高财第11章（英文版）
2016-11-15 23:16:43 3 举报AI智能生成
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Consolidation Theories<br>
Parent Company Theory<br>
Consolidated financial statements
Extension of parent company statement
Viewpoint of parent company shareholders<br>
Prepare consolidated statements
To benefit parent company shareholders
Noncontrolling interests
Have the separate (subsidiary) statements
Entity Theory<br>
Consolidated financial statements
Viewpoint of the total business entity<br>
All resources of the entity are valued consistently<br>
Income of noncontrolling interests is a distribution of the total business income<br>
Income Reporting<br>
Parent company theory and traditional theory
Consolidated net income is income to the parent company shareholders<br>
Entity theory
Total consolidated income is to be shared between the controlling and noncontrolling interests<br>
Asset Valuation<br>
Parent company theory and traditional theory
Assets and liabilities are adjusted to market value at acquisition, but only to the extent of the parent's ownership share.
Entity theory
Assets and liabilities are consolidated at fair value
Unrealized Gains and Losses<br>
Parent company theory
Unrealized gains and losses attributable to the subsidiary are only eliminated to the extent of the parent's ownership<br>
Entity theory and traditional theory<br>
Unrealized gains and losses are eliminated<br>
All theories treat downstream gains and losses the sam
Consolidated Stockholders' Equity<br>
Contemporary theory
Noncontrolling interest is a single amount and a part of stockholders' equity<br>
Entity theory<br>
Noncontrolling interest is also part of stockholders' equity<br>
It would be decomposed into paid in capital, retained earnings
Other ideas being promoted<br>
Use footnote disclosure for CI and NCI shares of consolidated income<br>
Use proportional consolidation, excluding NCI from the statements<br>
Push-Down Accounting
SEC Requires Push-Down<br>
SEC requires push-down accounting for SEC filings when the subsidiary<br>
Is substantially fully owned (97%)
Has substantially no public debt or preferred stock<br>
Establishes a new basis for the assets and liabilities<br>
Based on acquisition price
Arguments against
Subsidiary is not party to the acquisition
Subsidiary receives no new funds, sells no assets
Push-Down Procedure<br>
Assets and liabilities are revalued
Goodwill, if any, is recorded<br>
Retained earnings (prior to acquisition) are eliminated<br>
Push-down capital replaces retained earnings
Includes old retained earnings
Any adjustments to assets and liabilities, including goodwill<br>
Push-Down Differences<br>
The example used 90% ownership by the parent. <br>
SEC requires push-down accounting
Differences between the methods of application will be considerably less<br>
Leveraged Buyouts with a change in controlling interest<br>
Changing accounting basis may be appropriate<br>
Joint Ventures<br>
Corporate Joint Ventures<br>
Investors who participate in the overall management of the joint venture
Use equity method for the joint venture<br>
If significant influence is not present, use the cost method<br>
Investors with more than 50% of the voting stock have a subsidiary, not a joint venture<br>
Consolidate the subsidiary<br>
Unincorporated Joint Ventures<br>
application of the equity method to unincorporated joint ventures is appropriate<br>
Industry specific practice
Proportional consolidation in oil & gas and undivided interests in real estate ventures<br>
Identify Variable Interest Entities<br>
Variable Interest
The primary beneficiary of the variable interest entity (VIE) must consolidate the VIE.<br>
Primary Beneficiary<br>
The entity that will<br>
Absorb the majority of the expected losses, receive a majority of the expected gains or both<br>
If separate entities are expected to absorb the profits and losses, the entity expected to absorb the losses is the primary beneficiary<br>
The primary beneficiary may be an equity holder and/or creditor of the VIE<br>
Consolidate Variable Interest Entities<br>
Special Consolidation Considerations
VIEs are consolidated like other subsidiaries
Exception
Goodwill can only be recorded if the VIE is a "business" FIN 46(R)<br>
If the VIE is not a "business," the excess paid is an extraordinary loss<br>
"business"<br>
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