...Does Parent’s purchase of a legal subsidiary in bankruptcy qualify as a business combination under ASC 805? Parent lost its ability to remove and replace majority of the board of directors of Poor Son as a result of the bankruptcy. This supports that Parent lost control of its wholly owned subsidiary, Poor Son. Therefore, Parent’s acquisition of the reorganized Poor Son does not meet the scope exception in ASC 805-10-15-4(c). Under ASC 805-10-20, a business combination occurs when an acquirer obtains control of one or more businesses. The given facts state that Parent will receive 100% of the new equity interests in the re-organized Poor Son. In addition, Parent will have the power to name all members of Poor Son’s new board of directors. ASC 805-10-55-2 provides the examples of transactions in which an acquirer can obtain control of an acquired business. Based on ASC 805-10-55-2(c), Parent has control of the new reorganized Poor Son because it acquired 100% of equity interests of Poor Son. In addition, Parent has the majority of voting interests of Poor Son because it has the responsibility to appoint all new board of directors of Poor Son. According to ASC 810-10-15-8, an acquirer has the power to control if the acquirer has the ownership of a majority voting interests. Based on these, Parent has control of the reorganized Poor Son. To conclude, Parent’s acquisition of Poor Son in bankruptcy qualifies as a business...
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...1. How is goodwill measured in a business combination? ASC 805-30-30-1 Measurement of Goodwill Currently Viewing: 805 Business Combinations 30 Goodwill or Gain from Bargain Purchase, Including Consideration Transferred 30 Initial Measurement General > Measurement of Goodwill 30-1 The acquirer shall recognize goodwill as of the acquisition date, measured as the excess of (a) over (b): * a. The aggregate of the following: * 1. The consideration transferred measured in accordance with this Section, which generally requires acquisition-date fair value (see paragraph 805-30-30-7) * 2. The fair value of any noncontrolling interest in the acquiree * 3. In a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree. * 30-2 In a business combination in which the acquirer and the acquiree (or its former owners) exchange only equity interests, the acquisition-date fair value of the acquiree’s equity interests may be more reliably measurable than the acquisition-date fair value of the acquirer’s equity interests. If so, the acquirer shall determine the amount of goodwill by using the acquisition-date fair value of the acquiree’s equity interests instead of the acquisition-date fair value of the equity interests transferred. * Currently Viewing: * 805 Business Combinations * 30 Goodwill or Gain from Bargain Purchase, Including Consideration...
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...------------------------------------------------- ACCT3050 ASSIGNMENT, CHAP 2 1. | Lisa Co. paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the consolidation of Lisa and Victoria would be recorded in: A. | A worksheet. | B. | Lisa's general journal. | C. | Victoria's general journal. | D. | Victoria's secret consolidation journal. | E. | The general journals of both companies. | | | | 2. | Using the acquisition method for a business combination, goodwill is generally defined as: A. | Cost of the investment less the subsidiary's book value at the beginning of the year. | B. | Cost of the investment less the subsidiary's book value at the acquisition date. | C. | Cost of the investment less the subsidiary's fair value at the beginning of the year. | D. | Cost of the investment less the subsidiary's fair value at acquisition date. | E. | None of the above; it is no longer allowed under federal law. | | | | 3. | How are direct and indirect costs accounted for when applying the acquisition method for a business combination? A. | Option A | B. | Option B | C. | Option C | D. | Option D | E. | Option E | | | | | | 4. | A statutory merger is a(n): A. | Business combination in which only one of the two companies continues to exist as a legal corporation. | B. | Business combination in which both...
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...Assignment 1: Business Combinations Cindy Yoon Professor Robert Neely ACC 401 – Advanced Accounting October 24, 2013 Abstract In this paper, I will provide an explanation for the business combination method I selected in expanding the corporation by acquiring another firm, the reason for selecting that business combination method, and how the purchase will grow the business. I will also analyze the accounting requirements for the business combination method I selected and how I determined goodwill was impaired and the financial impact of such impaired goodwill. The business combination method I selected is the acquisition method. Business combinations have implemented the newly created accounting treatment called the “acquisition method.” The major changes in the acquisition method include changes to fair value measurement, goodwill recognition, and non-controlling interests. In acquisition method, the parent company reports the net assets of the acquired company at the price that it was paid for. This price includes any cash payment, the fair market value of any shares issued, and the present value of any promises to pay cash in the future. A key point of the purchase method is that the parent consolidates the book value of all the subsidiary’s assets and liabilities and then the fair value, broken down between Net Book Value and Fair Market Value increments, of the subsidiary's assets and liabilities are added to the parent's own assets and liabilities...
