RSM321H1 Chapter Notes - Chapter 8: Financial Statement, Equity Method, Retained Earnings
Document Summary
Chapter 8: consolidated cash flows and ownership issues (pg. The parent"s percentage of ownership can change when the parent buys or sells shares of the subsidiary or when the subsidiary issues or repurchases shares: purchasing additional holdings is referred to as block acquisitions. The subsidiary is measured at fv on the consolidated b/s on the date the parent obtains control. The ad, which includes the fvi of assets of the acquiree and goodwill, is retained as a component of the investment account and is not reported separately on the acquirer"s b/s. A separate allocation of the ad should be prepared for each incremental investment: i. e. if significant influence exists and more shares are purchased (still no control). The amortization of the ad"s are recorded in the investment account under the equity method. Once the acquirer has obtained control of the acquiree, a parent-sub relationship has been created and the parent must consolidate the sub.
