Presentation is loading. Please wait.

Presentation is loading. Please wait.

McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 10-1 Additional Consolidation Reporting Issues 10 Electronic.

Similar presentations


Presentation on theme: "McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 10-1 Additional Consolidation Reporting Issues 10 Electronic."— Presentation transcript:

1 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Additional Consolidation Reporting Issues 10 Electronic Presentation by Douglas Cloud Pepperdine University Baker / Lembke / King

2 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Prepared after Consolidated I/S, R/E and B/S. Steps: –Adjustment of consolidated NI (depreciation and amortization resulting from write-off of differentials) –Eliminating transfers between affiliates: sale or purchase of assets, unrealized profit of intercompany sales –Non-controlling interest: income is deducted; receipts and payments Consolidated Statement of Cash Flows

3 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved PT Induk and Subsidiary Consolidated Income Statement For the Year Ended December 31, 20X2 Consolidated Income Statement, 20X2 SalesRp720,000,000 Gain on Sale of Land 30,000,000 Rp750,000,000 Less: Cost of Goods SoldRp340,000,000 Depreciation Expense76,800,000 Other Expenses105,000, ,000 Income Available to All ShareholdersRp228,200,000 Income to Noncontrolling Interest -15,000,000 Consolidated Net IncomeRp213,200,000

4 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved PT Induk and Subsidiary Consolidated Statement of Cash Flows For the Year Ended December 31, 20X2 Cash Flows from Operating Activities: Consolidated Net IncomeRp213,200,000 Noncash Expenses, Revenues, Losses, and Gains included in Income: Depreciation Expense76,800,000 Income to Noncontrolling Interest15,000,000 Gain on Sale of Land-30,000,000 Increase in Accounts Receivable-105,000,000 Increase in Inventory-95,000,000 Increase in Accounts Payable 30,000,000 Net Cash Provided by Operating ActivitiesRpl05,000,000 TopportionTopportion Consolidated Cash Flows Statement, 20X2

5 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Consolidated Cash Flows Statement, 20X2 PT Induk and Subsidiary Consolidated Statement of Cash Flows For the Year Ended December 31, 20X2 Cash Flows from Investing Activities: Acquisition of Equipment-Rp100,000,000 Sale of Land 70,000,000 Net Cash Used in Investing Activities -Rp 30,000,000 Cash Flows from Financing Activities: Dividends Paid: To Parent Company Shareholders-Rp 60,000,000 To Noncontrolling Shareholders -8,000,000 Net Cash Used in Financing Activities -68,000,000 Net Increase in CashRp 7,000,000 Bottom portion

6 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved  Include in the consolidated income statement the revenue and expenses of the subsidiary as if it had been acquired at the beginning of the fiscal period, and deduct the parent’s share of the subsidiary’s preacquisition earnings at the bottom of the consolidated income statement.  Include in the consolidated income statement only the subsidiary’s revenue earned and expenses incurred subsequent to the date of combination.  Include in the consolidated income statement the revenue and expenses of the subsidiary as if it had been acquired at the beginning of the fiscal period, and deduct the parent’s share of the subsidiary’s preacquisition earnings at the bottom of the consolidated income statement.  Include in the consolidated income statement only the subsidiary’s revenue earned and expenses incurred subsequent to the date of combination. Consolidation Following an Interim Purchase The results of operations for a subsidiary purchased during the fiscal period are included in the consolidated income statement in one of two ways:

7 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Consolidation Following an Interim Acquisition On July 1, 20X1, PT Induk purchases 80 percent of the common stock of PT Anak for its underlying book value of Rp246,400,000. Book value of PT Anak on January 1, 20X1: Common stockRp200,000,000 Retained earnings100,000,000 Rp300,000,000 Net income, January 1 to June 30, 20X120,000,000 Dividends, January 1 to June 30, 20X1 -12,000,000 Book value of PT Anak on July 1, 20X1Rp308,000,000 PT Induk’s ownership interest x.80 Book value on July 1, 20X1, of shares acquiredRp246,400,000

8 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Consolidation Following an Interim Purchase The ownership situation on July 1, 20X1, is as follows: P S 7/1/X1 80% Cost of investmentRp246,400,000 Book value (7/1/X1) Common stock-- PT AnakRp200,000,000 Retained earnings-- PT Anak108,000,000 Rp308,000,000 PT Induk’s sharex ,400,000 Differential Rp -0- NCI 20%

9 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Parent Company Entries On July 1, 20X1, PT Induk records the purchase of PT Anak’ stock. July 1, 20X1 (1) Investment in PT Anak Stock246,400,000 Cash 246,400,000 Record purchase of PT Anak stock. During the second half of 20X1, PT Induk records its share of PT Anak’ income. (3) Investment in PT Anak Stock 24,000,000 Income from Subsidiary 24,000,000 Record equity-method income. Rp30,000,000 x. 80

