Question on FAR journal entries

  • Creator
    Topic
  • #182329
    Meadows30
    Participant

    If one company is acquiring 100% of another company, what would the journal entries look like? For example, if it’s 100% acquisition, you do not debit investment in investee right? You would debit PP&E/Inventory etc.? What would the credits look like?

    Reg 11/26/2012 80
    BEC 01/05/2012
    Audit
    FAR

Viewing 8 replies - 1 through 8 (of 8 total)
  • Author
    Replies
  • #485870
    Anonymous
    Inactive

    i think the credit would be what youre paying for it ie cash, or property given up?

    #485890
    Anonymous
    Inactive

    i think the credit would be what youre paying for it ie cash, or property given up?

    #485872
    zieba
    Participant

    I believe you still have to zero out the equity and reset book to fair value, credit goodwill, etc?

    On one hand you should have your investment at acquisition cost, and non-control share (if any), and vis-a-vis you zero out their common, APIC, retrained earnings, record intangibles at FV adjust assets record at book to FV, and record goodwill for the difference.

    DR: goodwill (GAAP full, IFRS partial)

    DR: intangibles

    DR: adjustment of assets at book to FV at time of acquisition

    DR: book value of assets acquired

    CR: . investment in investee

    CR: . non-controlling interest

    Right, wrong or indifferent, you think they'd ask this on my FAR exam, but no.

    AUD - 75*, 88 done 5/14! (*exp)
    BEC - 74 , 77
    REG - 65 , 76 (10 point combooo!!)
    FAR - 69 , 75

    Dr: perseverance
    Dr: intelligence
    Dr: luck
    . Cr: . advisory score

    #485891
    zieba
    Participant

    I believe you still have to zero out the equity and reset book to fair value, credit goodwill, etc?

    On one hand you should have your investment at acquisition cost, and non-control share (if any), and vis-a-vis you zero out their common, APIC, retrained earnings, record intangibles at FV adjust assets record at book to FV, and record goodwill for the difference.

    DR: goodwill (GAAP full, IFRS partial)

    DR: intangibles

    DR: adjustment of assets at book to FV at time of acquisition

    DR: book value of assets acquired

    CR: . investment in investee

    CR: . non-controlling interest

    Right, wrong or indifferent, you think they'd ask this on my FAR exam, but no.

    AUD - 75*, 88 done 5/14! (*exp)
    BEC - 74 , 77
    REG - 65 , 76 (10 point combooo!!)
    FAR - 69 , 75

    Dr: perseverance
    Dr: intelligence
    Dr: luck
    . Cr: . advisory score

    #485874
    Anonymous
    Inactive

    You simply debit the fair value of the assets acquired and credit the liabilities you are assuming as if you were just purchasing everything from them and assuming their liabilities. The excess of the fair value over the amount paid for the company is goodwill.

    The investment account is normally not associated with a 100% consolidation. It is associated more with the equity method of having significant influence 20%-50%, or just accounting for an investment with less than 20% interest. Hopefully I am remembering right!

    #485892
    Anonymous
    Inactive

    You simply debit the fair value of the assets acquired and credit the liabilities you are assuming as if you were just purchasing everything from them and assuming their liabilities. The excess of the fair value over the amount paid for the company is goodwill.

    The investment account is normally not associated with a 100% consolidation. It is associated more with the equity method of having significant influence 20%-50%, or just accounting for an investment with less than 20% interest. Hopefully I am remembering right!

    #485876
    Anonymous
    Inactive

    From Becker, CAR IN BIG.

    Debit:

    Common stock

    APIC

    Retained Earnings

    Credit:

    Investment in Investee (or cash I believe upon the purchase)

    Non-controlling interest

    Debit:

    Book Value Adjustments (adjust assets to FMV)

    Identifiable Intangibles

    Goodwill-DR or Gain-CR

    #485893
    Anonymous
    Inactive

    From Becker, CAR IN BIG.

    Debit:

    Common stock

    APIC

    Retained Earnings

    Credit:

    Investment in Investee (or cash I believe upon the purchase)

    Non-controlling interest

    Debit:

    Book Value Adjustments (adjust assets to FMV)

    Identifiable Intangibles

    Goodwill-DR or Gain-CR

Viewing 8 replies - 1 through 8 (of 8 total)
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