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...(amortizable, impairment); Acquisition has contingent consideration (treated as part of consideration); in process R&D (treat as asset with unlimited life) * Chapter 3: VIE (multiple choice, not problem), computation of goodwill; E&R elimination entry; bargain purchase; previously recorded goodwill (ignore it) * Chapter 4: CERO, impairment testing (for intangibles, limited life and unlimited life, and goodwill) * Chapter 5: NCI; goodwill allocation; N elimination entry (for NCI); NCI with bargain purchase; cash flow statements (multiple choice) * Chapter 6: land (problem) * IFRS not on the exam! * Be careful, if asked what’s acquiring company’s journal entry, it’s equity method entry. (This is different from consolidation entries.) Do one more time: P1.4 P2.5 E4.3, 4.4, P4.6 P5-4, 5-5 E6.1 Review notes: * At the date of acquisition: only E & R needed. * The balance of treasury stock is Credit. (when there is TS, BV should decrease by this amount) * Gain on bargain purchase: total gain(=Acquisition cost+ NCI- FV of net assets) recorded by parent. (E5.4) * Gain on bargain purchase: in R, NCI should be adjusted to it’s fair value at the date f acquisition, so does investment account. (E5.4) * Step N: DR. NCI in net income of xx (similar to step C for controlling interest) CR. Dividend CR. NCI in xx * Summary of CERON (see handout of P5-5) * C&N has similar function: reverse Equity and investment accounts...
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...ACCT 595 Advanced Accounting Final Exam Answers https://homeworklance.com/downloads/acct-595-advanced-accounting-final-exam-answers/ ACCT 595 Advanced Accounting Final Exam Answers FINAL EXAM ADVANCED ACCOUNTING (30 questions x 9 points=270) 1. Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2011 and paid dividends of $60,000 on October 1, 2011. How much income should Gaw recognize on this investment in 2011? A. $16,500. B. $9,000. C. $25,500. D. $7,500. E. $50,000. 2. Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2011, Dew reported income of $250,000 and paid dividends of $80,000. There is no amortization associated with the investment. During 2011, how much income should Yaro recognize related to this investment? A. $24,000. B. $75,000. C. $99,000. D. $51,000. E. $80,000. 3. On January 1, 2011, Pacer Company paid $1,920,000 for 60,000 shares of Lennon Co.’s voting common stock which represents a 45% investment. No allocation to goodwill or other specific account was made. Significant influence over Lennon was achieved by this acquisition. Lennon distributed a dividend of $2.50 per share during 2011 and reported net income of $670,000. What was the balance in the Investment in Lennon Co. account found in the financial records of Pacer as of December 31, 2011? ...
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...Unit III - Consolidation Subsequent to Acquisition Date Key Concepts: Recording on the cost basis requires additional calculations of Ps net income and consolidated retained earnings Under the equity method, the Parent’s net income and retained earnings equals consolidated net income and consolidated retained earnings Preparation of consolidated statements – cost and equity methods - Exhibit 5.16, page 205 Impairment testing for intangible assets with definite useful lives: two step process (page 176): o step 1: is the asset impaired? o step 2: if so, calculate impairment loss as the difference between the recoverable amount f the asset and its carrying value Impairment testing for intangible assets with indefinite useful lives (example: goodwill): as singlestep process; i.e., if the recoverable amount is less than carrying value, asset is impaired by the difference – note that goodwill is no longer amortized but tested for impairment. Key Objectives: Prepare consolidated financial statements for the first and subsequent year ends after acquisition for a parent and its wholly owned (or non-wholly owned) subsidiary when the parent uses the cost method or the equity method. Resources Text pages 170 - 206 Practice Exercises within the unit iStudy Website Unit Assignment Before you begin your reading, review the key points, learning objectives and unit overview/notes. It is useful to keep the learning objectives in mind as you proceed through the...
