Consolidated vs consolidating financial statements

29-Jan-2017 14:21

This site uses cookies to provide you with a more responsive and personalised service.By using this site you agree to our use of cookies.The practical result of the new rules is that many reporting entities are adding significant assets and liabilities to their balance sheets.

However, there will be a line item on the income statement, below the operating income line, which will include 60% of the net income of company B.Regardless of the method of acquisition; direct costs, costs of issuing securities and indirect costs are treated as follows: Treatment to the acquiring company: When purchasing the net assets the acquiring company records in its books the receipt of the net assets and the disbursement of cash, the creation of a liability or the issuance of stock as a form of payment for the transfer.Treatment to the acquired company: The acquired company records in its books the elimination of its net assets and the receipt of cash, receivables or investment in the acquiring company (if what was received from the transfer included common stock from the purchasing company).The primary beneficiary is the reporting entity, if any, that receives the majority of expected returns or absorbs the majority of expected losses.CPAs SHOULD RECONSIDER A DECISION ABOUT WHETHER an entity is a VIE if its situation changes so its equity investment at risk is no longer adequate, some or all of the equity investment is returned to investors or the entity undertakes additional activities, acquires additional assets or receives an additional equity investment that is at risk. 46(R) is causing reporting entities to make new decisions about whether affiliated entities need to be consolidated into their financial statements.

However, there will be a line item on the income statement, below the operating income line, which will include 60% of the net income of company B.

Regardless of the method of acquisition; direct costs, costs of issuing securities and indirect costs are treated as follows: Treatment to the acquiring company: When purchasing the net assets the acquiring company records in its books the receipt of the net assets and the disbursement of cash, the creation of a liability or the issuance of stock as a form of payment for the transfer.

Treatment to the acquired company: The acquired company records in its books the elimination of its net assets and the receipt of cash, receivables or investment in the acquiring company (if what was received from the transfer included common stock from the purchasing company).

The primary beneficiary is the reporting entity, if any, that receives the majority of expected returns or absorbs the majority of expected losses.

CPAs SHOULD RECONSIDER A DECISION ABOUT WHETHER an entity is a VIE if its situation changes so its equity investment at risk is no longer adequate, some or all of the equity investment is returned to investors or the entity undertakes additional activities, acquires additional assets or receives an additional equity investment that is at risk. 46(R) is causing reporting entities to make new decisions about whether affiliated entities need to be consolidated into their financial statements.

46 in January 2003 and a revised version in December 2003 to help companies decide whether to consolidate VIEs into their financial statements.