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    Advanced Financial Accounting ACCT 302 Assignment 2: Instructions For The Students

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    The document provides instructions for an accounting assignment. It states that the assignment is due on March 12th, 2015 and must be submitted through the blackboard system, not by email. It also notes that students who cheat or plagiarize will receive a zero grade. The document then lists three questions regarding consolidated financial statements, the difference between acquisition price and underlying book value, and preparing a consolidated balance sheet for a parent company that acquired all shares of a subsidiary.

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    Advanced Financial Accounting ACCT 302 Assignment 2: Instructions For The Students

    Uploaded by

    api-280585803
    251 views5 pages
    The document provides instructions for an accounting assignment. It states that the assignment is due on March 12th, 2015 and must be submitted through the blackboard system, not by email. It also notes that students who cheat or plagiarize will receive a zero grade. The document then lists three questions regarding consolidated financial statements, the difference between acquisition price and underlying book value, and preparing a consolidated balance sheet for a parent company that acquired all shares of a subsidiary.

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    acct 302 2nd assingnment (students copy)

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    The document provides instructions for an accounting assignment. It states that the assignment is due on March 12th, 2015 and must be submitted through the blackboard system, not by email. It also notes that students who cheat or plagiarize will receive a zero grade. The document then lists three questions regarding consolidated financial statements, the difference between acquisition price and underlying book value, and preparing a consolidated balance sheet for a parent company that acquired all shares of a subsidiary.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    251 views5 pages

    Advanced Financial Accounting ACCT 302 Assignment 2: Instructions For The Students

    Uploaded by

    api-280585803
    The document provides instructions for an accounting assignment. It states that the assignment is due on March 12th, 2015 and must be submitted through the blackboard system, not by email. It also notes that students who cheat or plagiarize will receive a zero grade. The document then lists three questions regarding consolidated financial statements, the difference between acquisition price and underlying book value, and preparing a consolidated balance sheet for a parent company that acquired all shares of a subsidiary.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Advanced Financial Accounting

    ACCT 302
    Assignment 2
    Instructions for the students:
    The due date for this assignment is 12th 2015 March.
    Assignments submitted after due date will not be marked.
    Students are required to submit the assignment on
    the black board and not on instructors E-mail address.
    Students who cheat or copy from other students will
    receive a grade of zero.

    Q1.Consolidated financial statements are required by GAAP in certain


    circumstances. This information can be very useful to stockholders and
    creditors. Yet, there are limitations to these financial statements for which the
    users must be aware. What are at least three (3) limitations of consolidated
    financial statements?
    Results of individual companies included in the consolidation are not
    disclosed, thereby hiding poor performance.
    Not all the consolidated retained earnings balance is necessarily available for
    dividends of the parent.
    Financial ratios are not necessarily representative of any single company in
    the consolidation.
    Similar accounts of different companies that are combined in the
    consolidation may not be entirely comparable.
    Additional information about companies may be needed for a fair
    presentation, thus requiring voluminous footnotes.
    Information is lost any time data sets are aggregated.

    Q2. Describe the difference between Acquisition Price and Underlying Book
    Value.
    When an investor purchases the common stock of another company, the purchase price normally
    is based on the market value of the shares acquired rather than the book value of the investees
    assets and liabilities.
    the acquisition price is usually different from the book value of the investors proportionate share
    of the investees net assets. This difference is referred to as a differential.
    The differential is frequently positive, meaning the acquiring company pays more than their
    share of the book value of the subsidiarys net assets.
    When the parent company uses the equity-method that portion of the differential pertaining to
    limited-life assets of the investee, including identifiable intangibles, must be amortized over the
    remaining economic lives of those assets.
    Any portion of the differential that represents goodwill (referred to as equity-method goodwill )
    is not amortized or written off because of impairment.
    an impairment loss on the investment itself should be recognized if it suffers a material decline in
    value that is other than temporary.

    Q.3
    Lea Company acquired all of Tenzing Corporation's stock on January 1, 20X6 for $150,000
    cash. On December 31, 20X7, the balance sheets of the two companies showed the following
    amounts:

    Tenzing Corporation reported retained earnings of $75,000 at the date of acquisition. Income of
    Tenzing Corp for 20X7= $30,000, Dividends paid by Tenzing corporation for20X7= $15,000.
    The difference between the acquisition price and underlying book value is assigned to buildings
    and equipment with a remaining economic life of five years from the date of acquisition.
    Required:
    1) Give the appropriate eliminating entry or entries needed to prepare a consolidated balance
    sheet as of December 31, 20X7.
    2) Prepare a consolidated balance sheet worksheet as of December 31, 20X7.

    Solution
    1- Book Value Calculation

    2- Work Sheet

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