Practical Accounting 2 Vol 2

Practical
Accounting 2
Advance Financial
Accounting Vol. 2
Advance Accounting Vol. 2

1. Home Office and Branch Accounting
General Procedures
Special Problems
3. Business Combinations
4. Consolidated Balance Sheet Date
of Acquisition
5. Consolidated Financial Statements

6. Intercompany Profit Transactions
Inventories
7. Intercompany Gain Transactions
Plant Assets
8. Accounting For Foreign Currency
Transactions
9. Translation of Foreign Entity
Statements

General Procedures
Accounting for Sales Agency
1. Determine NOT Separately the Net
Income
2. Determine Separately the Net Income

1. Sales Agency - Determine NOT
Separately the Net Income
The transactions of the Sales
agency are recorded in the Home
Office's own revenue and expense
accounts.
When the Home Office transfers
fixed assets to Sales Agency.

1. Sales Agency - Determine
Separately the Net Income

Observation
At the end of accounting period, the account
Shipments of Merchandise - Agency is deducted
from the total of Beginning Inventory and
Purchases to determine the GAS by the home
office for its operations.
Sales Agency neither keeps a complete set of books
nor uses a double entry systems accounts. An
Imprest System is usually adopted by the Home
Office for the working fund of the sales agency.
THEY MAINTAIN SAMPLES INVENTORY

Accounting for Branch

TRANSACTIONS
Established of Branch
Recognition of Branch Income or Loss

Merchandise Shipments to a Branch:
From Outside Parties:
From Home Office Billed at Cost with

Freight Charges:

Branch PPE
Case A: Plant Assets are recorded in the
books of the Branch but purchased by
the Home Office for the Branch
Case B: Plant Assets are recorded in the

books of the Home Office but purchased
by the Home Office for the Branch

Case C: Plant Asset are recorded in the
books of the Home Office but purchased
by the Branch for the Branch

Observation
1. Freight Costs incurred in shipping
merchandise from the HO to Branch become
part of the cost of the branch inventory.
2. Shipments to Branch is subtracted from the
total of beginning inventory and purchases in
the computation of home office's COGS for
the period.
3. Shipments from Home Office account on the
branch books is included in the computation
of the branch's COGS as an addition to
purchases.

Observation
4. The HO Shipments to Branch and branch
Shipments from HO account are nominal
accounts and therefore closed at the end
of the period to Income Summary
account together with the revenue and
expense accounts.

TRANSACTIONS
Apportionment of Expenses:
Utilities Expenses (Expenses incurred by branch and billed
to HO account)
Depreciation Expenses (Branch Plant Assets carried on HO
books)
Advertising Expenses (Allocated to Branch)

Observation
Not Only Assets can be transferred BUT
ALSO the allocated expenses.
Elimination Entries:
RECONCILIATION OF RECIPROCAL
ACCOUNTS (Common Errors)

2. SPECIAL PROBLEMS - BRANCH
ACCOUNTING
1. Merchandise Shipments to Branch at
price in excess of cost, @ billed price
2. Inter-branch Transfers of Cash
3. Inter-branch transfer of Merchandise.

2. SPECIAL PROBLEMS - BRANCH
ACCOUNTING
1. Merchandise Shipments to Branch at
price in excess of cost, @ billed price
When billings to the branch exceed cost,
the profits determined by the branch will
be less than actual profits.
Inventories reported by the branch are
overstated in as much as they were
valued based on the billed price, NOT
THEIR COST.

Observation
Home Office records the overvaluation.
Allowance for Overvaluation of Branch Inventory is also called
Unrealized Profit in Branch Inventory.
Branch Income is NOT CLOSE to Investment in Branch; might result to
unbalanced amount.
Only the reported income or loss of branch is closed to Investment in
Branch.
Allowance for Overvaluation will remain until the shipment is shifted
is reshipped or sold by the branch to outsiders. (Unrealized
Realized Profit)

Observation
On the 1st year, the elimination of the
intercompany shipments requires the
complete elimination of Unrealized Profit
account, because there's NO Beginning
Inventory.

