The noncontrolling in - Study guides, Class notes & Summaries

Discounted Cash Flow Exam Questions With 100% Correct Answers What's the basic concept behind a Discounted Cash Flow analysis? - answerThe concept is that you value a company based on the present value of its Free Cash Flows far into the future. You divide the future into a "near future" period of 5-10 years and then calculate, project, discount, and add up those Free Cash Flows; and then there's also a "far future" period for everything beyond that, which you can't estimate as prec...

SPE correct answers Special Purpose Entity VIE correct answers Variable Interest Entity What is an SPE? correct answers An SPE is an entity established for a special (limited, narrowly defined) purpose, often a financing vehicle What are the typical characteristics of SPEs? correct answers Exist for a specific purpose Engage in extremely limited operations or transactions Thinly capitalized What is a VIE? correct answers A VIE is any entity in which either: -Equity investor do not...

What is a basic premise of the acquisition method regarding accounting for a noncontrolling interest? a) Consolidated financial statements should be produced only if both the parent and the subsidiary are in the same basic industry. b) A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership. c) Consolidated financial statements should not report a noncontrolling interest balance because these outside owners do no...

What if there are CapEx synergies? For example, what if the buyer can reduce its CapEx spending because of certain assets the seller owns? In this case, you would start recording a lower CapEx charge on the combined Cash Flow Statement, and then reflect a reduced Depreciation charge on the Income Statement from that new CapEx spending each year. You would not start seeing the results until Year 2 because reduced Depreciation only comes after reduced CapEx spending. This scenario would be much ea...

Advanced Accounting exam 2 with verified solutions Stock given as consideration is valued at: - ANSWERfair market value Which of the following advantages and/or disadvantages of stock acquisitions relative to asset acquisitions (and subsequent consolidated financial statements) is misstated? - ANSWERConsolidated statements need not be produced as long as a parent company owns less than 50% of the voting shares of the subsidiary. Which of the following is not (generally) an advantage of st...

Package Title: Test Bank Questions Course Title: Advanced Accounting, 8e Chapter: Introduction to Business Combinations Chapter Number: 1 Question Type: Multiple Choice 1. A(n) occurs when the operations of two or more companies are brought under common control. a) tender offer b) vertical combination c) operating synergy d) business combination 2. The objectives of FASB 141R (Business Combinations) and FASB 160 (Noncontrolling Interests in Consolidated Financial Statements) a...

Which of the following is correct? A) No consolidation working paper entry is required for this transaction in 2014. B) A consolidation working paper entry is required only if the subsidiary was less than 100% owned in 2014. C) A consolidation working paper entry is required each year that Sidd has the land. D) A consolidated working paper entry was required only if the land was held for resale in 2014. Answer: C Objective: LO1 Difficulty: Easy 2) The 2014 unrealized gain from the inter...

QUESTION 1 On December 31, 2016, JJB, a private equity fund, purchased Geozone, a company with $882.7 million in last twelve months (LTM) EBITDA and an 8.0x multiple. EBITDA will expand at an annual rate of 8% during the following S years. Geozone owed $50.0 million and had $20.0 million in cash at the time of the acquisition. Debt and cash balances remained steady throughout the next five years. What is the equity value at exit if the sale occurs on December 31, 2021 at an 8x multiple? 3,...

Issuing stock rights to existing shareholders, enabling them to purchase additional shares at a price below market value, but exercisable only in the event of a potential takeover. correct answers Poison pill The purchase of a controlling interest in the target firm by its managers and third-party investors, who usually incur substantial debt in the process and subsequently take the firm private. correct answers Leveraged buyout (LBO) Encouraging a third firm, more acceptable to the target...

Advanced Accounting exam 2 with verified solutions Stock given as consideration is valued at: - ANSWERfair market value Which of the following advantages and/or disadvantages of stock acquisitions relative to asset acquisitions (and subsequent consolidated financial statements) is misstated? - ANSWERConsolidated statements need not be produced as long as a parent company owns less than 50% of the voting shares of the subsidiary. Which of the following is not (generally) an advantage of st...