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...Strategic investment: own more than an passive amount, not enough to control, has power to participate in financial and operational decision of investee IAS28. Classification require professional judgement. * Presentation of board of directors * Interco transaction and relationship * Who own the other shares * Any debt financing intermingled * Sharing technology and patent * Participation in policy making process Investor need to disclose share of investment income, * Also disc, opns * Error correction * Acct policy changes, * Capital transaction included amount in OCI Have influence or not : 20% Users and objectives 1. Public shareholder: a. investors are interested in the performance of the company b. owner: tony Antonio: the liquidation of the company, if its performing well and be able to generate profit. Ability to distribute dividend. 2. Government/CRA: due to the variety of the investment, if it records the investment recognize it properly. Prepare consolidated financial statement under necessary circumstance. Report the income tax and deferral properly. Constraints: 1. IFRS since it becomes public in 2005 Identify issues * Bach Burgers Inc: 80% which is more than passive amount, under IAS28, Teresa;Antonio’s wife has power to participate financial and operational decision. * One of the 12 board of directors * 20% of the shares is owned by other 11 directors...
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...BAC 3634 Corporate Accounting I Trimester 1 2015/2016 Group Assignment Topic: IFRS & IAS and The Practical Disclosure In Fraser & Neave Holdings Berhad Prepared for: Mdm. Haslin Binti Johari Prepared by: No. | Name | ID | 1 | Tan Se Man | 1102703355 | 2 | Wong Chin Ang | 1102703373 | 3 | Gan Hui Leng | 1102703420 | 4 | Neo Zi Sin | 1102703513 | 5 | Cheah Zhi Qin | 1112701231 | Table of Contents List of Diagrams I 1.0 Introduction 1 1.1 Economics of F&N Holdings Berhad 1 2.0 The Users of Financial Statements and Their Information Needs 4 3.0 Discussion of Standards Related to Consolidation and its Actual Presentation 6 4.0 Conclusion 14 Reference 16 List of Diagrams Exhibit 1 Group Structure & Summary of Ownership Interests in Subsidiary Exhibit 2(a) Disclosure of Ownership Interest in Subsidiaries Exhibit 2(b) Disclosure of Ownership Interest in Subsidiaries Exhibit 3 Consolidated and Separate SOPL Exhibit 4 Consolidated and Separate Statements of Comprehensive Income Exhibit 5(a) Consolidated SOFP Exhibit 5(b) Separate SOFP Exhibit 6 Consolidated SOCIE Exhibit 7 Separate SOCIE Exhibit 8 Consolidated and Separate SOCF Exhibit 9 Disclosure about Reporting Date Exhibit 10 Acquisition Method of Business Combinations Exhibit 11 Comparisons of Investment in Subsidiaries of 2 years Exhibit 12 Goodwill as Intangible Assets and Computations Exhibit 13(a) Goodwill Recognized...
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...MASH The first thing I noticed was the awesome theme music. I remember seeing reruns of M*A*S*H as a kid and turning the channel immediately because the opening theme made it sound like a drama and not something funny. So when the lyrics of the song are sung at the beginning of the film it catches me off guard. “Suicide is painless”, is one of the stupidest lyrics I think I've ever heard but I think that was the point of director Robert Altman. I later did some research and found out the song was written by the director's 14 year old son. Something else I noticed right off the bat was how familiar a lot of the faces were but I couldn't put a name on any of them until the credits rolled, Donald Sutherland, Elliot Gould, and Robert Duvall being the most familiar. Up until a few years ago I had no idea M*A*S*H was a movie before it was a show. So when we were assigned the film I had expectations of seeing some of the cast members of the series. Apparently I was wrong because I didn't see any whatsoever. From what I've read, the show is based on the movie, and the movie is based on the book so all the characters are exactly the same. I have to say this. Hawkeye and Trapper John are now two of my favorite movie characters of all time. Sutherland and Gould played their respective parts so nonchalantly that you forget they're both actually trained surgeons in the middle of a very bloody war. I have to admit the zaniness of the film touched a bit too close to something I would...
