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FORMULA #1
Consideration Transferred xx
NCI in the Acquiree xx
Previously held equity interest in the acquiree xx
Total xx
FV of Net Identifiable Assets Acquired (xx)
Goodwill at acquisition date xx
Accumulated impairment losses since acquisition date (xx)
Goodwill, net - current year xx
FORMULA #2
Consideration Transferred xx
Previously held equity interest in the acquiree xx
Total xx
Less: Parent's proportionate share in the net assets of subsidiary (xx)
Goodwill attributable to owners of parent - acquisition date xx
Less: Parent's share in goodwill impairment (xx)
Goodwill attributable to owners of parent - Current year xx
Subsidiary
Share Capital (&Share Premium)
Retained Earnings
Other Components of equity
Totals at carrying amounts
Fair value adjustments
at acquisition date
Subsequent Depreciation
at Fair Value Adjustments
Unrealized Profits (Upstream Only)
Net Assets at Fair Value
FORMULA #1
Consideration Transferred
NCI in the Acquiree
Previously held equity interest in the acquiree
Total
FV of Net Identifiable Assets Acquired
Goodwill at acquisition date
Accumulated impairment losses since acquisition date
Goodwill, net - current year
i
i
i
FORMULA #2
Consideration Transferred
Previously held equity interest in the acquiree
Total
Less: Parent's proportionate share in the net assets of subs
Goodwill attributable to owners of parent - acquisition dat
Less: Parent's share in goodwill impairment
Goodwill attributable to owners of parent - Current ye
Fair Value of NCI
Less: NCI's proportionate share in net assets of subsidiary
Goodwill attributable to NCI - acquisition date
Less: NCI's share in goodwill impairment
Goodwill attributable to NCI - current year
Goodwill, net - current year
xx xx
NIL (xx)
NIL (xx)
xx xx xx
xx
xx
est in the acquiree xx
xx
s Acquired (xx)
xx
osses since acquisition date (xx)
xx
xx
est in the acquiree xx
xx
share in the net assets of subsidiary (xx)
ners of parent - acquisition date xx
will impairment (xx)
wners of parent - Current year xx
xx
are in net assets of subsidiary (xx)
I - acquisition date xx
ll impairment (xx)
CI - current year xx
xx
ained Earnings
current year-end xx
The fair values of XYZ's assets and liabilities on January 1, 20x1 are a
XYZ, Inc. Carrying Amounts
Cash 5,000
Accounts Receivable 12,000
Inventory 23,000
Equipment 50,000
Accumulated Depreciation -20,000
Accounts Payable -6,000
Net Assets 74,000
The remaining useful life of the equipment is 4 years.
SOLUTION:
Step 2:
XYZ, Inc. Aqcuisition date
Share Capital 50,000
Retained Earnings 24,000
Other Components of equity -
Totals at carrying amounts 74,000
Fair value adjustments
at acquisition date 16,000
Subsequent Depreciation
at Fair Value Adjustments NIL
Unrealized Profits (Upstream Only) NIL
Net Assets at Fair Value 90,000
STEP 3:
FORMULA #1
Consideration Transferred (5,000 sh. x P15)
NCI in the Acquiree (90Kx20%)
Previously held equity interest in the acquiree
Total
FV of Net Identifiable Assets Acquired
Goodwill at acquisition date
Accumulated impairment losses since acquisition date
Goodwill, net - current year
STEP 4:
STEP 5:
ABC's retained earnings in Dec. 31, 20x1
Consolidation adjustments:
ABC's share in the net change in XYZ's net asset
Unrealized Profits (Downstream only)
Gain or loss on extinguishment of bonds
Impairment loss on goodwill attributable to Parent
Net Consolidated adjustments
Consolidated Retained Earnings
ABC's share in the net change in XYZ's net assets is computed as follows:
Net change in XYZ's net assets
Multiply by: ABC's interest in XYZ
ABC's share in the net change in XYZ's net assets
STEP 6:
ABC XYZ
Profits before adjustments 60,000 20,000
Consolidation adjustments:
Unrealized Profits - -
Dividend Income from Subsidiary - N/A
Gain or Loss on extinguishment of bonds - -
Net consolidation adjustment - -
Profit before fair value adjustments 60,000 20,000
Depreciation of fair value adjustments -8,000 -2,000
Impairment loss on goodwill - -
Consolidated profit or loss 52,000 18,000
STEP 7
XYZ, Inc.
57,000
22,000
15,000
50,000
-20,000
124,000
30,000
-
30,000
50,000
-
44,000
94,000
124,000
16,000
-10,000
-
100,000 10,000
Depreciation
75,000
18,000
-
93,000
-90,000
3,000
quisition date -
3,000
100,000
20%
20,000
-
20,000
110,000
8,000
-
-
-
8,000
118,000
mputed as follows:
10,000
80%
8,000
Consolidated
80,000
-
-
-
-
80,000
-10,000
-
70,000
10,000
8,000
2,000
10,000
e computed as follows: