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Major Concern in Preparation of Consolidated Financial Statements

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1) The accounting basis is a major concern in the preparation of consolidated financial statements. What is the accounting basis for consolidating assets and liabilities in a business combination recorded as a purchase? What was the accounting basis for consolidating assets and liabilities in a business combination recorded as a pooling interests?

2) Jones Company obtains all of the common stock of Hudson, Inc., by issuing 50,000 shares of its own stock. Under these circumstances, why might the determination of an acquisition price be difficult?

3) Consolidated financial statements represent accounting information gathered from two or more separate companies. This data, although accumulated individually by the organizations, is brought together (or consolidated) to describe the single economic entity created by the business combination.

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Solution Summary

Attachment in Word speaks on accounting basis as a concern in statements, and an example on common stock and acquisition price.

Solution provided by:
Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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