Includes bibliographical references and index.

Table of Contents

chapter 1
Business Combinations 1
The Legal Form of Business Combinations 4
The Accounting Concept of a Business Combination 5
Accounting for Business Combinations Under the Purchase Method 7
Disclosure Requirements 16
The Sarbanes-Oxley Act of 200219
Electronic Supplement to Chapter 1 ES1
chapter 2
Stock Investments?Investor Accounting and Reporting 27
Accounting for Stock Investments 27
Equity Method of Accounting?A One-Line Consolidation 31
Interim Acquisitions of an Investment Interest 38
Investment in a Step-By-Step Acquisition 40
Sale of an Equity Interest 40
Stock Purchases Directly from the Investee 41
Investee Corporation With Preferred Stock 41
Extraordinary Items, Cumulative-Effect-Type Adjustments, and Other Considerations 42
Disclosures for Equity Investees 43
Testing Goodwill for Impairment 45
chapter 3
An Introduction to Consolidated Financial Statements 63
Business Combinations Consummated through Stock Acquisitions 63
Consolidated Balance Sheet at Date of Acquisition 67
Consolidated Balance Sheets after Acquisition 71
Allocation of Excess to Identifiable Net Assets and Goodwill 73
Consolidated Income Statement 80
Push-Down Accounting 81
Preparing a Consolidated Balance Sheet Worksheet 83
Electronic Supplement to Chapter 3 ES19
chapter 4
Consolidation Techniques and Procedures 101
Consolidation Under the Equity Method 101
Locating Errors 108
Excess Allocated to Identifiable Net Assets 108
Consolidated Statement of Cash Flows 114
Preparing a Consolidation Worksheet 119
Electronic Supplement to Chapter 4 ES27
chapter 5
Intercompany Profit Transactions?Inventories 147
Intercompany Inventory Transactions 148
Downstream and Upstream Sales 153
Unrealized Profits from Downstream Sales 155
Unrealized Profits from Upstream Sales 158
Consolidation Example?Intercompany Profits from Downstream Sales 161
Consolidation Example?Intercompany Profits from Upstream Sales 163
Electronic Supplement to Chapter 5 ES49
chapter 6
Intercompany Profit Transactions?Plant Assets 185
Intercompany Profits on Nondepreciable Plant Assets 185
Intercompany Profits on Depreciable Plant Assets 190
Plant Assets Sold at Other Than Fair Value 198
Consolidation Example?Upstream and Downstream Sales of Plant Assets 200
Inventory Items Purchased for Use as Operating Assets 202
Electronic Supplement to Chapter 6 ES65
chapter 7
Intercompany Profit Transactions?Bonds 221
Intercompany Bond Transactions 221
Constructive Gains and Losses on Intercompany Bonds 222
Parent Company Bonds Purchased by Subsidiary 224
Subsidiary Bonds Purchased by Parent 230
Electronic Supplement to Chapter 7 ES75
chapter 8
Consolidations?Changes in Ownership Interests 249
Acquisitions During an Accounting Period 249
Piecemeal Acquisitions 253
Sale of Ownership Interests 255
Changes in Ownership Interests from Subsidiary Stock Transactions 260
Stock Dividends and Stock Splits by a Subsidiary 265
Electronic Supplement to Chapter 8 ES97
chapter 9
Indirect and Mutual Holdings 283
Affiliation Structures 283
Indirect Holdings?Father-Son-Grandson Structure 285
Indirect Holdings?Connecting Affiliates Structure 289
Mutual Holdings?Parent Stock Held by Subsidiary 293
Subsidiary Stock Mutually Held 303
Electronic Supplement to Chapter 9 ES107
chapter 10
Subsidiary Preferred Stock, Consolidated Earnings per Share, and Consolidated Income Taxation
319
Subsidiaries with Preferred Stock Outstanding 319
Parent-Company and Consolidated Earnings per Share 327
Subsidiary with Convertible Preferred Stock 329
Subsidiary With Options and Convertible Bonds 330
Accounting for Income Taxes of Consolidated Entities 332
Income Tax Allocation 333
Separate-Company Tax Returns with Intercompany Gain 336
Effect of Consolidated and Separate-Company Tax Returns on Consolidated Procedures 338
