Province of San Antonio de Padua – Philippines

ORDER OF FRIARS MINOR (OFM) – FRANCISCANS

Christ the King College of Calbayog City, Inc.
THE PIONEER CATHOLIC FRANCISCAN INSTITUTION OF EASTERN VISAYAS
Founded 1905
INSTITUTE OF ACCOUNTANCY, MANAGEMENT AND COMPUTING AND INFROMATION STUDIES
Studiositas Fraternitas Minoritas Oratio et Devotio

QUICKNOTES

Measurement Period:
- period after the acquisition date during which the acquirer may adjust the provisional amounts recogniz
recognized
ed for a business
combination
- shorter between:
a. acquirer receives the information it needs about facts and circumstances that existed as of DOA; OR
b. twelve months from the acquisition date

Business Combination Achieved in Stages (Step Acquisition)

- shares acquired initially as passive interest or significant influence and additional purchase to obtain control

INVESTMENT FVNA of EE @ DOA

[ % ] Consideration transferred BVNA
[ % ] NCI @ PB or NCI @ FV +/- Over- or undervaluation
[ % ] Previously-held
held interest (Consi ÷ CI% × PHI)

Stock Acquisition
- acquisition of shares above 50% but not 100%
- parent and subsidiary relationship exists

Consolidation as of Date of Acquisition

- only Conso. SFP is prepared as of DOA

Step 1: Add all book balances of parent and subsidiary.

Step 2: Adjust the combined balances by preparing
preparing working paper entries #1
#1-3
Step 3: In consolidated statement of financial position,
position, Investment in Subsidiary is eliminated in the Asset Section;
Goodwill arising from business combination will appear in the
the Asset Section; and Non
Non-controlling
controlling interest appears in the
Equity Section.

Consolidation Subsequent to Date of Acquisition

- parent and subsidiary will continue its operation after the stock acquisition
- both entities prepare separate financial statements,
statements, however only the parent will prepare the consolidated financial
statements for all its subsidiaries
- goal of consolidation: eliminate intercompany transactions and prepare financial statements as if there is only one entity

Items that would affect

ct consolidated balances:
1. Dividend declared by subsidiary – parent and NCI will share the amount proportionately; working paper entry is
prepared to eliminate the dividend received by the parent AND reclassify the dividend received by NCI
2. Receivables and payables between parent and subsidiary – will affect conso. balances on the SFP only
3. Amortization of over/undervaluation –
Understates the net income because of Add the amortization to the conso. net
Overvalued NCA (except land)
overstated depreciation expense income
Overstates the net income because of Deduct the amortization from conso.
Undervalued Asset (except land)
understated depreciation expense net income
Add only the portion of inventory sold
Understates the net income
ncome because of during the year (if not stated, assume
Overvalued Inventory
overstated cost of goods sold ALL are sold because that is the nature
of inventories)
Deduct only the portion of inventory
Overstates the net income because of sold during the year (if not stated,
Undervalued Inventory
understated cost of goods sold assume ALL are sold because that is
the nature of inventories)

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4. Impairment of Goodwill – loss charged to the parent and NCI only if NCI is not measured at partial goodwill; if NCI is
measured at partial goodwill, the impairment loss charged against the parent is NOT the whole impairment loss but only
up to its actual share of impairment
Example: Impairment Loss = 5,000
If FULL GOODWILL METHOD on DOA: Charged to CI  3,000; Charged to NCI  2,000
If PARTIAL GOODWILL METHOD on DOA: Charged to CI  3,000; Charged to NCI  0
5. Gain from bargain purchase on DOA – addition to consolidated net income but only attributable to parent; applies only
on the year of acquisition; subsequent years will not be affected

Note:
- Income from subsidiary is different from Dividend Income from subsidiary

Templates:

Consolidated net income Controlling interest Non-controlling interest

NI – P 100% -
NI – S Proportionate Proportionate
Less: Dividend received by parent Proportionate -
Add or Less: Amortization of over/undervaluation Proportionate Proportionate
Less: Impairment of goodwill Use GW-sharing pro-rate Use GW-sharing pro-rate
Add: Gain from bargain purchase 100% (only on the year of acquisition) -
CONSO NET INCOME SHARE OF CI* NCINIS**
*Total will go to CONSO RE **Total will go to NCINAS

CONSO RE
Beg. RE of Parent
Plus: SHARE OF CI*
Less: Dividend declared by parent
TOTAL CONSO. RE

NCINAS (Balance of NCI)

Beg. NCI at DOA
Add: NCINIS
Less: Assigned amount from dividend declared of subsidiary
NCINAS

CONSO SHE
Ordinary Shares of parent
Share premium of parent
CONSO RE
NCINAS
CONSO SHE

For CONSO BALANCES of Current assets/Non-current Assets/Total Assets/Current Liabilities/Non-current

Liabilities/Total Liabilities:
1. Start with combined balances at book value.
2. Reflect working papers that would affect the balances.