ACCOUNTING FOR BUSINESS COMBINATIONS (CHAPTER CONTENTS Learn oojecrives @ Deserta ne major tangsin the scouting bins comtarations ne 20 an the enon es iguipinwetcmcucecien © (Sesaeemrelinedrome me ings (runcnast ice Bow FAR YALJEOF Leeper del ad EAIOO ADJUSTMENTS a weenie ssa wise ere weno montyeoness ® Describe the disclosue 2.1 ACCOUNTING STANDARDS ON BUSINESS COMBINATIONS: BACKGROUND of 307 byl1 Sana on Busines Combis Sagi 3s business combistion With the abject f convergence, ce Hing common ad one vetaatht could be usd bath ome in css bse st atoms. Nostcles, te subsequent auston sansa at et al We ‘sci some of the ifleeacs eo oh chaps ‘The objecive ofthe standard ed by the FASB wat recommend single Iethod resting in move comparable and ranepre! finan stement, The ‘esene ofthe standard that te aegaized busine shold Fe espa sl ‘alse on the austin dite rater than isco ples o wether the acuie purse allo ly 1 contoling percentage (even if the sombinaon i ached In apes) tn he pas, when business combination ma shire in tages (ot ‘ample. company purchases 2% of anther compaay i one dt, pcs» st ‘ldtonal 207 a umber of yeas ater, and then aves cone y pushing 125 aca slater dt) the cost amounts fom pir purchase ied gh he ‘occured dicaes sre) were combina with cent alc 0 cea cma Tad ol that vette mix of vale a ld book les beng cui ‘ard This combisaton of moun has lng bven ried as ekg come, Understand wefaiese Under the cent rules, the fal values of a vet and Habis om the segubtion dat, defined a te date the acgleer ‘tans control ofthe noqulree are elscted inthe anal statements This ‘change ea ae th timing andthe Sactare of del. “he aneare te buses combinations porary the ero Rcontng Stance dara Se) a Us Fnaneal coving Stands baw (968 ste stare ‘cuponsns vats pos nung emotes ats atourans end ev ee tad wo bck ne change wich ey came wan on erty he tnd ones spleen ees ater ta frecune he casing ne Te new sana paces es ar “alvesin abuses cmratien eer ness iter len an 100% ofthe eyes ‘gure re pureased Opponents ate oucre of pace ore gos ns ‘The standards for business combiations apply to business combinations imolving mas enites, those achieved by cont le, the nl easel ition of variable interes ens (VIE), Vall net cts ate dss in ‘Capter3 1 second anda io ised on December 4, 2007, “Noncontling In ‘ts in Cooolidted Financial Statements," mended Aeeouting Resear Baftin (At) no. 31 (now incleed in FASB ASC ope B10 [Conrldtons Thi ps ounces’ eablakad stand or he epoting the mons ness ‘when the aguier obtains come! withot purchasing TDD othe cies Arn atrlng (Or mln) est dos wet exit ae cg, bi ae the foes ofthis chance Thus most of the dicinon of hae eft Chapters“0 chapter 2 Accounting for Burnes Combinations CHANGES IN GAAP/ASC TOPIC 805 WITH ce SIGNIFICANT IMPLICATIONS FOR DEALS. fe 4 ‘Measurement te fr securities Use e reasonable pene of ime before an ‘Ue te Girvan ee mon = peer ae Saino wisn Feo pra er er Sune Seicinedectertsies:| cecum Eeoncn a Salinas Enea ttementmaonss parame nt e ey eee Geis | epee manne: tetieseireeeatin ome Seestysomiee ‘hapacdstefecter ad waesconicts) Sega roche iy Sacto” Geateco cnitnemenee ‘Entec Semeur Seer Gere concens tr Sndrs tote, 96 den, ets of sig feraz tne an towing ro Qari ii basins combinations wete permite in the Unie Sate: prchae an pring fire, Alogi he mary of exgrs weve acct fo bythe uichase ‘tho geass where the sock of one company Was beng exchanged frail the arate orm ofthe stock (D% or mre othe oer ir sometines went to great length to stty an elaborate ot pooling ct aid our the US, andr ster. Tene of 20 the Bae probed the wse ofthe pling interests metho and decked that good would no longer be amar nad old tend be {ed perl To imparmet a manner ferent rm erase Sc Cal ia he poting meted hashes pcibted fr uss comin ts ‘Snel 30,2001. Futheree, gl squire in bones comb Flossie Jane 200, shold te ome” Tnialy artis star ws evod ome corpus” mangement and ven nals vevponded with rosy predictions that he casings mers would lookcoer Sardar nies Coins adgoune a 1 ot ber for companies wth luge suns of goodies than «year ler ‘many ofthese sane fas were wring flr chonks of pol wor the npsement aes Today all messin he United States re asoune fr bythe The Sar included th Folin taceensin ting tha ehages Arabs ad the user finance taterens neat that itmas teu compa te franca eas fe ‘because aferent methods af scouting for business comovtare ware weal Usted Fancal stemerts oe date ae fi bternfermton sous stag aes, ecu haar nner praca rsa a ayes ‘counting fer busines combate fetes competion n masts merae™s ana Geode | ight be predic, sponses he changes razed ror opt th the "rgament ASB hadgien away the sore to pra that he combined anges Wel il Tei" hand ei or bine. re (ters, sch st Maman Staley Dean Witer' Trevor Haris argued tn the ‘tenders oq at hte shoul bem fngter eet oo sock ies ht yl oes ‘fet or he change accu sndadew mee mentm ly Geusten concerts ‘While fs of he stds euang goo accunng append Ne ‘erably Sepacrea nC ily, ees queioned wheter the gol impart test open he So Iazcanentoncngstroue —sinipltion of carings via the ming of wle-o, and some a STaccautngetermgton i hotle mere act. "Artin of avo strony the ave aga are ncn Crp Choon Kenneth ay focused one aeged owriars manipaton ot Charges or gendnil exposes roses stynd ta Lay re the company uaa n cabe 0 ego von ars = siestubuenanemeceriomad ug creya prs he acovig i tae ‘capa, nvon woul hove boe forced treapneipavmet nav amauren hay ‘reset mits fds ate tme ot the sat Ly daar the compar par ped ‘ver on onthe un ins teeta are a ate onpay a go > recogni the pose pact othe sandra earings vat ine lowing tener decane goo a soe eagle sae na anger sme he ep tous ogo end engl aus (os el ar ste dnt Sees these ‘parted nce an unger pres sands bens parca ose ae el cer fei ond nveyngamcons ‘yaa wo {ho Pi 37 Gol gi22 ILLUSTRATION OF ACQUISITION ACCOUNTING. Le tain as a ae seu Ine Bomedeat Jn an iin Eo leroy EP ater proce edb sys Spesatsto agate and esterday dears Side fresno recordings son sion ret jr ang Ps Aste em ingles he xqusion meted was the combina the acgision of fone mere omnes By anther For eps ae equ i assuring for bani 2 Determine te aegason dat |. Meurer lof he aegis 44 Measure and ooze he ast ace and lies sume, Assets acute by ing stares of wack of the ae copoaton ae ‘code the fa vale of eso en othe ee ose, whee mts ‘levy evident Ifthe stack ip atly rade qufed mort pie a ans ‘Sowanos oe market Cuutos, lawl ques eed, eso, nd wn i somally ter evidence of firs tha re apse abs ofthe net ose an angezed company Ths, msl peo he share ed con ‘none Where tea sk sa ole eld ompany, weer the ‘vale of tb ass received mua generale ed Any secuy ine co hates bons oF soaks need a coms he mrp ae det! the {alu sare the seb or iy enible ses ied (cling ngs athe tan goo) ad i ‘ities sumo Soul be acoder a aes at he date aston Ay ees of ral eost vee sm of acne eid to efile a ite recoded ns goo FASB btews Ut goodwill ean ested dry ‘nd is eid moat. Gaodil shuld nt be amortize bt shoal feted Sewavat aly when in “mpart” oder along ston Th the pst, mazes seeing 0 race the sou of gol oor 83 ret of te acquisition retin: fond ering way toed rece eel Prieto te suan ty itteasing the mon lca tte ent ete Involved ietiyng ince research and development (RD) the esed ‘mp, FASB sand eq ht RAD cos be capensed sce cop ‘ste. an inert ofthe arom RAD, FASM sad th oe foe ‘of RED, ncloing «specie resechpojct In popes, wih sored ns ‘cquision should also be expensed. Farermoe, the sm! oe expensed ‘ot deerniad mot the oii cot ofthe stl RAD bt th sr ad the aeqiriag comrany. However, under carseat GAAP, Inproces R&D i ‘measured and recorded a air vale ae a ait om the aeuiiton date This ‘element doesnot eal io RAD inconexs che! an Poses combination {ny even he importance of iting soppring documentation ran mn ‘oienod to RAD men ‘Wien inet amount of hf vals dent estes ails ences ‘he ttl cont ofthe aur orpny he ein x omnes tte oo 8 barein, When a frgninsexiation os, gan mat be ognize 9 hace he ‘sso, Beaute ay elcnce te rcophie inc im apc oan ‘in wher the asl ie of revenue recopton te st) he FASB oe at equed that mos ged aut be itn dow anh poss ashsf and Crpanie January 3 8 4 sation before recognizing any sa ke it mts fon austin ‘ela tgan purchase, FASB ASC pareragh 80530254 ses the soe {to reassss wheter as corel ete sl of teases ae al oe sien sue before resopiting «gut 0 Brain prcne Ax pat ‘quired easement the ager ness ove the pov ase to se theamouns reopnized tthe action don nt, howe gue tt ‘ssi be marked down Below a va Ones that dri tab, hon {Me excess of acquit fir ale feasts oer the cideration pa {srecoglzd in income he bargin prcise gin). Acquistion sunple Assume tht on any 1, 2020, ® Campy nays “cqured he aero ss th habe S Cnn Company Ene oe oF {518 pa value comma shares tothe ker scold of § Compary fr ce "wo shires ofthe $8 pr value como sos hey held. Tight th tn the ompany num Pan $ are rue set dating a art company fn Sula nan se sequin hese tre nappa esis he bk of the asus fi re disolod ake ine of sean None he inition ‘suse to avo cotusion between the ser ad te sed. ‘Company commen sock, hit wan lings ange of $500 $52 pr share wing ended period prior tothe cmblation, i somidered Wo hve at ‘ale per share of S48 alr an appropite reuton i made inv make ale Tor eto shares sued and for hue cos. Te tl va othe Hoek ad 1s S.n.0 48» 30000 shar). Balance sheet fr Pod cates ong wih evant ar vl da) on January 1, 2020 ae reseed in saton 21 Becase the book ale ofthe boss 40,00, bo discount nthe acne of $000 ($40,000 350,000) mat he recoded to reduce the Bonds pale 1 ‘represen ae ote. enon) on slamom? som 5 now 5 non som son sao ssoCoaptar 2 Acauning for Business Combinobans “Teco te eshngeof sek forthe ae assets of Company, Cmpary wil mae he flowing en Ping apm ne) meen ‘CammonSc Boum $15) hon ‘tr oath Cap (HN 188851) a [tr the merger $ Company ceases o ext a a eprate legal ety. Note hander the ction med the cot OF Te et sate smeared Net ‘aloe (90,00 shares $48 = SL 4N10B) of he share given in eachange. Coron ok icra for he pr vale of he sues ste, wih Ue remae ings process bas ocamed conned ‘hetataprosehorbrzan FAIR VALUE OF IDENTIFIABLE NET ASSETS) ‘Whe th pie oie mater mower the valerie et Ihnen aed 0 arg. AW es ‘SSmmom fn sequins nvhing gov gin eon de cura ee {hc apicain of pee eso ono eerily acetal acum eis. Howevec FASB sii hse, + Ary previous record ool onthe ters books eliminated ant wo nw fil eee). A gains feted in curet earnings ofthe aque the exe Cafe of et asets cone consideration pi Acquires ae eed 0 eset wheter hak corey ead al of he ‘Sots sed sn Tien suum Gncudinginlangibies) foe recogni fa ample of Baga Purchase Asm ta ayes Company pus S00 ashore erase Shy Company ee Shody Campy alee set ‘Sow the lowing beck tales end avalos A barsin gin of $3000 ma eed yon seston base te cst he eto (51 Ns esha he vale ft ast sed 823.00, "ent by Piya Company to ecrd the soon eal ht he ass sn bes mst be corded a ah) ‘Son ops tty ade A re PA gah nana ns -fo kuin a ‘2.4 MEASUREMENT PERIOD AND MEASUREMENT PERIOD ADJUSTMENTS Theta Gena panos epoedn 26 Bectse the FASD requires hat the enable et at be record a vale in 8 aso, te amas ported si alae athe fincas may he linia Cnd the ema may not eb faa) the ales ‘let, they ue fared provisional unut, Asigis re iene Yer Foi the etnies. This ner peed seed ashe est pred Dering ie easement eto the cgi my at the pone aus ee ‘omtzed fra basress combination, The measurement ied pve the ue ‘tha retoable ime oi he rnin mses oy nd mae ay tft ftocing a a he soqton dt Te denial se Intestin th guess 3. Anycosieration wastrel he guise {© Inatusness sombinton bev tage. pretos ey nes ell by thease 4. The amount eognze as god rth sin fon basa pachase eure, bles assumed, ond ny ransontling Prins for mesrener perio susan regs tpl ating lp vison anourts Carre GAAPreqes ht th rani scents be stot {erode mentuweteat period ajninent reso Fis an no eng al aut ‘he Boks (arate hey allowed esate er hey ast beaded immed uring the reste pro he sexe egies nal so oi bili ev informations ited about acts and emus tht nd ‘quis temic, known, wouilhav esl inte recognition se es Sa Uinbitis. The measurement period ede ess ess tne Ie Information msec about farts and cicmaunces tht exact he sy theo kare that more neon bt Howes the maserement period shal not exced one yar rom etion date Tas ese pet ‘Kjusmons ar ot heres of new” infrmatio lars“ he da Son Meare! peso ajstment ref ifraton th de fag, ‘Teac eogzes as icese (dct) nthe psn ou piel {eran identibl oe (ably) by mens face (een gn Pan the measeenent pr the ier sl size djtmens Ie pv meant a i te sou he uns cmbinaeg had Bsn some a the ‘eguston date Puter acguer sol eve cane natn ee vids seein ancl salen if cet charges fn pein Sura o er icone effect econ a competing he na ast. “Aer the mearement period ods, eit oly seth ening busines combination cot an ere Eom thers. 