Business Combinations 348
Financial Statement Disclosures for Income Taxes 351
Electronic Supplement to Chapter 10 ES115
chapter 11
Consolidation Theories, Push-Down Accounting, and Corporate Joint Ventures 371
Comparison of Consolidation Theories 372
Illustration?Consolidation Under Parent-Company and Entity Theories 375
Push-Down Accounting and Other Basis Considerations 384
Joint Ventures 391
Accounting for Variable Interest Entities 395
Electronic Supplement to Chapter 11 ES149
chapter 12
Foreign Currency Concepts and Transactions 413
Foreign Exchange Concepts and Definitions 413
Foreign Currency Transactions Other than Forward Contracts 416
FASB Statement No. 133: Accounting for Derivative Instruments and Hedging Activities 421
Accounting for Hedge Contracts: Illustrations of Cash Flow and Fair Value Hedge Accounting
Using Interest Rate Swaps 426
Foreign Currency Derivatives and Hedging Activities 432
chapter 13
Foreign Currency Financial Statements 455
Objectives of Translation and the Functional Currency Concept 455
Application of the Functional Currency Concept 457
Illustration: Translation Under Statement No. 52 461
Illustration: Remeasurement Under Statement No. 52 468
Hedging a Net Investment in a Foreign Entity 472
chapter 14
Segment and Interim Financial Reporting 513
Segment Reporting Under FASB Statement No. 131 513
Interim Financial Reporting 519
Guidelines for Preparing Interim Statements 521
chapter 15
Partnerships?Formation, Operations, and Changes in Ownership Interests 539
Nature of Partnerships 539
Initial Investments in a Partnership 540
Additional Investments and Withdrawals 542
Partnership Operations 543
Profit and Loss Sharing Agreements 544
Changes in Partnership Interests 550
Purchase of an Interest from Existing Partners 551
Investing in an Existing Partnership 554
Dissolution of a Continuing Partnership Through Death or Retirement 557
Limited Partnerships 559
chapter 16
Partnership Liquidation 575
The Liquidation Process 575
Safe Payments to Partners 579
Installment Liquidations 581
Cash Distribution Plans 586
Insolvent Partners and Partnerships 590
chapter 17
Corporate Liquidations and Reorganizations 607
Bankruptcy Reform Act of 1978607
Liquidation 610
Illustration of a Liquidation Case 611
Reorganization 619
Financial Reporting During Reorganization 623
Financial Reporting for the Emerging Company 624
Illustration of a Reorganization Case 625
chapter 18
An Introduction to Accounting for State and Local Governmental Units 643
Historical Development of Accounting Principles for State and Local Governmental Units
643
Overview of Basic Governmental Accounting Models and Principles 645
The Financial Reporting Entity 655
Comprehensive Annual Financial Report 656
chapter 19
Accounting for State and Local Governmental Units?Governmental Funds 679
The General Fund 679
Accounting for the General Fund 679
Special Revenue Funds 689
Permanent Funds 690
Capital Projects Funds 691
Special Assessment Activities 695
Debt Service Funds 696
Governmental Fund Financial Statements 698
Preparing the Governmentwide Financial Statements 700
chapter 20
Accounting for State and Local Governmental Units?Proprietary and Fiduciary Funds 723
Proprietary Funds 723
Internal Service Funds 724
Enterprise Funds 727
Proprietary Fund Financial Statements 730
Fiduciary Funds 734
Agency Funds 734
Trust Funds 736
Preparing the Governmentwide Financial Statements 739
Required Proprietary Fund Note Disclosures 740
chapter 21
Accounting for Not-For-Profit Organizations 749
The Nature of Not-For-Profit Organizations 749
Not-For-Profit Accounting Principles 750
Voluntary Health and Welfare Organizations 755
"Other" Not-For-Profit Organizations 761
Nongovernmental Not-For-Profit Hospitals and Other Health Care Organizations 762
Private Not-For-Profit Colleges and Universities 767