高级财务会计 陈信元 chapter 11

1Chapter11ConsolidationTheories,Push-downAccountingandJointVenturesRequiredReadings:Chapter111.AlternativeConsolidationTheories11.Parentcompanytheory1)characteristicsassumption:CFSareanextensionofP’sfinancialstatementsCFSarepreparedforthebenefitofP’sstockholders2consolidatedNI:ameasurementofincometoP’sstockholdersNCIisaliability,andNCIshareisanexpense2)commentsinconsistentvaluationconflictwithdefinitionsofliabilityandexpense12.Entitytheory(Contemporarytheory)1)characteristicsCFSreflecttheviewpointofthetotalbusinessentityallresourcescontrolledbytheentityarevaluedconsistently3NCIisapartofconsolidatedstockholder’sequityNCIshareisanallocationofconsolidatedNI2)commentsvalidityofconsolidatedconceptconsistentvaluationofS’snetassetsrecognitionofimpliedgoodwill:conflictwithGAAP13.Traditionaltheorycompromiseofparentcompanyandentitytheory414.Comparisonofconsolidationtheories1)exhibit11-1(p.401ofthetextbook)2)otherdif.amongconsolidationtheoriesworkingpaperentriesreportingformats(B/S,I/S)*note:theconsolidationtheoriesdonotaffectP’saccountingundertheequitymethod3)illustration(p.402-411)2.RestructuringandPush-downAccounting21.Restructuring51)definitionsachangeinfinancialstructureorownership:mergersandacquisitionsleveragedbuyouts(LBO)re-capitalization(reorganizationandquasi-)anymajorchangeinthecharacterandamountoftheoutstandingcapitalstockorpaid-insurplusofacorporation,includingtheabsorptionthereinofadeficitbuybacksofacorporation’sownstockspin-offs:transferofassets;propertydividendsell-offs:sellatareducedprice62)goalsofrestructuringtoincreasestockprice(LBO,buybacks)toincreaseprofitability(thengopublic)(sell-offs,re-capitalization)22.Push-downaccounting1)definition(p.411)TheSECrequirestheuseofpush-downaccountingfortheSECfilingswhenasubsidiaryissubstantiallywhollyowned(97%)withnosubstantialpublichelddebtorpreferredstockoutstanding.2)S’accountingprocedures7newaccountingandreportingbasis:fairvalue*proportionalorfull‘push-down’?P.vs.EntityeliminationofR.Estozeropush-downcapitalsetup3)controversiesproponents:thepricepaidbythenewownersprovidesthemostrelevantbasisformeasuringtheS’assets,liabilitiesandresultsofoperationscritics:*thepurchasetransactionbetweenPandS’oldstockholdersdoesnotjustifyanewaccountingbasisforS.8*thesubsidiaryisnotapartytothetransaction:itreceivesnonewfunds;itsellsnoassets4)consolidationproceduresifpush-downaccountingisappliedtoS,theconsolidationprocessissimplified.5)illustration(p.412-416)3.JointVentures31.NatureofJointventures1)characteristicseachventurerisactiveinthemanagementimportantdecisionsrequireconsentofeachv.9ownershippercentagesvarywidelydomesticandforeigntemporaryandrelativelypermanentobjectives*toshareintherisksandrewardsofundertakings*tocombinetechnology,markets,andhumanresources2)organizationalstructures(p.392)corporatejointventuregeneralpartnershiplimitedpartnershipundividedinterest1032.Accounting1)corporatejointventuresAPBNo.18:InvestorsthatcanparticipateinthemanagementofacorporateJVshouldreporttheirinvestmentsasequityinvestmentsIfnosignificantinfluenceoveritsJVinvesteeforwhateverreason,costmethodisapplied.aninvestmentinthecommonstockofacorporateJVthatexceeds50%oftheoutstandingsharesisasubsidiaryinvestment.jointventurer’sSwouldhavetobeconsolidatedundertheprovisionofFASBNo.94and141R.112)unincorporatedjointventuresAPBOpinionNo.18addressestheapplicabilityofOpinionNo.18toinvestmentsinpartnershipsandundividedinterestsinJVOpinionNo.18donotapplyinsomespecialindustries(e.g.oilandgas)inwhichtheinvestor-ventureraccountsforitsproratashareoftheassets,liabilities,revenues,andexpensesofJVinitsownfinancialstatements.(thisisproportionateconsolidationmethod)illustration(p.421-422)4.Accountingforvariableinterestentities(VIEs)41.Specialpurposeentitye.g.employeebenefitplans(pensionfundsorotherpostretirement-benefitplan)1)off-balancesheettreatmentseparateaccountnotincludedaspartofCFSSPEdeemedqualifyingentitiesareexcludedfromconsolidationunderFASBStatementNo.140.Lifeinsurancecompaniesarepermittedtoexcludecertainaccountsfromconsolidation2)SEC:EnronCorporationmisleadinginvestors42.FASBInterpretationNo.46(R):ConsolidationofVariableInterestentities1)conditionforinclusioninCFSfinancialcontrolexistsbecauseofcontractualandfinancialarrangementsotherthanownershipofvotinginterests2)Example:Disney(p.423)43.Identifyingvariableinterestentities1)definitioncontractual,ownership,orotherpecuniaryinterestsinanentitythatchangewithchangesinthefairvalueoftheentity’snetassetsexclusiveofvariableinterests2)consolidation-whoisrequiredtoconsolidatetheVIE:primarybeneficiary,thatwillabsorbamajorityoftheentity’sexpectedlosses,receiveamajorityoftheentity’sexpectedresidualreturns,orboth-theprimarybeneficiarymaybeanequityholderand/orcreditoroftheVIE-sameruleswithforanyotherconsolidation.twoexceptions:*thegoodwillmayberecordedonlyiftheVIEisabusiness*otherwise,anyexcessoftheconsiderationpaidoverfairvalueofthenetassetsistreatedasanextraordinaryloss.-measureandconsolidatebasedonthefairvaluesofassets,lia