acquisition date This is a topic that many people are looking for. bluevelvetrestaurant.com is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, bluevelvetrestaurant.com would like to introduce to you AFAR: CONSOLIDATION (Part I) DATE OF ACQUISITION BUSINESS COMBINATION. Following along are instructions in the video below:
” s discuss consolidation. This is part one of our three part series for consolidation. We we will focus on the date of acquisition during the date of acquisition. Very important you have to know how to compute for goodwill goodwill competition.
This is from ifrs. 3 for the sake of illustration. Let s say a world eighty percent of b. Is the higher b.
Is the hawaii is the parent b is the subsidiary. A right so how do we compute for the goodwill. The equation fair value of consideration transferred plus. The non controlling interest or mci.
We know the nc is the 20 hey. This is 80 nc is the minority stake minority stake. This should be equal to the fair value of the net assets of the subsidiary plus. The goodwill all right it means.
How do you bid from the goodwill gaugamela. Very vital consideration transferred plus nc i let s the fair value of net assets you get the goodwill okay on the other hand if naaman mashmallow hume fair value of net assets then these two you have the gain on bargain purchase which we discussed in our previous video sir what do you mean by a fair value of consideration transfer this can be ash payment okay or we also call this the price speed okay the parent can also pay using shares right or non cash assets and don t forget freddie dinner contingent consideration okay the fair value consideration transitory can consist of cash shares non cash assets and contingent consideration nci on the other hand can be valued at fair value or at reporter shouldn t it share all right so this is how you do these have you complete for the goodwill or gain on bargain purchase all right tricky thing about consolidation is there s what you hold the working people eliminate the entries all right so that we will review that you use this compare nothing neither that happen working paper and trees that we will encounter in our problems for consolidation. All right don t forget that in the consolidation. There s at least three sets of financial statements.
I m american two separate fs for the for a and b. And then you have the whole so dated. Fs. Now imagine.
This is a time line. This is january 1 okay. And this is december 31. All right you know registration diversity a marriage and separate fs b s ben.
But i ll operate from january 1. To december 31. See emergency. Reading balance sheet.
Income statement. Cash flows. And so on. And so.
Forth. Cbd marin. We call this their separate financial statements. Balance sheet.
Income statement. And cash flows. They have their own separate operations. They have their own separate reporting and books right ok now at the end of the year december 31 since islam you owner may only be the part they have to prepare what we call the consolidated financial statements.
How do you do on so fs. Well on google. News and jen. You separate fst.
A and b. At mozilla. Okay pair american uppity reflect you know what we call the working paper eliminating entries. Okay admission admin books.
A and it and you also reflecting working paper entries. Then you get the consolidated financial statements. Don t forget in a guatemalan to every december 31. Mps are only temporary entries.
Okay meaning. He became aggressive texbooks a or the big i temporary dasha now sir a noble human working people in a meeting and if you don t have enjoys esse. But as a review and william entry not a new enemy. A new parent.
No i said that ccc parent c b or c sub right what is the entry in the books of a you entries debit investment in subsidiary let s just call it a is let s see cash from bernard credit cash. This is the entry at the date of acquisition. That s it january 1. Haha question class.
A new entry in the books of the subsidiary. Or any p. Manageable. Entry.
Answer is no entry answer. But new entry because i m being a bit more in consolidation is the shares of being and men shareholders be my current shareholders. Ah. When i read on selena harris.
If don t touch. The current on and transfer of ownership shares na ra. No stop stop ownership alright so in short well i m angry in the books of be alright pero alumni..
Tina s a and b. They re only one entity curses is allah owner. Sarah right. That s why we have to reflect this working paper.
Eliminating and wrist first entry item critical in consolidation. Magna master musa. The working paper entries then my medallion. See you consolidation alright if you difference then between consolidation and merger acquisition.
There s a merger will hanuman working paper antecedent different eyes different variants are also division gets alright. First entry is we eliminate the book value or the equity of the subsidiary alright explain later why but the entry is debit cs or common stock debit epic that with retained earnings array and then credit investment in sub credit nci. This is your first entry. The logic of deterring description to eliminate the reacquisition pre acquisition equity of the subsidiary of a survival.
