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上一主题: Financial Reporting and Analysis【 Reading 23】Sample
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周教授CFA金融课程:2019/2020年CFA一二三级系列课程

Assume that on the balance sheet date shown below TME Corporation acquires 70% of Abcor, Inc. common stock for $25,000 in cash.

Pre-acquisition Balance Sheets
December 31, 2001

  

TME Corp.

Abcor, Inc.

Current assets

$80,000

$38,000

Other assets

28,000

15,000

Total assets

$108,000

$53,000

  

  

  

Current liabilities

$60,000

$32,000

Common stock

15,000

14,000

Retained earnings

33,000

    7,000

Total liabilities and equity

$108,000

$53,000

What will be the post-acquisition current ratio, using both the acquistion method and the equity method, respectively, for TME?
The choices below represent Acquisition and Equity, respectively.
A)
1.01, 0.92.
B)
1.04, 1.11.
C)
1.21, 1.02.



With the acquisition method: The current assets are ($80,000 + $38,000 - $25,000) = $93,000. The current liabilities are ($60,000 + $32,000) = $92,000. The current ratio is $93,000/$92,000 = 1.01. With the equity method: The current assets are ($80,000 - $25,000) = $55,000. The current liabilities are $60,000. The current ratio is $55,000/$60,000 = 0.92.

Using the acquistion method to account for the acquisition, what will be the post-acquisition current assets of TME?
A)
$93,000.
B)
$105,000.
C)
$118,000.



Using the acquisition basis of accounting, the post-acquisition level of the current assets is the amount of the current assets prior to acquisition minus the amount of cash used for the acquisition. ($80,000 + 38,000 – 25,000) = $93,000.

Using the acquistion method to account for the acquisition, which of the following is closest to the post-acquisition amount that will be recorded as the minority interest under US GAAP?
A)
$10,700.
B)
$6,300.
C)
$21,000.



Since only 70% of Abcor was purchased by TME there is a minority interest that must be accounted for, equal to the percentage of Abcor not owned by TME times Abcor’s fair value.
Abcor’s fair value = 25,000/0.7 = 35,714.29
Under US GAAP, only full goodwill.
Minority interest = 35,714.29 (0.3) = 10, 714.29

TOP

The proportionate consolidation method results in:
A)
different net income from the equity method.
B)
same equity as the cost method.
C)
same net income as the equity method.



The proportionate consolidation results in the SAME net income and equity as the equity method

TOP

The proportionate consolidation method will least likely achieve the same results as the acquisition method because:
A)
of the use of the equity method on the income statement.
B)
there are no minority interests.
C)
no joint ventures are included.



Proportionate consolidations and acquisitions are the same except for the exclusion of minority interests in proportionate consolidations.

TOP

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