Business combination:
Business combination refers tothe combining of one or more business organizations in a single entity. The business combination leads to the formation of combined financial statements. After business combination, the entities having separate control merges into one having control over all the assets and liabilities. Merging and acquisition are types of business combinations.
Consolidated financial statements:
The consolidated financial statements refer to the combined financial statements of the entities which are prepared at the year-end. The consolidated financial statements are prepared when one organization is either acquired by the other entity or two organizations merged to form the new entity.The consolidated financial statements serve the purpose of both the entities about financial information.
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Impact of the dividend on the equity of the subsidiary and the investment account.
Explanation of Solution
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
500,000 | ||||
Common stock | 10,000 | |||
Paid in capital in excess of par | 490,000 | |||
(being the stock dividend recorded) |
Table: (1)
The
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Chapter 8 Solutions
Advanced Accounting
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