Concept explainers
Consolidated earnings per share:is calculated in the same way as earnings per share is calculated in a single corporation. Consolidated earnings per share is based on the income attributed to the controlling interest and available to parent’s common stock. Basic consolidated EPS is calculated by deducting income to the non-controlling interest and any preferred dividends requirement of the parent company from consolidated net income. The resulting amount is then divided by the weighted-average number of the parent’s common shares outstanding during the period. In computation of EPS, the parent’s percentage of ownership changes frequently when subsidiary convertible bonds and
how rights, warrants and options of subsidiary companies are treated in consolidated EPS.
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ADVANCED FINANCIAL ACCOUNTING IA
- Discuss how the consolidated financial statements reflect:(a) The distinction between “control” and “ownership”.arrow_forwardwhat are intra-entity transfers? How do you treat intra-entity transfers while consolidating the financial statements of a parent company and its subsidiary?. Discuss with suitable examples.arrow_forwardUnder what circumstances does a company prepare consolidated financial statements?arrow_forward
- Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assetsand liabilities in the consolidated financial statements on the date of the acquisition.arrow_forwardWhat are some of the advantages of holding companies? Identify adisadvantage.arrow_forwardIn preparing the subsidiary company's incom distribution schedule (ids) how is the total distribution to non_controlling interest calculatedarrow_forward
- Explain what a variable interest entity is, what a major beneficiary is, and what elements are utilized to determine whether or not a variable interest entity is liable to consolidation.arrow_forwardDefine underwriter (of IPO)arrow_forwardWhich consolidation method should be used in preparing consolidated financial statements in accordance with IFRS? A. Proportionate consolidation method.B. Either identifiable net assets or fair value enterprise method.C. New entity method.D. Parent company method.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning