[Lentilcounter]

U.S. GAAP full goodwill method = acquisition cost adjusted for ownership % – fair value of the entity’s net assets including identifiable intangible assets

IFRS partial goodwill method = acquisition cost – (fair value of the subsidiary’s net assets acquired)*ownership %

My understanding is that the formulas above are for the acquisition method when the ownership % is greater than 50%. How do the formulas change for equity method? Or are they the same?

Thanks.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Ana]

From my understanding full and partial methods are used for consolidation (50%+) only.

[Lentilcounter]

@Ana Thanks. So does that mean goodwill could not be created in an investment under the equity method?

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Ana]

correct. Just thinking about it to myself it wouldn't make sense to account for NCI and goodwill when you're just a significant owner (20-50). CARINBIG is only used, and the goodwill methods are needed, to calc the acquisition journal entry.

[Lentilcounter]

Thanks. These Becker simulations are bringing up cobwebs in my knowledge base.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Ana]

I'm doing far chap 4 sims group 2 now, same material. I'm great at mcq on this topic but weak when it's tested as a sim. I (we) have to get this down though.

[IwannabeaCPA2017]

oh nice since yall on F4 I just finished.. Those SIMS were brutal especially on Consolidation.. I don't get it. @Ana, if u used becker can you explain one of those SIMS I believe it was #5 in the second SIMS testlet. They gave a list of like ppe, inventory and stuff and you had to fill in the blanks. I did some cheating and I get the overall idea where they had to be reported based on FV but I woudlnt know what to do on exam if that showed up..

[IwannabeaCPA2017]

TBH these questions are so math intense I cant remember the formula but when I have it handy and use it as a reference the MCQ are much easier. I agree the MCQ isn't too bad but the SIMS are tough. it gets so vague

[Ana]

@iwanna sure, I actually understand that Sim, only got one yellow box. With the information given above the chart, fill out the chart noting if the line item is an asset, liability, oci, or p/l. If the entry is a credit, note with as a negative number. If you're familiar with CARINBIG, you know that assets and liabs should be at fv and legal fees are expensed when incurred. Only the post acquisition line item threw me off. But it says we don't book it as a liability just wait to expense when incurred. Hope that helped.

[Lentilcounter]

What's the difference between a merger, acquisition, consolidation, and a combination?

These are terms that are thrown out a lot in multiple choice and I think it's important for test takers to know the differences.

For example, registration and issuance fees reduce additional paid in capital in a business combination per Ninja MCQ.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Lentilcounter]

bump. anyone?

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Ana]

@lentil seems to me that they're all synonyms for the consolidation method. In the real world there are differences between the types you listed but it doesn't matter for the exam.

[Lentilcounter]

@Ana

Wiley had this explanation below.

Legal forms of business combinations = merger, consolidation, acquisition

While in a merger and a consolidation, at least one preexisting entity ceases to exist, in an acquisition, no entity ceases to exist. In an acquisition, one preexisting entity acquires controlling interest in another preexisting entity, and both continue to exist as separate legal entities. In a legal merger, one preexisting entity is combined into another preexisting entity; one entity ceases to exist. In a legal consolidation, two or more existing entities are combined into one new entity; two or more entities cease to exist.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Ana]

thanks, as far as it goes for the exam we just treat them all as consolidation. right?
I finally got the je's down for acquisition, the purchase and elimination entry. now that I do though, I probable won't see it on the exam, that's how it goes.

[Author]

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