acquistion method

CFA Level II
#1

pg 81-82 of schweser notes:

when you consolidate the two sets of assets and subtract 8000 as cash you get the total: 96 (80+24-8)

how does this reflect in the liabilities and owners’ equity? it appears too mechanical to add 2000 and let the whole thing magically balance.

just as the 8000 went away as cash, what went and came into the liability + owners equity section?

#2

ok. wait. i think i get it.

you take the 6000+4000 from owners equity and retained earnings. since you paid 8000 for it you subtract that to get 2000. then you use that 2000 as minority interest. and, wallah, it balances out.

is that it?

#3

bump

#4

Congratulations!