TREATMENT OF BEGGINNING BILLED
ABOVE COST

Observation
Realized Profit is the amount that Branch
Net Income is Understated
Concern means TRUE

TRANSACTIONS BETWEEN BRANCHES
Inter-branch Transfers of Cash
Accounting Rule: The Branch will clear such
transfer through its Home Office Account

Inter-branch Transfers of Merchandise
Accounting Rule:
Branches SHOULD NOT CARRY an account with
another branch but should be clear the transfer
through its Home Office account.
Freight on Goods received by the branch directly from
HO are properly included in the cost of branch
inventory, but the transfer of merchandise from one
branch to another does not justify increasing the
inventory value by the additional freight costs
incurred because of the indirect routing
Excess freight costs should be absorbed by the Home
Office and treated as Expense.

Explanation to the Accounting Rule:
Recording as an expense the excess freight
cost on merchandise transferred from
one branch to another is a manifestation
of the accounting principle that losses
should be given prompt recognition.
The excess freight cost arising from such
shipments generally is a result of
inefficient planning of original shipments
and therefore should not be included in
inventories.

Branch True Income Statement (T-account)
End Of Home and Branch

Accounting
BUSINESS
COMBINATION
INTRODUCTION
BUSINESS COMBINATION
IFRS 3 (2008) Business Combination as
a transaction or event in which an
acquirer obtains control of one or more
businesses.
Business Combination is the term
applied to external expansion in which
separate enterprises are brought
together into one economic entity as a
result as one enterprise obtaining
control over the net assets &
operations of another enterprise.
CLASSIFICATION OF
#1. Acquisition of Assets

The acquiring corporation must
negotiate with management. To obtain
the asset (assume the liability) of the
company
being acquired in
exchanged for cash, securities, or
other consideration.
Upon consummation, the acquired
company ceases to exist as a separate
economic, legal, & accounting entity.
CLASSIFICATION OF
#1. Acquisition of Assets

Note:
This results in automatic
consolidation for the current
& subsequent periods, since
the
assets & liabilities of
both companies are recorded
in the same set of books.
CLASSIFICATION OF
#1.
Acquisition of Assets
A. Statutory Merger
when 2 or more entity
merge into
single business
which shall be one of the
constituent corporation.
A Corp + B Corp = A or B Corp.
CLASSIFICATION OF
#1.
Acquisition of Assets
B. Statutory Consolidation
- when 2 or more consolidate &
form a new corporation from
then on.
A Corp. + B Corp. = Z Corp.
CLASSIFICATION OF
#2.
Stock
Acquisition
or
Acquisition
of Common Stock
The acquiring corporation may acquire
majority
ownership
interest
of
outstanding shares common stock or
control of a corporation & the separate l
legal entities of each enterprise are
preserved or they both continue their
legal existence
Parent (acquiring Corp.) & Subsidiary
(acquired corp.) relationship.
CLASSIFICATION OF
#2.
Stock Acquisition or
Acquisition
of Common
Stock
Accounting Rule:
2 companies may be viewed as a
single reporting entity, PAS #27
mandates for a consolidated
financial statements.
PFRS #3 (2008) Business

Combination Summaries
#1. Definition of Business

Combination
It is a transaction or event in
which
an
acquirer
obtains
control
of
one
or
more
businesses.

#2. Scope: It does not apply

to
the
following
transactions
Formation of a Joint Venture.
Acquisition of an asset or group of
assets that does not constitute a
business.
Combination between entities or
business under common control.

#3. Method of Accounting
All business combination within

the scope the standard must be
accounted
for
using
the
acquisition method. Pooling of
Interest Method is
STRICTLY
PROHIBITED.

