Management and Organizational Studies 4465A/B Lecture Notes - Lecture 5: Consolidated Financial Statement, Equity Method, Intangible Asset

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 4465A/B
• Professor: Danny Morrison

Document Summary

Chapter 5 - consolidation subsequent to acquisition date. Cost method records income when the investor"s right to receive a dividend is established, when accounting for investments in subsidiaries. Equity method captures the investor"s share of any changes to the investee"s shareholders" equity. At a minimum, the following factors should be considered: For each cgu, the allocated value is compared with the fv of the unit"s identifiable net assets: the difference = goodwill of the cgu. Sum of each cgu"s goodwill = total acquisition goodwill of the subsidiary: the recoverable amount of each cash-generating unit is compared to its carrying amount, including goodwill. If recoverable amount > carrying amount then no goodwill impairment. Losses on assets other than goodwill can be reversed to the extent of the pre-loss carrying amount of the intangible asset: assess whether there are any indications that the impairment loss either decreased or no longer exists.