5. ney ante any Lr 312 bonchapter 2 Aeounng or uss Combination: 2.5 GOODWILL IMPAIRMENT TEST @) Contant: Foe yecomants pal io longr aman heme ene ‘rico raporng unt reporingun ste eel whch margaret ol of ec opr ent ites or fpsmen om naa sn. The nl rl mpc tet be rtrd ny de ring tesla poe he ‘etispernmadethe se tine coy yer Dent earings aye et or Impairment ies. Tn lanary 201, FASB mended he und for privat companies lawns then to cet an aertvedl Unde selena, pod iwamerizder Pored nt teed 10 yer nd singlet patrmen del ed in 017, FASB spite te fr gol impeentfr ubi companics. FASB sini te torsepapach, Te we appa soaleaue cos heeded fo mesre good lng The nett ial opal est Tee parse [Shell gusta a guntaive asset ls, apo spe! case ple compan sig soil 1 3 reqetng i Dey TS Sse quae sts to ec bee oe Hil than ne the fa vale ‘Sorin un ss han Hyg acm Quin furs le tes sch 2s Trl ecncnecouas, need compe etvienmert detring exh hs, (Sef essere of te ative crs ket oe Wey ha 4 Hkton! gtr te SO ath ac fhe opr nie than cryin tench pol he ty per equates oder he a Th ep te crying amount of epg ui ree tan its rae goodwill othe reporting ut scoedered pated. The anc of gossips ‘tet sth lover of a tiearsng va of geil or) he ecess fhe earns. {mount ofthe repel nit Gung gol) overs ae vale. So Mt thon 2 fora ral Maen of proces ‘te eperhg serene paromancen ier ode sate Ds [Seuped oy feopopy on con prose dard sone andl satan or example parsing chsonroparing tote osarte pure compat con We eon unto (Seton ne opersing spent or rpsimert etn tcompanens os opering smart ‘routinet onc one ca oman aioe enone icarmon gene pre eae Ot repo aa he no Sk reponedbebveene to 10reporabe unt and Yaropates mor th orepatbleuns inaedon they report 3 pale sarpanes repr gooowl ond har Do these oman: repures gocawlimaurreen 216 Trenmter Mlstration of Determining Goodwill impairment ‘fevcc In the qualitative assessment, the enityasseuses qualitative fctors wo determine iit {pear prs ity han a ie ae he gorge ise Sota nn compmny pete pen tt Serge SAETTs impued povll Prestinon scndrloptonte dept qaleaoes Sant of te goo pa Se eee om nt tin Sonia si"MLUSTRATION 23. Annual Gooswiinparent Tere (fete 1216209) Te [cea Aaa Hoenn tapirarea]) ahaa ieee = iter ec angie arene Semen tum nt0 hapr 2 Acouting for Business Combinations (On theft perio evi dt Geusteo concerrs rela te acme hrs a pte! gin se "sty SopeseaWSFAG’ MOS lily thn ot ht irae exis he eopany mone © te gute eee erat Steke text The quinine tex dermines he acu of ond impoien any Ihe Np ceranmmeemearbe yng vale he eting wit nln ool se tanh aval trp en, good ipinnt xt the carping val estan he ‘alo pints oasis Quine on oe Since he anying ab of he pong nt Inge $000 10000 the amt of gov inpment teaver of 1) he exces the exile her fave 1000) te caring ae of euing pore S00) Siete ecsss ev crying ne of ond ant of go "Aner godliness esopie, he adjust crying anc of the godwil eco new ascomng br. Subseqat eral Os pei ‘eapived inputs prone once th enema of at los as Dt ‘onset ian ingen et fr ool cs te sete psi es toca the te FASB arcs ut ter ate sl etek ri fmt fe. FASB a seis tints oer tan god shuld be rorind evr thtsfl ves fe xs) eve fringe in Solace ih FASB ASC 30-30435-17, 18 “BS Gar annaunand ha Kwa down the god alo oiseleszon and aa wey S85 bilan a ion, rng s sabe fouthquares los hs re secansconcautes ‘Ercan acid eur meurraett eaeno (henge ans growth era an boast eon nase. {na paid in which annie las osc, FASB ASC parsgranh 350-20- 45-2 mand he ollonngctoses ine rte: 1. A desrpion ofthe ict a crcustances ang 1 th ingest {A Theme an nouns fay sens made inpiemen sims fon eaterpetos.isgnieant Gerwemars ‘Fall alscosore suggests that all intoneeanitiantistestiy CR SETS! 1 haematite lee ced hei Smash, Bites 2. The amount of edi by eponting egret (fhe acing fe este ‘neler © fp ets mctlig et epee eae a © deci emmy acon ages ee @ Desi the vakstion a lion of coum 35 INVSIMENTSATTHE DATE oF ACQUISTION. Inconsistencies, u DATED aauce Hees THE USE © Liste iene inno aii 27 acount usrsren-nore run, Dis etna el me © scars te investment the tbs cs books at the de fag, © Prepure tte conse wokpaper and etininaing ties at te dat of ston © Compare sot stlncat the sitferecs between glia valbe und took val ofthe eg fms ay, surement] n franca eportng has been ncaa Accoting to 4 Delite 2017 sve, the tip objetivo prea Jehrs ae ern lec hology ssc (208), expanding cose ban eviting mare (19) and verifying products o services (168), Aoguagchaclogy ass icesChapt Conde anc Satereres—Date a Acqon from 6 in he sane 20165 reef 2017, Wat Disoey Co Gene Eee, Ford Motor Cov and Office Dept in, dese changing needs of esos by ering teh hroogh Maca esau ner compar he ae st al he spine pice ote a oe of he underying wt and abies aid ‘Beau determination off aes fen Inoles some degree of subj cing ems sometimes ue htm tlle te values sch 993. {oe te wey for are pow in caning nd epee. Ferg higher ales pope, an eum wile ores incetesin depot cars rie eninge he sets wil igh al Fer mectres wl lw Trg the ice nem x so as tbe {oi These wpe ae developed nd iste ally Caer. Among the uses thine rahe tension elton een yer ar ecology int {Sikes nd ines research andl development cons Fra ie, seme that ay {fet wah pda othe pipeline provided an epprtigy Yor RAD locations. Spins Phares for aan senbed he ee puch crt of eens Pharmacia 0 RAD, How xa hs pen? To nos ths ton kp in tha th acque lan ented fies well ae ofthe ge. Wher ise seed ‘RHC. ermine ta sigitca programming commie lef pbsble ad ‘Stabe aie tt, hagh pevon srecerdedby ABC needed eres isthe austin, The re of he, sed eer eter austen, wis the ong ‘of gooilinan aman sigh ager than he puchase poe, ‘Chott ange ensonatlress whch meron thea ating tem 9 Cone) ‘Disha acountrgesinates 2 re: Rel hat bness combinations may he megane its set aequston or asockaequktons. In Caner 2 he poset fais ws on bie ch ons ating fm ae aeguson, I hose sting he seine comrany Neve and the aged cengary te compas ceed oes a Sopra es ‘ies, The evs nhs eager or scouting patie lowe tek oc Hons, tht i, when on omy controle hese eso aster emp zh the det or indiet ours of me ral os ein Sock "When ths occu the acing compaty general refered oa the nt od the aquedCompeny «suber, Tors Hong any remnng sok Sissi st eee the nanconrling (minor interes. 