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What is the value of the acquiree's PPEs in the subsidiary books (B) at the start of year 2?
What is the value of the acquiree's PPEs in the subsidiary books (B) at the start of year 2?
What is the total amount of amortization expense recognized in the consolidated income statement for year 1?
What is the total amount of amortization expense recognized in the consolidated income statement for year 1?
What is the value of the PPEs in the parent company’s (A) books at the start of year 2?
What is the value of the PPEs in the parent company’s (A) books at the start of year 2?
What is the value of the deferred tax asset related to the fair value adjustment in the parent’s books at the start of year 2?
What is the value of the deferred tax asset related to the fair value adjustment in the parent’s books at the start of year 2?
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What is the value of the equity in the subsidiary (B) at the start of year 2?
What is the value of the equity in the subsidiary (B) at the start of year 2?
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What is the value of the non-controlling interest (NCI) in the subsidiary (B) at the start of year 2?
What is the value of the non-controlling interest (NCI) in the subsidiary (B) at the start of year 2?
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What is the value of the parent company’s (A) investment in the subsidiary (B) at the start of year 2?
What is the value of the parent company’s (A) investment in the subsidiary (B) at the start of year 2?
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What is the value of the non-controlling interest (NCI) in the subsidiary (B) based on the fair value at the acquisition date?
What is the value of the non-controlling interest (NCI) in the subsidiary (B) based on the fair value at the acquisition date?
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What is the fair value (FV) of the PPEs at the acquisition date for Entity B?
What is the fair value (FV) of the PPEs at the acquisition date for Entity B?
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What is the total amortization rate for Entity B's PPEs over five years?
What is the total amortization rate for Entity B's PPEs over five years?
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At the end of Year 1, how much would the carrying amount of Entity B's PPEs be after accounting for fair value adjustments?
At the end of Year 1, how much would the carrying amount of Entity B's PPEs be after accounting for fair value adjustments?
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The increase in the fair value of Entity B's PPEs at acquisition compared to its book value is:
The increase in the fair value of Entity B's PPEs at acquisition compared to its book value is:
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What is the impact of a 30% tax rate on the revaluation of PPEs?
What is the impact of a 30% tax rate on the revaluation of PPEs?
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What is the value of the acquiree’s PPEs at book value from the subsidiary's perspective?
What is the value of the acquiree’s PPEs at book value from the subsidiary's perspective?
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What is the amortization rate for the subsidiary's balance sheet?
What is the amortization rate for the subsidiary's balance sheet?
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What is the residual value of PPEs in the subsidiary's balance sheet?
What is the residual value of PPEs in the subsidiary's balance sheet?
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What is the value of the acquiree’s PPEs at book value from the parent's perspective?
What is the value of the acquiree’s PPEs at book value from the parent's perspective?
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What is the amortization rate in the parent’s balance sheet?
What is the amortization rate in the parent’s balance sheet?
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What is the tax effect due to amortization in the subsidiary's balance sheet?
What is the tax effect due to amortization in the subsidiary's balance sheet?
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What is the residual value of PPEs in the parent's balance sheet?
What is the residual value of PPEs in the parent's balance sheet?
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What would be the tax effect due to amortization in the parent's balance sheet?
What would be the tax effect due to amortization in the parent's balance sheet?
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What is the annual amortization expense for the PPE in the balance sheet of Subsidiary B?
What is the annual amortization expense for the PPE in the balance sheet of Subsidiary B?
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What is the value of Subsidiary B's PPE at book value?
What is the value of Subsidiary B's PPE at book value?
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What is the calculated effect of the fair value amortization in the consolidated financial statements for one year?
What is the calculated effect of the fair value amortization in the consolidated financial statements for one year?
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What is the total PPE value in the consolidated financial statements (CFS) after considering the changes?
What is the total PPE value in the consolidated financial statements (CFS) after considering the changes?
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What is the residual value of the PPE in Subsidiary B’s balance sheet?
What is the residual value of the PPE in Subsidiary B’s balance sheet?
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Which of the following statements is true regarding the amortization rates of A and B?
Which of the following statements is true regarding the amortization rates of A and B?
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How is the fair value of PPE accounted for after the initial recognition in consolidated financial statements?
How is the fair value of PPE accounted for after the initial recognition in consolidated financial statements?
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What was the initial fair value adjustment of PPE on the acquisition date?
What was the initial fair value adjustment of PPE on the acquisition date?
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What is the total amount of PPE at the end of Year 3 after considering amortization?
What is the total amount of PPE at the end of Year 3 after considering amortization?
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Which entry represents the annual amortization related to the PPE acquired by Parent A?
Which entry represents the annual amortization related to the PPE acquired by Parent A?
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What impact does the differential tax have on Parent A's financial reporting?
What impact does the differential tax have on Parent A's financial reporting?
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How is the value of Deferred Tax recorded for Year 3?
How is the value of Deferred Tax recorded for Year 3?
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What process does the parent and subsidiary undertake at the beginning of each year regarding their accounts?