An onion kadam really medium equity in sub because i m a our union is the parent okay so you wanna revolution well onion. Who know by arunachala insured are a so the patent dynamic reflectors consolidated fs register review a i d learn athenian books here reflect not a new working paper entry soon first entry and is this one magnetic not into class now get credit can an investment in sub meaning. Songs hindi ineligible investment in sub and then malala baskaran nci nci is an equity around in the consolidated financial statements and because you re debating the book value of the equity of the subsidiary in the enricher mcgregor flag in the consolidated financial statements gets all right so in your reason why you have this person the very critical again niente planet earth to eliminate the pre acquisition equity of the subsidiary because in even a amun re known shares or near the inter american sub alright. I mean i read on is the shareholders of the parent gets all right number two alright second working paper and immediately entry now take note of this in consolidation similar to partnership.
We have to remain sure in assets and liabilities at fair value. Okay. Let s say for the sake of illustration. Let s say much mata assalam.
You fair value of the tp and inventory of compared to the book value array. So that say david pp. They ve been invented in dynamic delegate norman s an alum perform entry salam credit investment in sub credit nci. This is the exists exists of fair value over value sir back me exist a very valuable book value because if you just add this the books of a and b.
If in line gagawin mo am. A great effects upon so fs is the book value of the assets and liabilities of a and b of the parent and sub depart in the canonical. A in business combination in consolidation. The partner of leg at fair value your assets and liabilities of the parent of the subsidiary.
Okay so this is the excess of fair value of the book value of the assets and liabilities of the subsidiary gets away writing paper entry number one to enemy the book value of the equity of the subsidiary. The entry numbering paper entry. Number two is too steep the ansell abilities of the subsidiary at fair market value huh. Later party commodity.
We will apply this as we answer our problems for today class. If you appreciate this free hardy tutorial. Don t forget to subscribe and turn on the notification bell. So you get notified whenever.
I have a new video right let s go to our problem. For today. Let s go to the questions assume. The following independent cases.
One. Two three four and the minimum problems. Booton. Levitt.
Pinnacle. Cpa review school salaam. My pogey problem. You founder.
The passenger bind. The owner operator. Savviest. Adam perron.
The humid is trapped all right salmonella ohon let s treat a given on january 1. 2012. The statements of financial position of bread and feed company prior to the combination or caso cash inventories pps or total assets currently herbs ordinary share share premium retained earnings right the fair value of v. Company s equipment is two two nine five hundred assume the following independent cases.
Assuming brad company avoid stop of feed company all right. We know brad is the parent faith is the subsidiary all right and we re given the balance sheet of the parent and sub. We ll assume that these are that book values specially mentioned either very explicit with the fair value of v. Company s equipment is two two nine five hundred we have predicted this at fair value of net assets right ray so you pp though instead of one 575 and repair the goodness.
A cross out yes a diamond. Relevant book value certain two two nine five hundred let s compute for the assets of fifty of the sub at fair value all right. So let s see two to five hundred plus forty five thousand plus equip. Our ppe two two nine five hundred plus 2500 you get here two nine seven thousand two nine seven thousand this is a total assets at fair value and we know you importance having is the fair value of net assets.
So we have to deduct the current liabilities to nine seven thousand let s 22500 and that s 22500. This is 2 7. Or five hundred the fv any of the subsidiary is 274 274 five hundred all right now let s see and then what else skippy problem. A assuming bread company acquired hundred percent of the standing stuff of hiptompaz.
You can see beanie believe mediator is the shares of the subsidiary not the assets and liabilities away as compared to merger the merger has literally have been a beauty model as profits and liabilities of the acquire e for consolidation among your acquiring the shares in this case. Hundred percent qualify own man. Controlling interest right okay. A feed company resolving to a good we love ninety.
Nine thousand contingent consideration of 54. How much is the price paid to fit company stuff as you can see class mentioned ito good news of 99 contingent country consideration of 54000. Contingent consideration is part of the fair value of consideration transferred right and then you have also a la nci all right so how do you compute for the goodwill..
Ah actually how much is done uh. The price paid alright. So like even at informal a price paid. This is a high speed okay.
Plus contingent consideration this should be equal to the fair value of net assets. Plus. The goodwill am i right so this is the equation and because the broadest asked for the price paid will compute for this one alright para presidenta bin shall we plug in your figures price paid plus contingent consideration of. 54000 this one okay 54000.