9) yt ‘eon etermed on alllation, td te ele companin eee ated Companies, Fach of the fisted companies cominus fs separa legal exe {Sd the iesing campy cares into a neste. The alt so ls cominue to account nil Foret own ass ad bis wth he Parent sompny reflecting the vou os tank nag sean vee fn Subsidiary. Tris secant il malay be mine ie he cmslcon pres {Sree ae corel! mri ote, Heer he veinen ‘Berman, oa “iy Mn nh tm Sy Pail be inti inthe “pret eas. Ths, an gor sien i ot {encen ine coma semen adhe parent ony roc iment the Sse of sok acquis. ‘Acomplia ay. of ou, consi of mare aw Sompanes A pa nt my ban consi iatet nth oig sk seer are Hone ‘rmureciestiariesovaseconoling intrest mone nt te conan {chan ownarip is ned by wh he aren company contol eel Inder, the aves fhe er companies, Many large Armercon oom hive bse ome by arety of nit owns. ‘nwa soe area dete ply we day compel ol Unters dia, Wasa waar) Linkedin or ab to nepate mio Oc, U amt reutes approve ne dal shee aera ceasing sears ere ores, he max prominnt acevo shot Oe oda Borers se obra samt so rhe cope ay 3.1 DEFINITIONS OF SUBSIDIARY AND CONTROL 1 aes oa ough em sus ka on var meanings practi, nt exe te sinaon verbo paret congas anor he pan te unis) ont crural anal res inane compar, wheter tha compar icrpoaed ‘nat (sacha a rus or pres)» Bath th TASB and he FASB av nds ‘ai opin athe dfn of onl sold bei tthe common ren om in patie of 57% et bt sl nae sn aes any con ‘ot e's Se Comreling tort i defina as he orton the ea fhe conoid group arable he parent and hy pret ners Consaldied facil semen ae analy aeenary fo fal pesenaton tone af th ene ithe consoled up ditty eine has wong nati tres i he ober ents FASB ASC paspagh S10-10-15$ tes hat ‘heusua conic for acontaling financial intent sows x maori Inert. However. appliston ofthe moje ing ners equement my at ‘dey he party wi acontoling nance ease te contig nani interes maybe ace though rangement tat do met cle eign ‘The int wep in determining wheter tenn stent shuld be onl Isto determine the reporig enh ars ltr aster nity era ‘0 ab petal varbieneret omy (VIE) Se seit nm ur hess ye sg ou so se noe‘raper3 ConalgtesFnanclStaterens—0: “The Vasile Inet Ens seston of he Coiicton vies uae ‘ordering sh ena. The argue 1 tinal, bt bean mind hat hese fe gan lgely thse loots hat hd previ allowed sch sm Fant Emon 0 edppatacspe or te nes nde the companys cn its cusled fac sateen. Trnscos noling VIE ae Pxate Ineesngly common Some spring ens have ened a aang’ nt ‘TEs tt appear be diget to rod eping nd ais forwich 2 a nay gi at ay en re ita aso. Ate Same ne, many reporting eis bnew ‘ies ead bsness puree nl ve opr scare fr thre VES asd be ssdace an sceped pais (FAST ASC papsagh 10-1059, “Toca of eu ett smetinesh aty hat ose mary fhe iy tare ntstcnity cs actly soa thea eemse Xs iy a fiz. note wor he nj fhe facies raph eae hey ‘When company tie Eason riparia at does at ove ay sock in hat neti aontices ftv comol he sets fe pater hile Se otis tarchslcs oot FASB coped ik an rena mel cecrine so soul cost ich apart o er sail meet cay. The mes Tensor chr mest orto are ces ony vexetehses (rceie pton fhety’s expecta esol erm ae cal arlene ‘The Wefeaon var eres eter coma oni te igh nd shgons fale’ aes, abies egly andorra Varin ‘tse cna owner othe ony eres yaa eit change ‘eh hanger ne rae of hey" et sts alive a ale CES(GASB ASC pag 10-1055), Opens of an xy a i ic end teva aay da geen oo are net) whe ables an ety tc aba ht arab FASB ASC aragrph 10-1055-6thogh st ert [Samples of abl rere in VIE. or sae ey nee messin Sette den VIE se abl terest oth ext ht ey ae sk, Gur tes te ae of he eo abies of» VIE ae varie nee “Once vale rei, mat eerie wha te ely {VIE GASB ASC eng 810-0151) Ian th he il step todo “Vs may benef re ryt wale eed cooline e VIE in ‘ownboot: Ane anja colon Kayo he lloing contin i ‘The otal ey a dk ot lfc 0 pei te ll eny 1 Sane i Actives without edlenalebordnted financial soppar provid hy 29 ti nldig equity elder See FASB ASCHIOID 25-5 fro 4 fore ‘Steminaton feet ai 1 The holders of the ety vestments lack ay owe of the Flowing 1. The power drt the actives ofthe legal enty tat impact the e's oom peformance 2. Th ligation mabe the exp esses ofthe ea eatiy 4. Tego eceive the expt resid ear of he legal entity «Thee veto at prop lc the over odie th ete iff 1. The voingsighs re not roportoato thei bligaions absorb e expected Inte thighs rece th exposed esi! rs, 2 Soba all of the egal en’ activites, sich a8 orowing, ie Inve rae coneutt on bet fan ves wo has dsppornaly few ving righSint || laren wer, || ecg aan ieheimatt sean” || Sewprwrcerearcel ‘Tse conditions determine whether a coawoing Fnac rest achieve Yhrogh tangents that o ot inode voting net Ifthe cai «VIE in ‘hich any ofthe stove condos ent, tena eration necessary of ators indicating which prey hol the power oduct he atvies ofthe VIE and the ‘tiation fo abso losses a att reap benefit fom the Vie, Tis pty te ‘rimary Beneficial cole he VIE See suppenetl Apeni 3, ‘alae om your strat ‘Oe xh an th ey so considered VIE, th stein feo ‘olan tse on wher on ofthe ies oth ome proudly o Inde hs wong Sencar nthe th tis sly Sener of {majority og eres), Cool, acceding US. GAAP. defied tet for indet ay to deerme the ction of managensnt an ples though ‘omer contract or oterwise IFRS defies cal oe power oven te ives neal and eperaing poles 0 oot bt ris aces See seston 31 fora sunny "Pros ove