Chapter 10

5 terms by Apachuichank 

Ready to study?
Start with Flashcards

Create a new folder

Advertisement Upgrade to remove ads

Additional Consolidation Reporting Issues

The 1st and 2nd elimination entries are for the post-acquisition equity adjustments to the investment account and non-controlling interest, as usual. The 3rd elimination entry must include eliminating the income statement accounts (beginning of the year to acquisition date).

When a subsidiary is acquired in the middle of the accounting period what are the changes to regular elimination entries?

They may consolidate their taxes. Inter-company transfers will not be taxed until exchanged with a third party. One company's losses may be offset by the other company's profits.

If a parent owns 80% stock of a subsidiary what special tax maneuver is permitted?

Since inter-company profits are eliminated on both financial and tax returns there are no temporary differences. No DTA (deferred tax assets) or DTL (deferred tax liabilities) necessary.

How are unrealized inter-company profits eliminated when a consolidated tax return is filed?

Since for tax purposes inter-company profits will be taxed while financial statements wait until sale to a non-affiliate, to eliminate the excess tax expense we create a deferred income taxes account. The additional elimination entry looks similar to :
Deferred Tax Asset XXX
Income Tax Expense XXX

How are unrealized inter-company profits eliminated when separate tax returns are filed?

Parents share of the consolidated Net Income +/- Adjustment for Parent Securities - (Parent Ownership % Income available to common share holders of sub) + (shares held by parent subsidiary diluted EPS) ALL DIVIDED BY (Weighted average of parent company shares outstanding + shares of parent to be issued if dilutive securities are converted and options exercised). If you got all that they your a boss!

Diluted Consolidated Earnings Per Share, How do you calculate it?

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set