#3. Method of Accounting
Acquisition Method Consist:

Identifying the acquirer
Determining the acquisition date &
consideration transferred (Purchase price)
Recording & Measuring
- the identifiable assets acquired,
liabilities assumed & any NCI (non
controlling interest)
Recognizing Goodwill, or in the case of a
bargain purchase, a gain
Accounting Procedure:
Identifying the Acquirer
The ACQUIRER is the combined
entity that obtains control of the
other combining entities.
Indicators:
1. Fair Value of one entity is
significantly greater than that of
the other combining enterprises
therefore, Larger entity would be
deemed the Acquirer.
Accounting Procedure:
Identifying
(cont.)
the
Acquirer
2.The Entity paying the cash would

be deemed the Acquirer
3.Management of one enterprise is
able to dominate selection of
management of the combined
entity.
Therefore, the dominant entity
would be deemed the Acquirer.
Accounting Procedures in
Recording the Acquisitions:
(1) All accounts identified are
measured at estimated Fair
Value. This always the case
even if the consideration given
for a company is less than the
sum of the fair value of the net
assets acquired.
Consideration Transferred:
Is measured at Fair Value at acquisition
date calculated as the sum of the
acquisition date of Fair Value of:
the asset transferred by the Acquirer
the liabilities incurred by the Acquirer to
former owners of the acquiree.
the equity interest issued by the
Acquirer.
(2)
If the total consideration given for

a company EXCEEDS the fair value of
its net identifiable assets, the excess
price paid is recorded as Goodwill.
(3)
If the total consideration given for

a company is LESS THAN the fair
value of its net identifiable assets,
the excess of net assets over the
price paid is recorded as Gain in
Acquisition.
(4) All Acquisition- Related Cost
are Expensed in the period in
which the cost are incurred,
with one exemption. The cost
to issue equity securities are
recognize as a reduction from
the value assigned to Share
Premium (APIC)
Therefore:
Direct Cost of Combination = EXPENSE
Indirect Cost of Combination =
EXPENSE
Cost to Issue and Register Stock =
Debit to Share Premium (APIC)
account
Cost to Issue Debt Securities (Bonds)
= Bond Issue Cost
Contingent Consideration
[ Par. 39 of PFRS #3 2008]
The acquirer shall recognize the
acquisition date Fair Value of
contingent consideration as part of
the consideration transferred.
If it was Revalued based on
additional
information,
the
estimated liability & Goodwill or
Income from Acquisition would be
adjusted.
[ Par. 39 of PFRS #3 2008]
Entry:
Dr. Goodwill
XX
Cr. Contingent
Consideration
Payable
XX
Dr. Income from Acquisition

XX
Cr. Contingent
Consideration
Payable
XX
if the adjustment is included in

the Profit & Loss of the later
period.
[ Par. 39 of PFRS #3 2008]
Entry:
Dr. Loss on Contingent Consideration Payable
XX
Cr. Contingent Consideration Payable
XX
Computation of Goodwill
(Direct Approach)
Data: Past Earnings for 5 years

Year 1
Year 2
Year 3
Year 4
Year 5
Total
950,000
975,000
950,000
1,075,000
1,050,000
5,000,000
Average Earnings for 5 years 1,000,000

(5,000,000 / 5)
Net Assets, excluding Goodwill 7,500,000
Normal Rate of Return in the industry 12%
(Direct Approach)
Method #1:
Purchase
of
Earnings
Ave.
Excess
Note: Goodwill is measured at average

excess earnings
(Direct Approach)
Method #2:
Capitalization of Average Excess

Earnings
excess earnings capitalized at 25%
(Direct Approach)
Method #3:
Capitalization
of
Average
Earnings
earnings capitalized at 10%
(Direct Approach)
Method #4:
Present Value Method

Note: Goodwill is the discounted value
or the Present Value of the average
excess
earnings that are
expected to become
available in
future periods.
Computations:
100,000 are expected to be
received in 5 years, discounted rate
is 12%
(Direct Approach)
Method #4:
Present Value Method
APPLYING THE ACQUISITION