atm Wat Dany Cos al ra aio of D4 as avenue apts nd von onsooated cntng 322 mono fhe ference eae Boney sco oo cong ‘Ue peranng otha conelaston of arabe neerext erties a Es angle is ae Dery conaidatea he bance shee ot ur Dane an ang Wang sean oo Ne 3 Sate inca fash Now serene epimers yt? 1. Prior the adoption ofthe scouting ue, herein Denese statements wc ihe 2. wngm@h One dose epee dates conalae he ance sheet anne and (eh fom staenets Inchisctupr we fcu on susions Whee the contol viens by ama ‘omnerstip. The sane procedures wuld apply, however, a Be ese where sale, Feccentge ownership exits concurrent wih ewigence of eleva ct iw ot Noa 30 Net Ra 2 Pa Si Rene Gy ichaper3 Conte oni Satemes—Oate of Acuston example, the prea’ onns 05% of he voting sok, nd 0 er pty hs sigan incr pent coal the bod, “Jo Seures and Exchange Conan defines siya an fine card ane ety ey nest ough one more ‘Con means the postentoe, det oadiet of the power oct of ease De ‘Get athe monagemest spies of poner eu. wt tog he ON rip wing shares, by conto terse. THe dca ies esse sich 2 ‘Sittin net arctan ronment i weve consist ith he Stedatjeete of he IASB andthe FASB to move amy fom rules-based accountng intovor oriented ascunting "Only 3,202, resent Bushsigncd ato aan Accbutng Indy Reform ‘ck eng chet eset fies 0 cer the aly of hi rms nani ‘tment begining Aupst 1, 202. Oe asec ofthe at ned the flow ‘ag te osasmen ofan ena bard forthe scouting nt a the aut ing weer npr PCAOB oe The Pais Company Ascouring Orersah Beary eticons a he types of enaingsves allowed ob pr ty ‘rs so as bolder, nancial ems desig, nd prsonne an ea se ices tuneon sea fun fom compat htop lias nd ecto a The resto fnew penis or corporat a 3.2. REQUIREMENTS FOR THE INCLUSION OF SUBSIDIARIES IN THE CONSOLIDATED FINANCIAL STATEMENTS. Sep: “The ppc fconslited seers to poet he operating rss on he fi il pono of puent and lt ans a ey avo conomicetil. Civen {hs pupusa poles wa 0 oft Saige FASD sen the phan ht soem lol crys shoul scone, fn ‘al the tel contin so vie he wo meaning anal presen ‘eps in ccs The FAS hess he ise fon that fpren-commny-o fincas we anceeabie for evel prpoe dst ‘cet the esa oil statement ae Pe pry Sans he ‘Conon eo west ar-nsny en stslerens a ene inn ‘conse ancl atts be meets f sch psa bodes he ‘Salto and pce schol the prem Cansaing Steners wi ts frites ce rap of stan no eau ore ps, tte covefietve way reset sch nent. ‘Under some tums, maoiy-ovee subs sos excluded fom the comulted teen Thovecncunstanes nla those whee 1. Contol doesnot est wit the major omer Fores, sui in ga Feorgization or ankepry sould pt he sonst 2. The sabeiiaryopeses under goveranetaly imposed uneeainy 60 er ‘See spin dot shout he poten con Fae amp, a ign ‘SeeiiaryiSoed in a sounty with foi exchange restos coo ‘roter goverment posed wnceainerso severe at he sgn ‘Eaomthe pre's iy to contd he aii TASB ASC omen OTIS‘ference in tial yards betneen the pret anda subs doesnt jo iy the exch ofthe sbsiry om he consist fans eens erly viewed os eile fr he stiday to pare Tan en ca Side ones ese. withthe paren’ ca peri. When the iene ety esends is grate th thes toate ly espe nee sb ay Steen fr cl pero. giving recognition by sls crore mens ot In seing tens that rely lft he rest of pean er ae poston, 3.3. REASONS FOR SUBSIDIARY COMPANIES AD) honing meer ‘Thee ae sve adunages aegis contig nt nthe vag sek ote company athe hans eta ting sock Far exam I. Stock sequston rei snp, tc cn be aque by open are pur ‘hse ot yeah ener fete subs’ schol Sach actors ote on lengthy nd ification ha ae ried aan eachange sock or stck dorig complete tre, 2 Control ote sbsidi’s operons can be seeompishe wth a much sir Investment sine nt al of he oc now be rue The spent pl exitence ofthe individual alas povides an eee of wotccon of the paras ssa fom aah by rests he sry 2X paseat ay sometimes exis x sbidary by amine how corpo ‘ater than ity ang avis exiting Coan. The inte aby arctic the cope fo of bine egiation iin he rinry ‘eon doing, 3.4 CONSOLIDATED FINANCIAL STATEMENTS Gexsin concer Sages tae parent anate The sotements prepared for a pven company ond it sabia ae vale ‘omsoldated financial statements. They include tefl coolant of cen erally prepare for sepa eniy an repent eset the sum of he st, Ties, revenues, and expenses ofthe ais she inating the elt o a ‘nections among the fled conpasin. Account eg tha the ares ‘olde fiancilvtement ofthe pret company, th lal enti, a nce "present ancl psiton andre of pean of he cami etl co ol yh pret company. Conde fr mona he wc ai ements oh pent company When ue seq conolegisonst inthe dy, i pans ene) ebing Knesset in Suir ind cing ier ch cot sa (sss ‘ombisdeening on the medium af exchange. Acute thal he custo ees ‘na cups pso 8 mon The yi e's ols wale“The pet’ invest cecum rpresons the pre's in he ies asset ani ai acu ofthe sua an fe ads giant aoa ok ‘ill Hower tise na singe cent ened neste The ss. ‘ope coninrs to esp i ld teks aed on sera Book ales. These ls tas cura heme vale assed y the prt tthe dite 3 Sion bth dal esifeatin- On ay ncking ah ces co ‘olin Gonder ie fllowing able ie ‘momen | Aacaauin ae om the able sone, we shit neither he pats avesnen coun othe sebsiary det at nny aco serves 9 eB he vaston 2d ‘rsicato desi nh eomobsted ancl Semen The oes of pephg ‘Smolded finn scents si achieve te Gemble racers 0 te ‘lagna by showing the eed eet an Tay counts o te conse hire Shee ting te alton exalt he equson prc Fut his ton [ovis a deo useing ecg noes hres The parse of consldted semen it preset, primary fr the Bene ofthe cenars and erin th parent th rests of operation nthe facil oson of parent company and el subir if the consleted group Ite ing economic ed" Cooled erent ignore Ie legal pests ‘tt prt ets bot fsb intend onthe econo eity unit te “col ‘timiragaret The pesmi i hl wos ts of oe stare eke to cmfute te econ ently tes th he eal ny Ths the prepereton a onliae satement ran expe of fcosig on sbsance ater tan fe “Alough solid temo or he eerie enya cose To Ne smo poi fo ae bythe sckolders ad rere he Fret company (Gad are te only inera purpose fiance sccptbe yet GAAP Fr ‘ompanis with one moe sbi), hy ae ac susie forte stents [ore ty