Financial Accounting > Study Notes > Consolidation Techniques & Procedures Rutgers University - ACCT 33:010:401Ch.4_Notes (All)

Consolidation Techniques & Procedures Rutgers University - ACCT 33:010:401Ch.4_Notes

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Consolidation Techniques & Procedures Chapter 4 I. Sequence of Entries/Adjustments on the Consolidated Working Papers (1) Adjust for any errors or omissions on either the parents or subsidiary’s ... books. (2) Eliminate inter-company profits or losses from exchanges of inventory or property, plant, & equipment (chapter 5-6). (3) Eliminate the parent’s “Income from Subsidiary” account and the parent’s share of the subsidiary’s “dividends declared.” The difference will adjust the “Investment in Subsidiary” account back to its beginning balance. (4) Eliminate the subsidiary’s stockholder’s equity accounts and the parent’s “Investment in Subsidiary” account, and recognize the unamortized fair value – book value differential at its beginning balance. If the subsidiary is less than 100% owned by the parent, “nonconrolling interest” will be recognized at its beginning balance. (5) Allocate the unamortized fair value - book value differential and eliminate the “unamortized excess.” (6) Record amortization or depreciation of the fair value – book value differential for the current year. (7) Eliminate any inter-company (reciprocal) balances for dividends or other payables and receivables. (8) If subsidiary is less than 100% owned, record “noncontrolling Interest Income”, eliminate the noncontrolling interest share of dividends, and adjust “Noncontrolling Interest” to its end-ofperiod balance. [Show More]

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