Current Asset under Equity,Consolidation and Prop Consolidation equity, current, acquired, method

anish

Parent
Cash $400
Inventory $500
Other Current Assets $100

Subsidiary
Cash $100
Inventory $300
Other Current Assets $200


Parent acquired 50% of the equity of subsidiary for $500 in cash.

What is the current asset after consolidation under each method (Equity,Consolidation and proportionate consolidation)

giorgio10

I was going to try it, but wasn't sure (and still so) how the parent buys it for $500 cash wen it only had $400 in cash...no indication of loan, etc.

huangxiaoxie

maybe it was a gift!

FinancialAnaly

I would imagine that if there was insufficient cash, the parent issued either stock, or a combination of stock and cash. Purchase prices - in reality - are rarely "all cash" transactions.

tianxin

I try as well:

Equity Method

Cash: 400 - 500 (???)
Inventory: 500
Other Current Assets: 100

Proportionate Consolidation

Cash: 400 + 50 - 500
Inventory: 500 + 150
Other Current Assets: 100 + 100

Consolidation

Cash: 400 + 100 - 500
Inventory: 500 + 300
Other Current Assets: 100 + 200

We account for the cash we paid for the subsidiary in each of the 3 methods, right?

i.e. current assets (i.e. cash) must go down by the price we paid for the subsidiary irrespective of method used? Correct?

chaojimali

this is from this year mock AM Merick case, it was specified if numbers were before/after the acquisition