METHOD
Illustrative Problem
Balance Sheet:
Illustrative Problem (Case

1)
Case #1: Price Paid EXCEEDS

Fair Value of Net Identifiable Assets
Acquired

1)
(1)To record the Net Assets Acquired @ FV

including Goodwill

1)
(2) To record the Acquisition-Related Cost

2)
Case #2: Price Paid LESS THAN

Fair Value of Net Identifiable Assets
Acquired

2)
(1)To record the Net Assets Acquired:

2)
(2) To record the Acquisition-Related Cost

2)
NOTE:
Stock Issuance Cost EXCEED the
Share Premium recorded at
acquisition, the excess should be
treated as EXPENSE.
Gain must be reported as a
SEPARATE LINE ITEM in the Income
Statement of the Acquirer in the
period of Acquisition.

1)
BOOKS OF THE ACQUIREE
(1)To record the sale of the Net Assets
in CASE #1

1)
BOOKS OF THE ACQUIREE
(2)To record the distribution of
Acquirer, Inc. shares received to its
shareholders and liquidation of the
Acquiree .

1)
OBSERVATION:
All accounts in the acquiree are
derecognized at Book Value.
All increase in Fair Value is not
recorded.
Price paid amount is recorded in the
Investment in Acquirer.
Illustrative
OBSERVATION: Problem (Case
1)Balance Sheet Presentation:
Under the Acquisition Method, the
Balance Sheet of the Acquirer after
the combination are included all
assets & liabilities of the acquiree
at fair value.
Income Statement Presentation:
The Income Statement of the
Acquirer for the accounting period
in which business combination
occurred included the operating
results of the acquiree after the
ACQUISITION OF
STOCK
Note:
Acquisition company deals
only
w/
existing
shareholders
of
the
acquired company not the
company itself.
Data:
10,000 shares @ 100 par
value
P 2,000,000 cash paid
P 100,000 cash paid for
professional fees.
QUESTION #2: MULTIPLE

CHOICE
(1) To record the acquisition of
stock from S Company:
(2) To record
related cost
the
acquisition-
OBSERVATION:
Entries do not record the individual
underlying assets and liabilities over w/c
control is achieved.
It is recorded in an Investment Account
the represents the controlling interest in
the net assets of the subsidiary.
Date of Acquisition of Stock no goodwill
or income from acquisition is recorded by
the acquirer.
The Investment in Subsidiary account
would appear as a long-term investment
on Acquirers Balance Sheet.
Impairment of Goodwill
Impairment Testing in Later
Periods
Note:
Goodwill is considered to be
impaired
if
the
carrying
amount of the units net assets
(including goodwill) exceeds
the recoverable amount of the
unit.
CONSOLIDATED
STATEMENT OF
FINANCIAL
STATEMENTS
Consolidated Financial
Statements
Consolidated Financial Statements

are the financial statements of a
group presented as those of a single
economic entity. The group is the
parent and all of its subsidiaries.
A parent is an entity that has one or
more subsidiaries.
A subsidiary is an entity, including
an unincorporated entity such as
partnership, that is controlled by
Core Principle for

Consolidation
of
F/s
PAS 27, par. 9, provides that a parent shall
present consolidated financial statements in
which it consolidates its investments in
subsidiaries.
Par. 12 further provides that consolidated
financial statements shall include all
subsidiaries of the parent.
A subsidiary is not excluded from consolidated
simply because the investor is a venture capital
organization, mutual fund, unit trust or similar
entity.
A subsidiary is not excluded from consolidation
even if its business activities are dissimilar
from those of the other entities within the group.
Parent is NOT REQUIRED to present

PAS 27, par. 10, provides that a parent is not
required to present Consolidated Financial
Statements.
1. The parent is itself a wholly-owned subsidiary,
or is a partially-owned subsidiary and its other
owners including those not otherwise entitled
to vote do not object to the parent not
presenting consolidated financial statements.
2. The parents debt or equity instruments are
not traded in a public market, meaning,
domestic or foreign stock exchange or an
over-the-counter market.
Parent is NOT REQUIRED to present

