When the parent company uses the cost method, an adjustment must be made to its retained earnings on consolidation in every year after the year of acquisition. Why is this entry necessary? Why is a similar entry not required when the parent utilized the equity method?
Answer to relevant QuestionsIs the impairment test for intangibles other than goodwill the same as the one used for goodwill? Briefly explain. "An acquisition differential allocated to revalue the land of a subsidiary on acquisition date will always appear on subsequent consolidated balance sheets." Do you agree? Explain. Beaver Ridge Oilers’ Players Association and Mr. Slim, the CEO of the Beaver Ridge Oilers Hockey Club (Club), ask for your help in resolving a salary dispute. Mr. Slim presents the following income statement to the player ...On January 2, Year 1, Brady Ltd. purchased 80% of the outstanding shares of Partridge Ltd. for $4,120,000. Partridge's statement of financial position and the fair values of its identifiable assets and liabilities for that ...When accounting for the acquisition of a non-wholly owned subsidiary, the parent can use entity theory or parent company extension theory to account for the business combination. Access the 2011 consolidated financial ...
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