te spate sre. Cites fhe bias mist fk 1 he ‘semen fh nia lop nes nanssig the degre of reteson read {0 thir clans, Likewise soncotollingockaers need te sateen of he indo! companies to devine the aegee of nveset rik ivared and th vant sable fr vided Also eu penis ne teh concer ih Tio et sources and este of operons othe nis obtain 3.5 INVESTMENTS AT THE DATE OF ACQUISITION. D. ee ‘The genet principles wed to eon sine combinations ete at a ‘iboarwete dead in Chae 2. Inti chapter and throughout Cpr © ‘rough 3 wll concentrate om aecounting forthe ae quiton af athe 0 ‘any voting sock. See supplemental Appendix 3A, eae fa you acer Forse ots dferede,Recording Investments at Cost (Parent's Books) ‘The bincwuidelns fr vatacion cust Caper 2 pring tins so ‘ato apt el tothe asin of eng wach enter srg, Uns es cus or agison mab te sock eset its asi by the at val he costo sven or he comet rece whch ore calcd Realtt the cman piven conto sh te ase ee sess, sock of he egg company, ou combiaon of te las, bath ‘hed cons faring the sok an ee cose ang guts ah he cost manag an acquire shld be exposed ence Hush i wed fr he ssqiston the vesinem roe ath nh oy ‘seh broker's es and ter dest oto theism chal, asus "a? Corjny segues ll 1,00 share ofthe conn stoke Cpa or Sos et shar an pays session eso 10), The entry Wo ecard the nto Company's hooks ee ‘nese S Company "0000 canons) 25000 spon pee rea | ‘The ayaston fe would be roca in 8 spate entry a an expense. IP [Compary ayuie ony 30% of te 1000) hte a 25 pet shar and plan sc sion eo $8000, aque ty woul be ae 1 Company sues sock nthe acquis, the eset is recoded as fhe ae of sok std ing eet any costs of egneringTe suck ite Assume, fr example, ta P Company sues 20.00 of $10 pr ae coe stares wih far vale of S13 pers ote 10000 shares ofS Compra Tt relstaton oss moun © $3.00, pain eth, Te aes ocd he terme EP Companys boks we ‘ehh aS Conpay Rows) | aon "Gm Sec 04819) ‘000 ‘es Comet Copa 0015) ‘oon tye Canes Capi som Cohesion cos) so HP Company pit an wba 000 wa ines ete ey woul bs Re ea ‘900 | oa p00oe (@) Parva \whchar the allan aherages ardor saan haper3 Conadsted Fan Sitemeres—Date a Acquistion risa nt seend (0) The spat leg nsec enh ed 2. wire aon ya 1 specs 1B) ajry of omnership not reed {© Uaoiyartecton ge foc auton ete se 9 stent famenock the ASB crs and subsequent consallated nen at: ssp pa en (G) Consucated satrentsned aot be produced Yeu fee neonate sare et Slogaraparen comparyonnslessthan50% {han sepuate nn stotements fers pen fry heevoungsnaes ofthe slo te tssuldon bes fusraes whch ofthe la fs) Stckcan be acquired by epermaretpurchaes— Payriigiegseraneate ory enor a senna (©) Gon ofthe subir operation canbe eee Sccompins ths much aaiernestner ‘eon ofthe sack eed be care. 3.6 CONSOLIDATED BAL 1 pes {e) tary (0) Econom ety \LANCE SHEETS: THE USE OF WORKPAPERS Aline carpi sal rp il sola tone ree testa ‘ne of psn, stl fe ances ine seen ah os Steet of ds egy (or rin! ering) an nef the ai sta nen) Asafhe date faction foe oon yan, ober. he steve ‘Stemetis thecomnial tae she Prone thee ome Cant sums ecmesinper wi casas one ands devon ker aps “The consol lace she port the sum of heats bes of prec ans sails they consid single company Assets anes {se summain their etie repaies of wheter the ptee ne 10S o alr mpc fewer exiy Thiet may be fre oo he the noon ‘ling imerest inne ae oa te notonoling ners in guy (ase mse ‘Genclan i smaimes beta at NCL Sic te pen snd sabre eigen single ni, limits rst md cancel efi of unt ong thence ora Sd paid, fr cramp, ms eee 0 wok doe counng ans asd {Svinte impesion ut he cutie ently Ove ney Ta sel ies Irercompary psi in att ah fom eqn recon tbe Se since meniy cas pice masactons with ace morkpaper kegs ed {ours he eto Yaron ciation a th Ar he ‘nperofranscon he mec cling ets ate allowing”Gare concens ile neste erence Btn mint yaa Shady uss afin | Api | Frsan ot mee ‘The proces of inning tse and ter pees (ah te parca intscogany es of tale in tastcions th oes) ite cased indeulin isan ae chaps The hope il fo etal sect occons, Ne lr hes wil fs nth ance set nde item soe Investment Elimination ‘An imports bs lntton inthe prepertin of comet stent lin ination of he ese! cent he eld ebay’ srs ety. The iesient cous ees ive bythe ptt camry in He het sso the sb an rele repeal fhe sir comps cole “city Since the subsidy conus es ables acid wih toe of ‘he pret company nthe conse bake sb snes 0 cna th lavexnet acount of he parent company aint he rel koe ey of the sir 0 ao double cooing of tee ett ln the ee companys the abi compas eo elie gun he nee ‘coun hsb cogary'e sats ae ated othe nese ca ‘he cooled bln “The proces of combining iid td bili fw pueneconpany ‘nis aiiary mt he dato cston is seuss wea the suo or Tes than 100% of th ary he ale of th he cooing eet ante oncoming nts must be dtr. Te a fhe coe ing tee eer sured eal th moun pid by the sear. Howeve, eteination the fr vale of the nonconoling ners sess stig. Frnear, xa is FASI ASC pra HOS-2030-7 ate et hie uu pa ye ‘eq could sede a com premium” Ihe ase sale to mess he a ‘ae ofthe naconalling itt on he asi of ve mace rcs he sats tbs te seer tthe seqon dt, hs wl rove he as fv lege nonconrling itr footer slong mt ep. ‘The ouenc wih nck squon cud a oncotligest hn Bs sround 48 sce 2001, with ight neve wowed 208 Ftlove by slew deine “The pecemape remained st 41m 2017 Note, oweer, ht pany ao hem at any pn eps es tun «10% acquit te onsontlng inet wil mason alan she ut sch ime athe biaryl te eminingstares are pried the poset ie Chapter orcas) Therefor ie frequency with whch aoncongoing ast aeolian espa ia ny her tan‘@ hap consoled Fant Siatemens—Dote of Acquion “Tats, suppose Company P sours 8% of Company S for $70 pe stare ant remain vesacely tem SES pr hire amily owing te ‘Savin Tae would inplyw ono! promi of 5 per hac ad woul he ‘Shoop oval the noneontling sues a S53 rather han 70 por a However, tongho thi tetiook, we wsume the vale of he entling snd ronconoling suri be ena uss expely sata berms Ths th ir Sale ofthe toncontling nets be nerd rom he vale ged) the ison pice Thi gponeh iste ex "Tost te comoldting proven wh fist ep is 0 prpute a “Cnn 2nd Alea of Difrnce eee plied Vac an Bl Ve shel (CAD), ‘rere of inched egies stb aestive i snes Determine teptcenage foc agin the abiiry (I i 00% sq shor ora salle pecentge? 