CPA Exam: Consolidations & Business Combinations, In a Snap!

Learn to compute goodwill from the purchase price and subsidiary fair value, and execute a three-step consolidation: remove subsidiary equity, mark assets to fair value, and eliminate the investment.

Analyze a 100% acquisition in a business combination by comparing book value, fair value, and purchase price, then recognize a bargain purchase gain and execute the 3-step consolidation.

Understand acquisition and consolidation in a business combination when buying less than 100% of a subsidiary, including the three-step entry and noncontrolling interest.

Master the measurement period for business combinations by using provisional acquisition-date fair values and adjusting within a year when new information updates the fair value, impacting assets and goodwill.

Explore the remaining details of business combinations, including direct expenses expensed as incurred and the securities exceptions; address contingent consideration at acquisition-date fair value, pre-acquisition contingencies, and in-process R&D.

Learn how a parent gains control through step acquisitions by mark-to-market the existing investment to fair value before recording the business combination, and apply equity method and consolidation entries.

Learn how to perform consolidation after an acquisition using the equity method, including elimination of acquisition entries, intercompany transactions, and noncontrolling interest, with a Pepper and Salt example.

Retain control after ownership falls; consolidation rules keep changes in equity with no gain or loss, reducing the investment by 4,500, first from APIC then retained earnings.

Eliminate intercompany pp&e transactions in consolidation between a parent and its subsidiary. Learn year-end entries to remove gains and adjust depreciation so asset cost is preserved.