[emichelle2321]

I don’t know why these arent clicking for me. Using Becker, not feeling like the book does a great job explaining this in terms of how the test will ask.

Does anyone have a good explanation so this can click for me? these multiple choice questions are not giving me my “AHA” moment that I usually get when I start working through the problems.

[thebigguy1992]

sure. so if it is a consolidation you need to eliminate the subsidiaries equity and it goes like this:

APIC
R/E
Common stock
Investment in subsidiary (%owned x total SHE(all credits added up)
Non-controlling interest (see above)

then get rid of any goodwill (which is purchase price – FV of net assets)

goodwill
investment in subisidiary (%owned x goodwill)
non-controlling interest (see above)

you also have to get rid of intracompany payables and receivables, because in a consolidation you cant ever own any more or any interest to yourself. so you pretty much just reverse the entries.

accounts payable
accounts receivable

interest revenue
interest expense

you also have to get rid of any inventory that is left over at the end of the year. I'm not sure exactly of that journal entry but it may be:

COGS
inventory

^ for that usually you multiply the GP% by any inventory left over at the end of the year. the key is LEFT OVER at the end of the year.

there may be some more but thats all i know.

[thebigguy1992]

sorry i had put tabs in there to separate debits and credits but it all got messed up when i posted for some reason. APIC/CS/RE are all debits, goodwill is a debit, and the first account listed in the others are all debits. rest are credits.

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