2. Use the purchase prise (os) to comput he implied va ofthe subs Sinply divide the pucise pic bythe prentge aed o clei hs ‘alte ie erenage 100% teint vale wil eal te prchane pce {4 Compare the inp ac fm ep (2 1 the Book vale ofthe sins ‘ofa ference eit, we mut ten allocate th clflereaet ajist te ryng sets nde ibis fhe cquied compan, “The book value af he guy the sum fall equty accounts (common sock tonal ond capital eave cigs, a), which egal the bok alec ‘heed in’ sets ius able he oto ston ni Valet Sti Easy = (Arion Pikero: Aea [Nowe tha the compan i betesh impli lve and Aaa value, This emmparsn is aporopriae bess the subir compary’s acount re recorded ‘honk sue amouma,an the al lee he sei compar (ne i) ‘he al balance of e pa corp) proves he string pit fr he cos faion proces. Tha aoaph mare vale re rosin erasing the rare ‘ha re evenly reported inthe cml ran stare ne se Poe valor ocala» ang pot When thetic vl excet the bok vale, ‘he ference wl be dsb o aj net ates upc, Se lluseon 32 {epic lson of tsp When he implies ae le han he bok {ale te iference ay be dnd nan tne dowd ona ‘te recopiaed fora “barain” stad bye face the aon, "Te sep shove lea the fllonng possible ces Cd els abt tiny ee ecw Sey | comes ep ae oie bid an nt ek hfe iy cee [Oe atvovsased ales het Th Use apr ® Peover [Farm] (“Sinn Son Were laste he eras above nthe ner, withthe exepion fa we omits of Cases 2) and 3s, which sold Be ea spare le rea the other. Examples ee sed on the blanc bets Fan 120 fo P Company and § Company nnn Manton 33 Tes inprtas eating Reweon ata entris ths re recoded books of one a he vo companies and workpaperly enix. "ie nrc re ‘eed inthe receding selon record the neoment nS Company ere eal ‘ies, whch wold be recrded i he accounts of P Compan These pc of otis would steady be reflected in the wl lace, which cnstes te fi Enum of he workpper resented ghana (oer nampa ‘rton 4 station 35, “The eri ht we develop Ret ad which appear in he me mini olumas of the workgupers. ate workgaperonly ene. As sch they ae et Postel tothe boots or acount fete Compéns sera! leer. Contes, he ets wll ed ote repeated exch yur in the coating proses In so ‘xs «umber of exis fom prior years ay te combed to spi) te pre ‘em ft meses tects at sig met each yea, Trougout his bak, ‘ontpaperaly erie wil be presented shaded In ue book) arene In 8 ‘oted border pia versie). Pun! compan tn sir ene asda it ‘ray and enclosed na sbd borderChapter 3 Concoldsed Fane sttmets—Dat of Acqulsion ance het forP Company Case 4 (a): Implied Value of Subsidiary is Equal to Book Value ‘of Subsidiary Company's Equity (IV = BV}—Total Ownership ‘(hooteof Subsidiary Stock Acquired) 1 pra priss apes tobe excl te bak ae of he egy si, Te iovennen cs om th pe il Ble) wil cinta onl zis he ety scant of he mbar He sue rte at he hal of he tse ocued apesine i bk aes, fen her mo neo at vet Tins rien ales The cd ri of fe lining poe x ne [vein soot compe cma sae the ope scr of ay ‘Ging iie 107% alton In enone te irene care repel with nding ats Ini 0 the sbi. “Tolls, sae tat om Janay 12020, P Coepy accu al the ou ‘tang tock 50 stars) a Compan ass payne of 38000 F Caray ‘ould recor an sn oun eny fos mediately ser be sence, P Company fas $20.00 in cash (3100000, sown in ltacon 3 medi) pir t agunton, mina S60.00 spe! Sequite Crary) and S800 ean Invesen a Company acco Thos Spots appar inthe isco ofthe workyopr presented a Mestion 34.1 the cate of 100 ago, the mle vale ofthe subiay ql e prease Drie The moi of aston sine 2010 ve Bean fr 100% of he ong ek (etl net ue) he ge tn, sneer nex i ‘pian harley snl prea. When dhe ag as peace ater ha ‘Pui ade, compa. he pecemage mas ein smal, with aly 3% of ma ‘Sons ya pub seer ping a priate company reskng na noon intrest When pb cq gcd py raed i, 71 ns rested in a nonconoling wrest neg being poe. ‘The Compaation and Alton fires beeen np nd Book Vokes Schedule reveal n ference os shown towextant arc Shan Tee strpges * \wetaeen mpi ond book sue Scheie Diese beves pe onto ess Fe fen Note tha th $80.00 paid equals he recor ae of Companys stk bodes equity Duta forthe preperation of formal consolidated scents ot ‘sormallyatcurulated ona workpaper on which sy rau sting shins Atig eis ae ma peo o embiangrering balances. Adjusting enti ue those mended to cormet any accounts of he lates thet may be eure ‘rt recogni the unrecorded ee of rencction tha have Boe recoded by ‘ne pay, bus nb he oer. Adjusting nites mst be mae tly the ‘ols of one or more of te aia. Eliminating entries remade cence te ects of nercompany vransactons ond are made onthe woripape ony nal ‘ston throughout bok etter noallon i sed 0 dent ted ot feasing ens, and mamber notation a ae letersi fntries, Note, however that sme ofthe siinting eats wile cat ten to accounts. pticularly when there is ifereace between spe ok vales. Tus, iis echalaly more accurate to chink of eiminang enti 2 eliminainglsjustngentes of ab worpaper ene, Thse ents wil be (ur foes thoughout the nex several copter, and tasting esrcs ae Ud ‘aly ey "Th workup ent eliminate § Company socks ey spins the Investment scout npc journal umn Remeber, oa sexes ingens jour frm his workpaperly cary No ity sma on the tks of et company A eons pet all arpaper eve are shade in be (boot entoed i a dtd border tat ‘bo and prin) csingush tos leat om Doak ec sated i 1 ‘eclno ntalbrser, ‘A workpoper forthe preparation of conoid flan sheet fr P and S Companies on January, 2020 the date of sutton, resented thay tation Note ie tlowing om he warpage: 1. The imestent account and reed subd’ sothaden’ eq he teen sinned, and the Subsidy company net ast sed the 2 Consolidated ast an ables cont ofthe sar of he prea an sbsiiny se apd labs ee lasifton2 hopes Conde Financ Sateneres—Date of Acquition Pontnd Biman taaz00 oo vm exe iS Conny momo ao ol Laisa iy ‘3. Console sckoes equ iste sume es the prestcompany'seus: Ths is sit shold be, ice he subsry company’s ssl” egy fsbo limi apin the pret compu’ imevtnet act Te cos) balence see lth fhe econo ai nd te only owns nee Sa