What process does the parent and subsidiary undertake at the beginning of each year regarding their accounts?
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What is the balance of Equity NCI after three years as noted?
What is the balance of Equity NCI after three years as noted?
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At the end of Year 3, what is the calculated value of PPE after all amortizations have been deducted?
At the end of Year 3, what is the calculated value of PPE after all amortizations have been deducted?
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After the initial recognition, what is the significance of the adjustments to re-estimate the opening CBS?
After the initial recognition, what is the significance of the adjustments to re-estimate the opening CBS?
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What is the value of the acquiree’s Property, Plant, and Equipment (PPE) at book value?
What is the value of the acquiree’s Property, Plant, and Equipment (PPE) at book value?
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What is the annual amortization rate for the subsidiary's balance sheet?
What is the annual amortization rate for the subsidiary's balance sheet?
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What is the total yearly excess amortization amount that affects the consolidated income statement?
What is the total yearly excess amortization amount that affects the consolidated income statement?
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How does the excess amortization affect the earnings for both controlling interest (CI) and non-controlling interest (NCI)?
How does the excess amortization affect the earnings for both controlling interest (CI) and non-controlling interest (NCI)?
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How do deferred tax liabilities change as a result of the excess amortization?
How do deferred tax liabilities change as a result of the excess amortization?
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What would be the impact on consolidated equity as a result of higher costs from excess amortization?
What would be the impact on consolidated equity as a result of higher costs from excess amortization?
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What is the impact of the amortization on taxes?
What is the impact of the amortization on taxes?
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What amount represents the tax effect due to amortization?
What amount represents the tax effect due to amortization?
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What percentage of the differential taxes disadvantages the parent?
What percentage of the differential taxes disadvantages the parent?
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Study Notes
Corporate Reporting & Group Accounting
- Course is for 2024-2025
- Instructors are Amedeo Pugliese (University of Padua) and Marco Ghitti (University of Padua)
- Email addresses are provided for the instructors
Consolidation at the End of Year 1
- Focuses on consolidation procedures at the end of the first year.
Accounting Entries for PPEs (Year 1)
- Shows how changes in fair value (FV) of Property, Plant, and Equipment (PP&E) between book value (BV) and FV affect accounting entries.
- Example: A company (A) buys another company (B), and the FV of B's PPE increases from 500 to 600.
- Amortization is calculated straight-line over 5 years for both entities.
Reporting Effects of FV Changes for Controlling Interests and Non-Controlling Interests (Year 1)
- Explains the impact of FV changes on controlling interests (CI) and non-controlling interests (NCI).
- Example: At the time of acquisition, one company (B) has a book value of 500 for its PPE; at the time of acquisition (1/1/200X), the fair value changes to 600, creating a difference of 100.
- Charts show the impact of these changes on the income statement (IS) and balance sheets (BS) of the subsidiaries and consolidated financials.
Reporting Controlling and NCIs (Year 1)
- Includes a table summarizing the consolidated data on acquisition date (1-1-200x) and 31-12-200x for PPE and amortization.
- Shows how fair value (FV) adjustments for PPEs are not directly recorded in the accounting system for the parent and subsidiary companies, but FV must be amortized as part of the consolidated financial statements (CFS).
Reporting Controlling and NCIs at the Purchase (Year 1)
- Demonstrates a scenario where a parent company (A) acquires 80% of a subsidiary (B).
- A table shows the adjustments made at the purchase date and the income statement entries including the amortization rate calculated on the acquired subsidiary's portion (80%).
- Table shows deferred taxes and earnings for controlling and non-controlling interests (CI/NCI).
Reporting Controlling and NCIs after the Initial Recognition (Year 1)
- Covers Parent (A) buying 80% of Subsidiary (B).
- Provides specifics on the adjustments and impact at the end of year 1 and includes tables on PPE, deferred taxes, equity, and income statement(IS) related to the acquisition.
Reporting Controlling and NCIs in Year 2
- A summary of procedures and effects related to the revaluation of assets held by the subsidiary (B) after a 1/1/ acquisition.
Reporting Controlling and NCIs after the Initial Recognition (Year 3)
- A review of reporting procedures and impact at the end of year 3 after an initial acquisition
Reporting Procedures after Initial Recognition
- The accounting system permits tracking PPE (Property, Plant, and Equipment) values for a parent and subsidiary company.
- At the end of a reporting period, processes are done to close accounting periods for both balance sheet (BS) and income statements(IS) for all entities involved.
- At the beginning of a new reporting period, data is re-opened according to each company's rules.
- Consolidated financial statements(CFS) processes differ from other statements (BS & IS), so adjustments are needed to ensure consistent tracking over time for the CFS.
- Re-evaluation of opening balance sheet (CBS) and adjusting for changes during the period are required.
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Description
This quiz focuses on consolidation procedures, accounting entries for Property, Plant, and Equipment (PP&E), and the reporting effects of fair value changes for controlling and non-controlling interests at the end of the first year. Ideal for students in the Corporate Reporting and Group Accounting course for 2024-2025.