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...Service Agreement is entered into on the date shown below between US Loan Support (USLS) and Customer: USLS provides processing and support services to assist consumers who are applying for Federal Student Loan Consolidation Services through the Department of Education (DOE). USLS is a private company, not affiliated with any government agency, and for a fee USLS will assist in assembly and submission of student loan consolidation documents. USLS is not a lender, a law office or a debt consolidation company. Customer requests USLS to perform, in good faith, the following services, (“the Services”): 1. Perform a financial review of the Customer’s current situation, 2. Analyze and determine the applicability of potential Student Loan Consolidation options that may be available to Customer from the DOE, 3. Present and discuss the various options with Customer, 4. After an option has been determined, prepare, submit and process a Federal Student Loan Consolidation Application with the DOE, on the Customer’s behalf. 5. After completion of consolidation, USLS will to contact Customer monthly. In the event of a change of Customer circumstances or change in government programs USLS will assist client in reapplying if it benefits Customer. 6. Approximately one year from the consolidation USLS will work with Customer to reapply in an effort to make Customer’s payment as low as possible. IN CONSIDERATION of the promises and covenants of the parties to this Agreement, Customer and USLS hereby...
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...Consumer Information Guide 2015–2016 August 2015 Table of Contents Consumer Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 About University of Phoenix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Accreditation, Licensures, Reviews and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Regional Accreditation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 State and International Licensures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Program Accreditation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 School of Business/Business Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 College of Health Professions: School of Nursing . . . . . . . . . . . . . . . . . . . . . . . ...
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... Submitted By: A Sreekanth Vidyasagar Garvit Sharma A Dixit Altman Z-score The Z-score formula for predicting bankruptcy was published in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. The formula may be used to predict the probability that a firm will go into bankruptcy within two years. Z-scores are used to predict corporate defaults and an easy-to-calculate control measure for the financial distress status of companies in academic studies. The Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company. Z score bankruptcy model: Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + .999X5 Explanation X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors. X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage...
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...Rev Account Stud (2009) 14:534–558 DOI 10.1007/s11142-008-9080-5 Bankruptcy prediction: the case of Japanese listed companies Ming Xu Æ Chu Zhang Published online: 26 July 2008 Ó Springer Science+Business Media, LLC 2008 Abstract This paper investigates if bankruptcy of Japanese listed companies can be predicted using data from 1992 to 2005. We find that the traditional measures, such as Altman’s (J Finance 23:589–609, 1968) Z-score, Ohlson’s (J Accounting Res 18:109–131, 1980) O-score and the option pricing theory-based distance-todefault, previously developed for the U.S. market, are also individually useful for the Japanese market. Moreover, the predictive power is substantially enhanced when these measures are combined. Based on the unique Japanese institutional features of main banks and business groups (known as Keiretsu), we construct a new measure that incorporates bank dependence and Keiretsu dependence. The new measure further improves the ability to predict bankruptcy of Japanese listed companies. Keywords Bankruptcy risk measure Á Accounting information Á Option pricing theory Á Japanese listed companies Á Bank dependence Á Keiretsu JEL Classifications G15 Á G33 1 Introduction When a company falls into bankruptcy, its stakeholders lose some or all the value they invested in the company. From an investor’s point of view, it is important to M. Xu (&) School of Accounting and Finance, The Hong Kong Polytechnic University, Kowloon, Hong Kong, China e-mail:...
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...Comparative HRM: China and Australia * Introduction Over the last few decades, as a rising number of globalisation of business transactions and organisations are seeking to develop and operate in foreign markets, the need for comparative human resource management studies are increased (Brewster & Mayrhofer (eds.) 2012), there are a lot of differences in HRM in different countries and regions, such as institutional culture, organisational structures, recruitment and development and relation of employee (Crystal & Iles 2013). The comparative human resource management provides a better understanding of different national settings on the management task (Hollinshead 2010). Two countries from different institutional and legal systems which are China and Australia will be comparatively analysed in this essay. Firstly, the overview of both countries and culture dimensions will be analysed. Secondly, three HR features will be outlined respectively include culture, organisational structures, and the content of Human Resource Management. in addition, a critical evaluation will be given for how and why these features in these two countries developed in the way that they have. Moreover, a comparative analysis of how HRM has developed in each country will be given, as well as that approach to HRM. * Background and Different Culture between China and Australia The study of the influences of culture is a key role in HRM (Brewster & Mayrhofer (eds.) 2012). Moreover, due...
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