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Solutions for Advanced Financial Accounting 1st edition by Nathalie Johnstone
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Solutions for Advanced Financial Accounting 1st edition by Nathalie Johnstone
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Solutions for Advanced FinancialAccounting 1st edition by Nathalie
Johnstone
Consolidated Financial Statements - ANSPortray the related companies as if they were actually
a single company.
Subsidiary - ANSIs a corporation that is controlled by another corporation
Parent Company - ANSThe controlling company who usually owns through majority ownership
of its common stock
Special-Purpose Entity (SPE) - ANSA financing vehicle that is not a substantive operating entity,
usually one created for a single specified purpose.
Pooling-Of-Interests - ANSPreviously widely used method of accounting for business
combinations, sometimes created earnings and, in the view of many, provided misleading
financial reporting subsequent to a combination.
Spin-Off - ANSOccurs when the ownership of a newly created or existing subsidiary is
distributed to the parent's stockholders without the stockholders surrendering any of their stock
in the parent company.
Split-Off - ANSOccurs when the subsidiary's shares are exchanged for shares of the parent,
thereby leading to a reduction in the outstanding shares of the parent company
Business Combination - ANSOccurs when "...an acquirer obtains control of one or more
businesses."
Concept of Control - ANSRelates to the ability to direct policies and management
Merger - ANSBusiness combination in which the acquired company's assets and liabilities are
combined with those of the acquiring company.
Controlling Ownership - ANSA business combination in which the acquired company remains as
a seperate legal entity with a majority of its common stock owned by the purchasing company
leads to a parent-subsidiary relationship.
, Noncontrolling Ownership - ANSThe purchase of a less-than-majority interest in another
corporation does not usually result in a business combination or controlling situation.
Other Beneficial Interest - ANSOne company may have a beneficial interest in another entity
even without a direct ownership interest.
Primary Beneficiary - ANSA company that has the ability to make decisions significantly
affecting the results of another entity's activities or is expected to receive a majority of the other
entity's profits and losses
Statutory Merger - ANSIs a type of business combination in which only one of the combining
companies survives and the other loses its seperate identitiy.
Liquidated - ANSWhen the acquired company's assets and liabilities are transferred to the
acquiring company, and the acquired company is disolved
Statutory Consolidation - ANSIs a business combination in which both combining companies
are dissolved and the assets and liabilities of both companies are transferred to a newly created
corporation.
Stock Acquisition - ANSOccurs when one company acquires the voting shares of another
company and the two companies continue to operate as seperat, but related, legal entities
Parent-Subsidiary Relationship - ANSThe relationship that is created in a stock acquisition
Hostile Takeover - ANSIn an unfriendly combination, where the managements of the companies
involved are unable to agree on the terms of a combination, and the management of one of the
companies makes a tender offer directly to the shareholders of the other company.
Tender Offer - ANSInvities the shareholders of the other company to exchange their shares for
securities or assets of the acquiring company.
Noncontrolling Interest - ANSThe total of the shares of an acquired company not held by the
controlling shareholder
Acquisition Method - ANSThe acquirer recongnizes all assets acquired and liabilities assumed
in a business combination and measures them at their acquisition-date fair values.
Goodwill - ANSIs an asset representing the future economic benefits arising from other assets
acquired in a business combination that are not individually identified and separately recognized
Differential - ANSThe total difference at the acquisition date between the fair value of the
consideration exchanged and the book value of the net identifiable assets acquired
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