repesente by P Compay's ska dt, P Conny owes al oS Company's ack Case 1 (b): Implied Value of Subsidiary is Equal to Book Value ‘of Subsidiary Company's Stock (IV = BV)—Partial Ownership, (Less Than 100% of Subsidiary Stock Acquires} Next we inva: a rmncontring nes nh sto, he ons le set wil peels efit th cine se nt of aren stir ‘nth enna Tolan, th egies il ene separa nthe no ‘lng iets guy net ase a he a ctling nes ay ns ‘Assume that on Janay 1, 2000 P Company aero! (4.0 shar) he sek: of Company for $72.0. SiceP Company mw ls than 005 of § Com any’ sokconsderation mast be gtea he extnce of « noncotaling iet (tinsy irs) inte et ses of $ Company The prcane pie of $72.0for 90% ofS Company implies tl vluon fr $ Compary of 572.0090. ‘MOQ, The oncoming ners, tha, pl of vl $8000 $8.00, Ine lsraton the mpi a bok vile ree, bh ee onuoing tnd aonomrling intern A Compustion nd Allein of Dene (CAD) Scheie Wout pyar lon (cetman imped ana aco. Volue Shee ‘ote ht the amounts bone CAD See provde the nics io he lowing woop ivstmen lininton cay ‘Toe cntte 190% of § Company's inated 9 agin theives ‘scant ih th reaining 10% of Company's ety eat the arco iret. The purpose of the corsolaed aan st ep te mt remures ‘ded contol single managers and the manageent of P Conpury le. ‘ey coms al S Compatys spree Ths, ll§ Capa sass lcs se combine wth tow of P Company onthe onldted balance tt, and te ‘eocotling intrest epeseaing the oncotraing sles ere he es ‘oes separate component of okboler cay ‘ workape for he rears fino ace beet athe eae of ‘sxquision i ths sution preset in lusation 3-5 A sept clam It ‘lds othe workpaper in is sain betwen the clinton climate tooled ales comps he oncogene Theol ths ‘lum represents the percentage egy ofS Compay mo acquired ty PCy ‘edeeorded atthe aloe implied by PCargsy' uiston pce. Te al no noing ines is taser tthe coat inc she sla, Ao ‘sted at on he workpope he nonconolingktet o th aca ood Pulao set shoud sper he fat component of tactbode eu (hse "eth sre, om he espe of teeming interes at) Tm comparing Moartion 3-4 un luariien 3, might be tte that (0 eamtded as re 8.000 greter in Iaion 35 sie nk S80 es‘eouson Aconting ‘ti a Ea ck Punt Bape Peon er Comet Capit Tol Lied et hope Connell Snements—Date of Acquton cash oat 97 investment and (2a 8,00 noncontling nee ex he ‘runing 1%) Nonsmllng intresnesumalated on tho conse ep fern asepute tu, "the per eafton of the ronconling ier fas Been sie! of ste Froth perecte of the cooling interes sina sty. isnot however iy Pane does ot ee fate payne y he part ommpony othe consti entity The sharsoles who repese the enc lng tet tended told, at nly ofthe soir spay a me ren Sane companies ne pant presen sere ater bites an etre Eektaden eu onthe sane sie to cn thera” ate te nono toling ners Acorn 0 PASH ASC paragraph SI0-I0-AS-16, the wns Ing mere sho be reset os part soe’ ey of he eroded nig bu Gly ele sings om he te equ sesoun. (a a on 7: ‘oiconpany me on 25% of mbar modo tea eI chen ‘ecromans pct hr oan wean os on ek Them cri tasers nore FAD eb wal egeCase 2 (by: Implied Value Exceeds Book Value of Subsidiary Company's Equity (IV > BV)-Partial Ownership (tess Tha 100% of Subsidiary Stock Acquired) Nex, we continuo allow fra ponzunaling ees and we inte » erence Beovee the co ante Hok ale segue, as bet id vs the bok leo the sbi n Case what he common station whee se pies higher han ths bok ws a ety ace ‘Assume ht on snr f, 2020, PConpany seed 00 ses Yo tne atsanting common sos of § Company fr $7000 cash ee nhs P Congas ‘$26,000 in cash and $7400 nan imesinem in S Compary Te orden 91 $74.000 for KO oS Company plas tl ake of S080 o 93 3 ‘Theil vile oe oncoming terest $92,500 208 318.50). mpi vale of $92.00 encase ak va equ of $80.00 I Compattion ad Alton of Direce (CAD) Setedl tis eto bi aston ‘omputatin ond Allocation of iterence (metnten mpi ond Soksue eae Diener hacia we ng 2s ise Inv cae aca her i erence ren inp and ook ales, we mst nc oly compute he difrence bts alloat tha ieee heaps ne sesouns I we asta dh the ete dence stitute sands ‘teat are valu higher tan hs trl recoded cote would cpl the ‘CAD scale fons Spilling ae ‘S4ime ais Teale ie “am Tao atoms becingand ick ike 0 a) Aden spt ma) wm gana‘Thedifrece must allocates to specie sab In his example he an sme incese and os at ve det an i sm onthe. The nue pase iar to mae” ry be asd here. no cane wow he sel Fe Ieoted higher hans markt wala. The arnt are hes summed (ete db ‘Shosmens argv: suns) yl 9 lnc. The coc ition the “erence tree inp and book vale depends he make aon a he Andring ses a lie, he ilerence larger than che aman ees Mis alesse then th exer god Tate st fas aking reeves ai cong zodill onesies noc orton othe purchase rice as an rede expen unde te pus | Inpoces RAD Ths has bch ener one, deren GAAP ie. thon grcess RED be caplied J acquired in busines combination 3y ajurg all et not otc steve ope aoe cold el ‘This stn tried fat arin dequion cea whe be eqn price ‘Stes then the market ave of etal net ants acquired Ar cin as rev ted soon th ks othe suse neue Balancer Soar sent arm rary ein i th coe stant in pride ‘Equion Weil att orga cin, ch were nly oon ‘hep agin in Char Te tesenont of agin pure recs ect ‘hangs fom prior GAAP, whlch rege that nega pol elcid 4 ‘elas spi se loti vale Suh eon in gallons “Teatonk problems nang tet thee of hich ioe make bling avsanpors uch "Ase ht on ference tose pie Bok “aloes ttle lly to andor Assrme dst any erence Bete aid {nd Wonk ves i anit pols Th lite ami vale 0 Sting th book vies ppm mace vals Kis importa, however be ‘mar that ore complet asin ae oi peed and may in at 0 ‘Seton ay seen (sisted in etal Cope 8). Returning the example above, whieh ile of $12.50 is sted tolind a mokoups fora conoid bance el a he ce of squstion 0 Os Suan psec in Mastacon 46 “Theft wonpaper invert limision en liminaton my 1) se roclmint the nvexrent acount asin he gy coun ofthe sir ant ecsuaae the lees eves imps sn be “alse Ano assent end “DifereaceBtveen Ilo a Bok Valo Is {teat in thi emt. Ts cont aemporry scot hich wl be ely ‘Simin inthe ery net ery. ‘Blimination en (2) helon sve lose the Direc betwses pi! Book Valen tbe appreprine acount i hia nd