Consolidating financial statements worksheet
At the acquisition date, the 10 percent non-controlling interest has a fair value of ,000.
Exhibit 6.6 shows book and fair values of Salida’s assets and liabilities and Pinto’s acquisition-date fair-value allocation schedule.
The resulting effects of this intercompany activity is eliminated on the worksheet so that the consolidated statements reflect only transactions with outside parties.
Likewise, the consolidated statement of cash flows does not include the impact of these transfers.
Types of intercompany eliminations Generally, elimination entries are made for removing the effects of intercompany transactions.
If the business combination uses the direct approach, it omits the balance because this expense does not affect the amount of cash.
As this text previously discussed, a significant volume of transfers between the related companies composing a business combination often occurs.
The cash outflow from dividends paid by a subsidiary only leaves the consolidated entity when paid to the non-controlling interest.
Thus dividends paid by a subsidiary to its parent do not appear as financing outflows. 95 requires that any adjustments from changes in operating balance sheet accounts (Accounts Receivable, Inventory, Accounts Payable, etc.) reflect the amounts acquired in the combination.