Name : Safira Yafiq Khairani

Nim : 1802112130

Abstract 1-5

 Chapter 1 :

In this chapter , business mixes happen when already separate organizations

consolidate under basic control. There are three kinds of formal business combinations ,
first Merger, where one of the consolidating company loses its legal identity and the other
company proceeds with the resources and liabilities of the two organizations. Second,
consolidation, where both consolidating companies join to create a new company. Third,
stock acquisitions, where both consolidating companies keep up their different presence
with one company owning the common of the other.

The purchasing company records the assets and liabilities acquired at their fair
values. Any excess of the purchase price over the fair value of the net assets acquired is
recorded as the intangible asset goodwill. Any abundance of the price tag over the
reasonable estimation of the net resources gained is recorded as the immaterial resource
altruism Once recorded, the generosity is amortized over its utilization the life and must
be tried for weakness in any event yearly

 Chapter 2 :

The cost method can be used if the investment results in an ownership stake of less than
20% but the influence is the more important factor to this method. The cost method is used when
making a passive, long-term investment that doesn't result in influence over the company.

The equity method of accounting should generally be used when an investment results in
a 20% to 50% stake in another company, unless it can be clearly shown that the investment
doesn't result in a significant amount of influence or control.

 Chapter 3

In this chapter is about the preparation of consolidated financial statements. Consolidated

financial statements are prepared for those who have long-term interests in the parent company,
especially the parent's shareholders and long-term creditors.

 Chapter 4

In this chapter is an advance from previous chapter, we learn consolidated balance sheet.
Balance sheet prepared on the date a parent acquires a subsidiary appears the same as if the
acquired company had been merged into the parent. A consolidation workpaper provides a
means of efficiently developing the data needed to prepare consolidated financial statements.
 The consolidated financial statements look like separate companies but it actually one.
So we also need make an eliminating entries for this part to remove the effects of intercompany
ownership and intercompany transactions so the consolidated financial statements appear as if
the separate companies are actually one.

 Chapter 5

The claims of the non-controlling shareholders on the income and net assets of the
subsidiary must be recognized, and these claims are entered in the consolidation workpaper
through eliminating entries in the consolidation of a less-than-wholly owned subsidiary.

Consolidated net income is aunt's income from the parent's income during the period
from its own operations and the proportional share of the subsidiary's net income. adjusted for
each amortization or differential elimination. If the subsidiary has other comprehensive income
for the period, the parent's proportional share is recognized in the consolidated comprehensive
income.