Professional Documents
Culture Documents
Chapter 4
Consolidated statements bring together the
operating results and financial position of two or
more separate legal entities into a single set of
statements for the economic entity as a whole.
Consolidation As
Of The Date Of
Acquisition
McGraw-Hill/Irwin
Consolidation-Date of Acquisition
4-2
Consolidation-GAAP
RoadmapChapter 4
4-4
RoadmapChapters 5 to 10
4-5
4-6
Consolidation Workpapers
Consolidation Workpapers
Consolidation Workpapers
4-8
Workpaper Format
The consolidation workpaper has four major
column headings or sections (in order from
left to right): Account Titles, Trial Balance
Data, Elimination Entries, and Consolidated.
Workpaper Format
4-10
Workpaper Format
4-12
Workpaper Format
4-14
4-15
4-16
4-18
_________________________________________________________________________________________________________________________________________
Investment Cost
Book Value:
Common Stock-Sub
Retained Earnings-Sub
Parents share 100%
Difference between
cost and book value
$300,000
$200,000
100,000
$300,000
x 1.00 (300,000)
$
4-20
-0-
==============
$300,000
$300,000
4-21
4-22
Common StockSub
$200,000
Retained EarningsSub
100,000
Investment in Sub Stock
$300,000
4-24
4-26
_______________________________________________________________________________________________________________________________________________________________
Investment Cost
Book Value:
Common Stock-Sub
Retained Earnings-Sub
$240,000
$200,000
100,000
$300,000
x 0.80 (240,000)
$
-0==============
4-27
4-28
$240,000
$240,000
4-30
4-31
4-32
_______________________________________________________________________________________________________________________________________________________________
Investment Cost
Book Value:
Common Stock-Sub
Retained Earnings-Sub
Parents share 100%
Debit Differential
$250,000
$200,000
100,000
$300,000
x 0.80 (240,000)
$10,000
==============
4-33
4-34
$250,000
$250,000
4-35
4-36
4-37
4-38
Land
Goodwill
Equipment
Differential
$4,000
9,000
$3,000
10,000
4-39
Credit Differential
4-40
Credit Differential
Errors or omissions on the books of the
subsidiary.
4-42
Credit Differential
Credit Differential
Credit Differential Resolution: As with debit
differentials, the various differences between
fair and book values of the individual assets
and liabilities of the subsidiary should be
recorded on the consolidation workpaper in
the form of an elimination entry.
Credit Differential Resolution: If, after recording
all of the various differences between fair and
book values (discussed immediately above),
a credit differential still remains, that credit
differential represents an unallocated credit
differential.
4-43
4-44
4-46
4-48
4-49
4-50
Push-Down Accounting
4-52
Push-Down Accounting
4-54
End of Chapter
4-55
McGraw-Hill/Irwin
10