Consolidated Financial Statements. Explained + Example CPA exam

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[@SubhashChandraDey-h2m]

I generally avoid Farhat's YT videos since I find a lot of them a bit too rushed, but this lecture is gold.

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Amazing lecture . compressive example

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cleared all my doubts. amazing lecture sir

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[@superoxy011]

Hi Sir, may I ask if the method of determining the Fv of Subs. by grossing up the controlling interest is applicable under US GAAP?

[@julieshah-ne4bt]

In the Adjustment column can you please explain how did you ended up with figure 593,500?

[@krishnadavda2154]

RD expense amortization over 5 years why not deducted from RE at the ending elimination entry??

[@mp-sv2cp]

I think the adjusted balance for COGS is wrong? should be $11,300,000?

[@riyaziaf]

YES, U R RIGHT. IT SHOULDBE 11300K. ALSO GROSS MARGIN AFTER ADJUSTMENT SHOULD BE 7300K. THERE IS A DIFFERENCE OF 60K IN BOTH.

[@shumirahman2382]

I am in a confused situation. I need to know the complete guide of Consolidated financial statement. You have so many lectures. I am not getting the sequence of it.

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Thank you!

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[@sonerguney3225]

Super

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[@Lotus0305]

Shouldn’t R&as be expensed (recorded in P&L instead of an asset)?

[@Lotus0305]

I mean… Shouldn’t *R&D* be expensed (recorded in P&L instead of Assets)?

[@SubhashChandraDey-h2m]

@@Lotus0305 Yes you are correct. However, the R&D expense mentioned in this problem is not the same as the concept you are mentioning. Here, the acquirer is willing to pay 150K excess over the Book Value of the net assets of the acquiree because of some on going R&D in the company which is valuable. In the acquiree's books the R&D expense, whatever the amount, is already a part of its expenses on the Income Statement. Finding some hidden worth in that R&D, the acquiror is now willing to pay 150K over and above the book value of the acquiree's firm to get a hold of it.

[@SubhashChandraDey-h2m]

Thus this R&D is a part of the FMV-BV component and will only reflect as an amortizable item on the consolidated balance sheet. The other place this 150k will be embedded is in the Investment account on the parent's standalone books. This has nothing to do with the actual R&D expense incurred buy the subsidiary.