thialand dating women - Consolidating financial statements equity

Consider the value of a quality business reputation that has been established for years.

consolidating financial statements equity-76

Notice that Sledge’s total equity is highlighted to call attention to its reported balance of $300,000. Premier became the sole owner of Sledge, which has assets that are reported on Sledge’s books at $450,000, and liabilities that are reported at $150,000.

It may seem odd that Premier’s investment is reported at $400,000, while Sledge’s equity is only $300,000. The resulting net book value ($450,000 – $150,000 = $300,000) corresponds to Sledge’s total stockholders’ equity.

Control is ordinarily established once ownership jumps over 50%, but management contracts and other similar arrangements may allow control to occur at other levels.

A controlled company may continue to operate and maintain its own legal existence.

A rental store with a favorable location and established customer base is perhaps worth more than its facilities and equipment.

A law firm is hopefully worth more than its desks, books, and computers.

There are many reasons for these transactions, and this helps to explain their frequency.

One business may acquire another to eliminate a competitor, to gain access to critical technology, to insure a supply chain, to expand distribution networks, to reach a new customer base, and so forth.

What about the other ,000 of acquisition differential (0,000 total differential minus ,000 attributable to land)? Whenever one business buys another and pays more than the fair value of all the identifiable pieces, the excess is termed only arises from the acquisition of one business by another.

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