PAS 27, par. 10, provides that a parent is not
required to present Consolidated Financial
Statements.
3. The parents did not file or is not in the
process of filling its financial statements
with a securities commission or other
regulatory body for the purpose of issuing
any class of instruments in a public market.
4. The ultimate or any intermediate parent of
the parent produces consolidated financial
statements available for public use that
comply with PFRS.
Parent LOSE CONTROL over a

Subsidiary
A parent can lose control of a subsidiary
with or without change in absolute or
relative ownership level.
For example, control is lost when a
subsidiary becomes subject to the
control of a government, court,
administrator or regulator.
Control could also be lost as result of a
contractual agreement.
Control to the preparation and

presentation of Consolidated F/S
Control power to govern the financial
and operating policies of an entity so as
to obtain benefits from its activities.
Control is presumed to exist when the
parent owns, directly or indirectly
through subsidiaries, more than half of
the voting power of an entity, unless in
exceptional circumstances it can be
clearly demonstrated that such
ownership does not constitute control.
Circumstances where control exist

even if the parent owns half or less
of the voting power of an entity.
Control exist when the parent owns half
or less of the voting power of an
entity when there is:
1. Power over more than half of the
voting rights by virtue of an
agreement with other investors.
2. Power to govern the financial and
operating policies of the entity under
a statute or an agreement.
Circumstances where control exist

even if the parent owns half or less
of the voting power of an entity.
Control exist when the parent owns half
or less of the voting power of an entity
when there is:
3. Power to appoint or remove the
majority of the members of the board
of directors or equivalent governing
body.
4. Power to cast the majority of votes at
meetings of the board of directors or
equivalent governing body.
Treatment for Parent loses

control of a Subsidiary
1. If a parent loses control of a
subsidiary, the assets and liabilities
and related equity components of the
subsidiary shall be derecognized at
carrying amount (PAS 27, par. 34AB)
2. Any gain or loss arising from the
difference between the consideration
received and carrying amount is
recognized in profit or loss (PAS 27,
par. 34F)
Treatment for Parent loses

control of a Subsidiary
3. If any amounts have been
recognized in other comprehensive
income in relation to the subsidiary,
these amounts shall be reclassified
to profit or loss or retained earnings
in accordance with relevant
accounting standard (PAS 27, PAR.
34E)
Treatment for any investment retained

in the subsidiary when control is lost.
PAS 27, par. 34D, provides that an
entity shall recognize any investment
retained in the subsidiary at fair value
at the date when control is lost.
Par. 36 further provides that such
investment shall be accounted for in
accordance with appropriate
accounting standard, for example, PAS
39.
Treatment for any investment retained

in the subsidiary when control is lost.
Under par. 37, if the investment is to

be accounted for as a financial asset
in accordance with PAS 39, the fair
value of the investment retained in
the subsidiary at the date when
control is lost shall be regarded as
the fair value on initial recognition of
a financial asset.
Treatment for change in a

parents ownership interest but
does not result in loss of control.
PAS 27, par. 30, provides that where a
change in parents ownership interest
in a subsidiary does not result in a loss
of control, the change shall be
accounted for as an equity transaction.
Par. 31, further provides that in such
circumstances, the carrying amounts of
the controlling and noncontrolling
interests shall be adjusted to reflect the
change in the level of ownership.
Treatment for change in a

parents ownership interest but
does not result in loss of control.
Any difference between the
consideration received and the
amount of the adjustment of the
noncontrolling interests shall be
recognized directly in equity.
Consolidation Procedures for

preparing Consolidated F/S
1. The financial statements of the parent and
its subsidiaries are combined on a line by
line basis by adding together like items
of assets, liabilities, equity, income and
expenses.
2. Intragroup balances, transactions, income
and expenses shall be eliminated in full.
3. The financial statements of the parent and
its subsidiaries used in the preparation of
consolidated financial statements shall be
prepared as of the same reporting date.

