Say an acquisition in a company is paid with cash, and consolidation method is used; Do you add the assets of both companies and subtract cash to report CA?
I want to say YES.
but why. that cash is going from X company’s CA to Y company’s CA. Which, when consolidating, both CA will be added together anyways.
yes, if you have taken care of inter company transfers.
It’s a reclass btw Cash and Minority Interest isn’t it?
CFAHouston Wrote: ------------------------------------------------------- > but why. that cash is going from X company’s CA to > Y company’s CA. Which, when consolidating, both CA > will be added together anyways. I think the cash should go to shareholders and not to the company.
hmm, that makes sense. Thanks!
Minority Interest is a liability account and is located just above ‘shareholder’s equity’ on the balance sheet.
- If cash goes to shareholders - only cash is subtracted from Parent company BS 2) If there is an acquisition ( company buys, but not shareholders) - then cash is subtracted from Parent company cash account but added to Target comp. Cash account. When combine both - cash remains in the group. So -> equilibrium still in force
