value at current year end as trading or
available for sale securities – the cost method, with an adjustment to fair value.
                  2.   Significant influence (no control)
                        a.   The parent company owns 20 to 50% of the subsidiary.
                        b.   The investment is measured under the equity method; may be elected to be
carried at fair value. Election is irrevocable.
                  3.   Effective control
                        a.   The parent company owns greater than 50% of the subsidiary.
                        b.   Consolidated statements are required (investment eliminated) and the
investment may be recorded using the cost, partial equity, or complete equity method.
B.         Cost method on books of the investor
                  1.   If S pays dividends, they become income to P, so long as they are not taken
from retained earnings originally bought from S as a part of the acquisition (liquidating
dividends)
                  2.   Year 1 – P’s books:
To record the initial investment
Investment in S    
          Cash (or Stock or Debt)    
To record P’s share of S’s dividends
Cash    
          Dividend Income    

                  3.   Subsequent years – P’s books

To record P’s share of S’s dividends (assuming they are issued
out of current earnings)
Cash    
          Dividend Income    
 
To record P’s share of S’s dividends (assuming they are a return
of investment – liquidating dividends)
Cash    
        Investment in S (Return of portion    
of investment)

C. Partial equity method on books of investor

1. Under the partial equity method, P Company records its share of S’s income or loss,
whether or not S declares dividends. If S does declare dividends, the amount received
by P becomes a reduction of the investment account.

2. Year 1 – P’s books:

To record the initial investment
Investment in S
       Cash

To record P’s share of S’s income

Investment in S
      Equity in Subsidiary Income

To record P’s share of S’s dividends

Cash
      Investment in S

3. Any year subsequent

To record P’s share of S’s income
Investment in S
     Equity in Subsidiary Income

To record P’s share of S’s loss

Equity in Subsidiary Loss
    Investment in S
 
To record P’s share of S’s dividends
Cash
    Investment in S

D. Complete equity method on books of investor

1. When using the complete equity method, P must account for its share of S’s income
(loss) and dividends, and, in addition, account for any difference between its original cost
and the book value of the net assets it acquired; for example, P may need to record a
transaction to recognize the effect of excess depreciation on equity in subsidiary income.
2. Year 1 – P’s books
To record the initial investment
Investment in S
      Cash

To record P’s share of S’s income

Investment in S
      Equity in Subsidiary Income

To adjust equity in S income for excess depreciation

Equity in Subsidiary Income
      Investment in S

To record P’s share of S’s dividends

Cash
      Investment in S
3. All subsequent years will be the same as the last three transactions above