Merger Entries
28 August 2008
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Dear all,
Please help in confirming the merger entry for the following case:
Company A acquired 50% interest in Company B during 2004. The other 50% was held by the Company C, Company A’s Parent Company. Upon acquisition, Company A recognized a goodwill under purchase method of accounting.
Cost 100
Investment in B – 50
Goodwill 50
During 2006, the 50% shares held by the Parent Company was transferred to Company A, giving it the full ownership of Company B. The parent agreed that the credit of 50% will go to ADDITIONAL PAID IN CAPITAL (APIC). During 2006, the following is the Stockholders’ equity of Company B:
Assets 300
Liabilities 100
Common Stock 100
Retained Earnings 50
Share-based compensation reserve 50
In 2007, a merger between Companies A and B took place. The merger will be accounted for using the pooling of interest method.
Upon consolidation of books, the following entry was made.
Assets 300
Goodwill 50
Liabilities 100
Investment in B 50
APIC ???
(50% of equity)
Thanks in advance!
Regards,
Grace
The pooling of interest method is not allowed under ifrs3 rules. you have to find an acquirer.
Best regards.
Dear All,
Could anyone suggest which articles of IAS are important for Treasury, Cash Flow and Working Capital Management.
Is there any web site link where I could find material about policies and techniques for managment of working capital?
Thank you.
Lado
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