10/8 Chapter 5

Question 1

when creating a sub internally it is valued at

Answer 1

book value

Question 2

Example:

we pay 20K FV for XYZ and XYZ’s book value is at 5k

Answer 2

we have 15k differential
1.Basic Entry
RE  4000(i made these up)
C/S 1000
    Inv in XYZ 5000
2. FV Entry
3. Amortization of FV Entry

Question 3

push down accounting

Answer 3

we would revalue the sub then purchase it

Question 4

Example:

We buy 60% of EFG for 100K, BV 20K, FV of EFG 166667

Answer 4

Differential
166667-20000=146667
NCI 40% BV 8000
Our FV portion 58667

Question 5

investment goes away after we consolidate

Answer 5

know it

Question 6

Group excercise 2

Answer 6

Basic
CS 136000
RE 117000
Inc S 62400
NCI in NI 15600
         Inv in S 223600
         NCI in NA 55900
         Div Dec.   45500
Previous entries
inv in sub 62400
    inc from sub  62400
cash    36400
    Inv in sub   36400

Question 7

on exam

Answer 7

break out the entries don’t combine them.