4. When the reporting dates of the
parent and a subsidiary are different,
the subsidiary shall prepare for
consolidation purposes additional
financial statements as of the same
date as the F/S of the parent unless it
is impracticable to do so.
In any case, the difference between
reporting dates shall be no more than
3 months.

5. Consolidated F/S shall be prepared
using uniform accounting policies for
like transactions and other events in
similar circumstances.
Presentation of Noncontrolling
interest in the consolidated F/P
Noncontrolling interests shall be presented
in the consolidated statement of financial
position within equity, separately from
the equity of the owners of the parent.
Profits or loss and each component of
other comprehensive income are
attributed to the owners of the parent and
to the noncontrolling interests even if this
results in the noncontrolling interests
having a deficit balance.
Presentation of Noncontrolling
interest in the consolidated F/P
If a subsidiary has outstanding
cumulative preference shares that
are classified as equity and are held
by noncontrolling interests and
classified as equity, the parent
computes its share of profits or
losses after adjusting for the
subsidiarys preference dividends,
whether or not dividends have been
declared.
Separate Financial
Statements
Separate F/S are those presented by
a parent, an investor in an associate
or a venturer in a jointly controlled
entity, in which the investments are
accounted for on the basis of the
direct equity interest rather than on
the basis of the reported results and
net assets of the investee.
Accounting for Investments in

Subsidiaries, Jointly Controlled Entities
and Associates in Separate F/S
When Separate F/S are prepared,

investments in subsidiaries, jointly
controlled entities and Associates
shall be accounted for either:
1. Cost
2. In accordance with PAS 39 on
Financial Instruments.
Accounting for Investments in

Subsidiaries, Jointly Controlled Entities
and Associates in Separate F/S
As amended, investments in subsidiaries,
jointly controlled entities and associates that
are accounted for in separate F/S in
accordance with PAS 39, rather than at cost,
shall continue to be accounted for in
accordance with PAS 39, even if such
investments are classified as held for sale
under PFRS 5.
However, investment at cost shall be
remeasured in accordance with PFRS 5 when
classified as held for sale.
Cost Method of Accounting

for Investment In Subsidiary.
The cost method is a method of
accounting for an investment
whereby the investment is
recognized at cost.
The cost method is usually applied
with respect to investment in
unquoted equity instrument or
nonmarketable equity security.
Cost Method of Accounting

for Investment In Subsidiary.
The investor does not share in the profit or loss of
the investee because this method is based on the
legal relationship between the investor and the
investee. The investor and the investee are
independent of the other.
PAS 27, par. 4, as amended, provides that in
applying the cost method, dividends received
from a subsidiary, jointly controlled entity or
associate are recognized as dividend income,
regardless of whether the dividends originated
from preacquisition retained earnings or post
acquisition retained earnings.
Entity Concept, Parent Entity

Concept and Proprietary Concept
in preparing consolidated F/S.
Entity Concept = that describe that
the group consist of all of the asset
and liabilities of the parent and its
subsidiaries. The non controlling
interest is classified as a part of
equity. This is the concept required
by PAS 27.

The Parent Entity = is the same as
the entity concept except that the
noncontrolling interest is classified as
LIABILITY.

The proprietary concept or
proportional consolidation =
means that the group consists of
the assets and liabilities of the
parent and the parents proportional
share of the assets and liabilities of
the subsidiary.

Hence, the consolidated F/S do not
include all of the net assets of a
subsidiary, only the parents share.
As the noncontrolling interest is
outside the group, the noncontrolling
interest share of subsidiary equity is
not disclosed.
CONSOLIDATED
FINANCIAL STATEMENTS
Subsequent to Date
of Acquisition
Discusses the subsequent

depreciation and amortization of
the asset and liability revaluations
in conjunction with its analysis of
working paper procedures for
preparing Consolidated Financial
Statements
Consolidated Net
Income
PARENT COMPANY APPROACH
- Consolidated net income is that part of the
total enterprises income that is assigned
to the parent companys stockholders.
- For Wholly owned subsidiary,
- All income of the parent and its
subsidiaries accrues to the parent
company.
- For Partial owned subsidiary,
- A portion of its income accrues to its NCI
and is excluded from consolidated net
income.
Consolidated Net
Income
PARENT COMPANY APPROACH
Consolidated Net
Income
ENTITY APPROACH
- For Wholly owned subsidiary,
- The consolidated net income is
computed similarly as that of
the parent.
- For Partial owned subsidiary,
- The portion of its income
accruing to NCI is included in
the consolidated net income.
Consolidated Net
Income
ENTITY APPROACH
Consolidated Net
Income
OBSERVATION:
Consolidated Net Income under
parent company approach is the
same as the income allocated to
parent company stockholders under
approach.
Difference b/w parent company and
entity approaches lie solely in the
manner of consolidating parent and
subsidiary F/S and in reporting the B/S
and I/S.
Consolidated Net
Income
Elimination Entries:
ACCOUNTING FOR
INVESTMENT IN A
SUBSIDIARY
Cost Method Equity Method
Used when the
Used when the
parent (acquirer)
acquirer/investor
owns directly or
owns 20% or more
indirectly more
(less than 50%) of
than half of the
the voting power of
the
voting power of
investee/acquiree,
an entity
thereby exercising
(acquiree),
significant influence
thereby
exercising control over the operations
of the investees.
(IAS 27)
ACCOUNTING FOR
INVESTMENT IN A
SUBSIDIARY
EQUITY METHOD
The investment account is initially
recorded at cost and is increased or
decreased to recognize the investors
share of the income or loss of the
investee after the date of acquisition.
Dividends received from an investee
reduce the investment account
balance.
Wholly Owned
Subsidiary Acquisition
st Year After Acquisition
1
at BV
Wholly Owned
PARENTS
at BV ENTRIES:
Wholly Owned
WORKING
PAPER
ELIMINATION
at
BV
ENTRIES:
(1)Elimination Dividend Income account
against the Dividend Declared by the
subsidiary.
(2)Eliminate the investment and equity
accounts at date of acquisition.
**this accounting technique is
necessary because the parents
Investment in Subsidiary account is
maintained @the cost of the original
investment under the cost method.
Wholly Owned
WORKING
PAPER
ELIMINATION
at
BV
ENTRIES:
(1)Elimination Dividend Income account
against the Dividend Declared by the
subsidiary.
(2)Eliminate the investment and equity
accounts at date of acquisition.
**this accounting technique is
necessary because the parents
Investment in Subsidiary account is
maintained @the cost of the original
investment under the cost method.

Practical Accounting 2 Vol 2

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Practical Accounting 2 Vol 2

Încărcat de

Drepturi de autor:

Formate disponibile

Practical

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Recognition of Branch Income or Loss

Advance Accounting Vol. 2

From Home Office Billed at Cost with

Advance Accounting Vol. 2

Case B: Plant Assets are recorded in the

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

Advance Accounting Vol. 2

End Of Home and Branch

#1. Acquisition of Assets

#1. Acquisition of Assets

PFRS #3 (2008) Business

#1. Definition of Business

PFRS #3 (2008) Business

#2. Scope: It does not apply

PFRS #3 (2008) Business

#3. Method of Accounting

All business combination within

PFRS #3 (2008) Business

#3. Method of Accounting

Acquisition Method Consist:

2.The Entity paying the cash would

If the total consideration given for

If the total consideration given for

Dr. Income from Acquisition

if the adjustment is included in

Data: Past Earnings for 5 years

Average Earnings for 5 years 1,000,000

Note: Goodwill is measured at average

Capitalization of Average Excess

Present Value Method

Present Value Method

APPLYING THE ACQUISITION

Illustrative Problem (Case

Case #1: Price Paid EXCEEDS