CPA FAR-Exam-Consolidated Net Income, Dividends, Retained Earnings-Business Combination-Darius Clark
Автор: Darius Clark
Загружено: 2025-07-24
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The objective of consolidated financial statements is to present the financial statements of entities under common control (over 50%) as if one economic entity
The justification for consolidated financial statements is Economic Substance over Economic Legal Form.
Consolidated Net Income-Parent’s Income and Expenses for the Entire year + Subsidiary Net Income from the closing date of acquisition to the end of the Year.
If the parent owns less than 100% of the subsidiary:
1. Consolidated Net Income- reflects the entire economic performance of both companies as a single entity, from the acquisition date forward. This amount includes:
100% of the parent’s net income for the full year.
100% of the subsidiary’s net income or loss from the date of acquisition forward, even if the parent owns less than 100%.
2. Less: Net Income Attributable to Noncontrolling Interest (NCI)
After presenting consolidated net income, you subtract the portion of the subsidiary’s post-acquisition income not owned by the parent.
3. Net Income Attributable to Parent Shareholders
This is what remains after subtracting the NCI’s share from total consolidated net income. It reflects the income belonging to the parent’s shareholders and is often used in computing earnings per share (EPS).
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