Session 5—Post- Acquisition Accounting

1. Session 5—Post- Acquisition Accounting • 100% post-acquisition accounting • Investment analysis • Consolidation entries Advanced Accounting-2012

2. Parent Co. Invest. Analysis Update Advanced Accounting-2012

3. Entries on Parrot’s G/L PCI 100 Equity in NI-S 100 Cash 40 PCI 40 Equity in NI-S 7 PCI 7 To record Sun earnings To record Sun dividends To record excess amort. on FV. Advanced Accounting-2012

4. Consolidation Entries on W/S • See Parrot Company worksheet: • Entry S: Basic subsidiary S/E elimination • Entry A: FV alloc. @ beg. of year • Entry P: Intracompany rec/pay elimination • Entry I: Intracompany income elimination • Entry D: Intracompany dividend elimination • Entry E: Excess allocation expense recognition • Other factors • Accumulated depreciation balance at acquisition elimination Advanced Accounting-2012

5. W/S Elimination Entries Entry S • Capital Stock-sub XXX Beg. S. R/E XXX Investment in sub XXX • Misc. assets XXX Investment in sub XXX Entry A Advanced Accounting-2012

6. W/S Elimination Entries Entry P • Intercompany payable XXX Intercompany receivable XXX • Equity in NI of sub XXX Investment in sub XXX • Investment in sub XXX Intracompany dividends XXX Entry I Entry D Advanced Accounting-2012

7. W/S Elim. Entries, cont. Entry E • Miscellaneous expenses XXX Miscellaneous assets XXX Advanced Accounting-2012

8. Consolidation Exercise • Using the information on pps. 84-94: • Update the Parrot Investment Analysis • Record the appropriate entries that would appear on Parrot’s G/L • Record the appropriate consolidation entries that would appear on the consolidation w/s • Be sure to include any intercompany eliminations Advanced Accounting-2012