This is equal to f vna. What is left been in orbit and a feature here that is 224 574 500. Plus goodwill goodwill is ninety nine thousand okay price paid is equal to algebra so to stand firmly plus 99. Less.
54 let s go calculate 274. Five hundred plus. Ninety nine thousand. Less.
54000. You get three one nine five hundred alright. So price paid is three one nine hundred is the final answer for problem. Hey.
Okay. Let s go to the next question. Assuming bread company of words seventy. Percent of the outstanding staff of feed company for what we spent 500.
This is the high speed buy bread to avoid 20 percent of feed company right and the known and control. The internet is measured at fair value of ninety. One 500 how much is the goodwill or gain an acquisition. Okay now as you can see 70 percent long and that s why we have an nci and i right now.
It s open up any competition. Right babe. Is 157 500. Okay.
Don t forget to add nci. I just review the the you earlier that but admin nci. Surviving happenin adnan unca to compute the the good or in because that apples to apples from from paris manhattan. As you can see you in favor.
I m a palestinian luggage and 100 person. Now you equivalent pre emergent should be always 100 in our industry. Shown. It s 80 that s 20 nci array in this case is the 70 and the 30 nci.
This 20 person is the one who this 2500. We at the nci of 91. 5. Okay.
Given a man in fair value. So. Let s add 150. 7500 plus.
91. 5. You get two hundred forty nine thousand two hundred forty nine thousand versus the fair value of net assets how much is the fair value of net assets well alicia 74 500 way to 74 500. Let s see difference is to 74.
525 500. All right 25500. Now question here is okay and goodwill or gain let s analyze so i mean i had my spoof 49000. Pero.
I m value net plug into 74 500. So much money can be not bad. I m unfair to the value you receive being right this is a gain on bargain purchase so be careful yeah. What s a choices.
If mitch is avoiding he made choices. But interpoma camel only 25 right but interpretation car malika. We do another game most element array in this case. If no man must massage him in a harem within the fair value of net afters.
It means that you re paying for something that is intangible array. That is the goodwill in this case. A man this is no barber than the favorite assets. We record the game in the consolidated income statement.
Okay. That s question b let s go to question c. A swimming. Brad company acquired.
8 of the study stuff of fit company for 205 210 is at nci s proportionate share. Okay to recall nci can be measured at fair value or proportionate. Share for question b at fair value for question c..
Proportionate gentleman of good companies identifiable net assets how much is the consul stockholders equity or the type of acquisition holy first thing is check manhattan ny. And this is this a good will or you get the game. And then later on try not and you compute um con. So stockholders equity.
Oh hey price paid a price speed is 205 two hundred nz is how much do they ingest in this problem. Well proportionate share dosha alright. We know the total the total fvn a is 274 500. And we belong is a unbelievably much 80.
So we have an nci of for 20 percent right so 270 for 500 times point two fifty four thousand nine hundred this is the ncis and say at proportionate share all right so fifty four thousand nine hundred let sadda to 205 250 4900 was 205 202 6100 to 6100 vs. Fv n. A of 270 for 500 we get here the difference 274 five hundred fourteen thousand four hundred okay fourteen thousand difference is fourteen thousand four hundred now my important for now and this is good we are game well 216 banana then 6100. But we re getting to 70 bana.
This is being on bargain purchase in thousand four hundred yes. But this is not the the final answer right because. The question is asking for the consulate is holders equity on the date of acquisition. Find orion well.
If you look at the balance. Sheet. Vermeer. And i on stockholders equity.
Here. Senior ad. Nothing yin. And this one.
Let s add. Stockholders equity for the parent company. Total five thousand plus. Sixty seven sixty seventy five thousand plus retained earnings of one two one five thousand we get here two one one five thousands basically i added ordinary shares share premium and retained earnings.
I got here two one one five thousand. What do you call this this is the stockholders equity of the parent at the date of acquisition. Ma. Right now a senior competing.
The not a new subsidiary 22. Five thirty two five plus forty five thousand plus. 135. Thousand you get oh.
Five. Hundred oh. Five hundred. What is two to five and this is the stockholders equity of the subsidiary at the date of acquisition.