10 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Parent Company Entries PT Induk records dividends received from PT Anak during the second half of 20X1. (2) Cash 14,400,000 Investment in PT Anak Stock 14,400,000 Record dividends from PT Anak. Rp18,000,000 x.80

11 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved PT Induk PT Anak Eliminations Item Debits Credits Consolidated An entry is needed to eliminate income from the subsidiary. 20X1 Consolidation Following an Interim Purchase Income from Subsidiary24,000 Dividends Declared(60,000(30,000) Investment in PT Anak Stock256,000 )

12 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Income from Subsidiary24,000 (4) 24,000 Dividends Declared(60,000(30,000) (4) 14,400 Investment in PT Anak Stock256,000 (4) 9,600 Consolidation Following an Interim Purchase 20X1 ) PT Induk PT Anak Eliminations Item Debits Credits Consolidated

13 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Consolidation Following an Interim Purchase Income to Noncontrolling Interest Dividends Declared(60,000)(30,000) (4) 14,400 Noncontrolling Interest An entry is required to assign income to noncontrolling interest. 20X1 PT Induk PT Anak Eliminations Item Debits Credits Consolidated

14 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Income to Noncontrolling Interest (5) 10,000(10,000) Dividends Declared(60,000)(30,000) (4) 14,400 (5) 6,000 Noncontrolling Interest (5) 4,000 Consolidation Following an Interim Purchase 20X1 PT Induk PT Anak Eliminations Item Debits Credits Consolidated

15 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Preacquisition Subsidiary Inc. Retained Earnings, Jan. 1300, ,000 Dividend Decl.(60,000(30,000 (4) 14,400 (5) 6,000 Investment in PT Anak256,000 (4) 9,600 Common Stock500, ,000 Noncontrolling Interest (11) 4,000 20X1 An entry is necessary to eliminate the beginning investment balance. Consolidation Following an Interim Purchase ) ) PT Induk PT Anak Eliminations Item Debits Credits Consolidated

16 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Consolidation Following an Interim Purchase 20X1 Preacquisition Subsidiary Inc. (6) 16,000(16,000 Retained Earnings, Jan. 1300, ,000 (6) 100,000300,000 Dividend Decl.(60,000(30,000 (4) 14,400 (5) 6,000 (6) 9,600(60,000 Investment in PT Anak256,000 (4) 9,600 (6) 246,400 Common Stock500, ,000 (6) 200,000500,000 Noncontrolling Interest (5) 4,000 (6) 60,00064,000 ) ) ) ) PT Induk PT Anak Eliminations Item Debits Credits Consolidated

17 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved PT Induk and Subsidiary Consolidated Income Statement For the Year Ended December 31, 20X1 Consolidated Income Statement, 20X1 SalesRp600,000,000 Cost of Goods Sold-285,000,000 Gross MarginRp315,000,000 Expenses: Depreciation and AmortizationRp70,000,000 Other Expenses55,000,000 Total Expenses-125,000,000 Rp190,000,000 Preacquisition Subsidiary Income-16,000,000 Income to Noncontrolling Interest -10,000,000 Consolidated Net IncomeRp164,000,000

18 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Consolidated Earnings per Share Consol- idated net income +-+- Adjust- ment for parent securities Percent owner- ship held by parent x Income available to common share- holders of subsidi- ary + Shares held by parent Diluted consoli- dated EPS = x Subsi- diary diluted EPS - Weighted average of parent company shares outstanding + Shares of parent to be issued if dilutive securities are converted and options exercised

19 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Consolidated Net Income PT Induk’s separate operating incomeRp140,000,000 PT Anak’ income before taxes 50,000,000 Total entity income before taxesRp190,000,000 Consolidated income taxes (40%) -76,000,000 Total entity income after taxesRp114,000,000 Less: Income to noncontrolling shareholders (Rp30,000,000 x.20) -6,000,000 Consolidated net incomeRp108,000,000

20 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved PT Anak Food’s Earnings Per Share PT Anak’ net incomeRp30,000,000Rp30,000,000 Interest effect of assumed conversion of bonds, net of taxes (Rp100,000,000 x.06) x (1 -.40) 3,600,000 Income accruing to common stockRp30,000,000Rp33,600,000 Weighted-average common shares outstanding in 20X120,000,00020,000,000 Additional shares from assumed bond conversion 4,000,000 Weighted-average shares and share equivalents20,000,00024,000,000 EPSRp1,500 Rp1,400 Basic Diluted

21 McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved Chapter Ten The End


Download ppt "McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 10-1 Additional Consolidation Reporting Issues 10 Electronic."

Similar presentations


Ads by Google