Okay now i don t happen umas related to stockholders equity all right so let s start with a parent. A parent company or bread company. Two one one five thousand in my right efficie it ll ah alright. What else how about the sub okay.
The masha allah guy all right sir. But i don t even look at you equity of the subsidiary of a eighth note looking back to our working paper entry number one again in eliminate nothing you stockholders equity of the subsidiary was the reason again you know that institutional onion. How are you furniture holders a pair. The shareholders of the subsidiary gets back all right so fine.
I languish and eliminate all right. I am. That s why da da. Da.
Gavita gets what else on the prima. Affect. On stockholders equity. Mmm.
How about the game. Yes. Ma. am affection because for the game.
Great affection in the consolidated. Retained earnings in the consolidated income statement. 14400 positive. Obviously what else don t forget to add.
The non controlling interest nci. Ah. Hi. Nci through our working paper entries after everything andrey madden that labas nci as equity.
I mi m par channel equity don t forget to add nci business a proportionate share no compute not in earlier. It s 54. 900. Let s add 54 900.
Total. Is my two one five thousand plus. 14..
Four plus 54. 900. You get to 180 for 301. A for 300.
The one if for 300 is the consolidated stockholders equity at the date of acquisition. That s you kill engine is based upon mr. Samuel stop. Holders equity.
Now let s go to question. Assuming. Bread company about 90 of the stannis top of it company for 360 for 500. And ncis measured at fair value.
How much is the total consolidated assets from the date of acquisition price. P. 364. 500.
All right nci sub region. At fair. Sir. As a new flavor agenda dimension.
Ab is a problem bagram on these herbs are probably in fair value. We can get that from the price speed. Okay sponsor will in 360. 4500 represents.
90 of the value of the subsidiary of a solid of a novena 10s 364 500. If we divide this by point. I know to another you 100 percent of the value. Multiply this by 10.
Percent this is the fair value of the nci 40500. Yes. We add 360 for five hundred plus. Forty thousand five hundred okay we get four hundred five thousand four hundred five thousand we compare this to the fair value of net assets.
Which is again 274 509 to 74 500 was a difference okay so four oh five thousand minus two seven four five hundred you get one 3501 3500. This is a would be organ since was potassium in a barren. Oh this is a good we ll all right. But this is not the final answer because.
The question is how much is the total consolidated assets on the date of acquisition powers on drug imogen. We get the assets of the parent to 250 thousand and the assets of the sub well the patent favor. I of natasha s volume book value or fair value of the assets wallah indian book value all right so add learn attend for the parent. It s to 250.
I put here the parent. Okay to 250 thousand for the sub. It s two ninety seven thousand it should be at fair value what else removal form partner pawn show assets at the date of acquisition. Don t forget to add a goodwill all right a goodwill one thirty five hundred okay what else one thirty five hundred and don t forget to did the cash okay in three sixty four five hundred nah so because bonide machines are out flu right hash payment of three sixty four five hundred okay so let s see decide everything to 250 thousand.
All right 250 thousand. Plus. Two nine seven five hundred up to 250 thousand plus. 2.
9. Seven thousand mine. Plus. One thirty five hundred minus three sixty four five hundred you get here two three one three thousand final answer consolidated assets in the balance sheet at the date of acquisition.
Two three one three. Samson okay. And then let s go back to our working. Paper.
Entry. Differences allegation. Working paper entry for the goodwill recognition after the mail. And i am third entry.
They were here in a computer in on goodwill right the goodwill should appear in the consolidated assets in the bad also dated balance sheet all right maritime entry for the goodwill debit goodwill credit investment in subsidiary credit nci hi. This is to recognize goodwill alright on the other hand if naaman ginza. So credit side naman yung game ok now we as of now we have three working paper entries are healed enough insha as we go on to the next videos for pancho division. Classes the end of this free tutorial became polonia.
How do you exactly do step acquisition. Reverse acquisition push them accounting. What if different accounting policies for the parent. And son.
What if be fred reporting dips for the parent and sub deuteronomy nepean athenahealth regardless of your accounting background. We will provide you with the most efficient and effective review by focusing on best review strategies. He points to remember shortcuts common tricks and mistakes for reservation and to know more about us visit our website and facebook page all the links are in the description below reserve now because we only accept a limited number of students in order to preserve the quality of our review class dismissed. ” .
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