Acquisitions
You will submit a report as well as the necessary spreadsheets for Section III of the final project.You will discuss acquisitions and the consolidation process. You will also create a hypothetical example of a consolidation worksheet to submit with your report.
Specifically, the following critical elements must be addressed:
III. Acquisitions: The company is also considering acquiring another small company. Communicate the crucial elements of creating consolidated financial statements including the income statement, balance sheet, and statement of cash flows in the case of possibly acquiring another company.
A. If the company acquires another small company, assess how it would know if it has to consolidate its financial statements on an annual basis. Defend your response.
B. Describe what the consolidation process entails.
C. Compose a hypothetical example of the consolidation worksheet and elimination entries. Ensure all information is entered accurately.
Guidelines for Submission: Your report must be submitted as a 2- to 3-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least two sources cited in APA format. Your accompanying spreadsheets must be submitted as Microsoft Excel files.
Answer Preview
Assessment of the Need to Consolidate Financial Statements for Subsidiaries on Annual Basis
The need to consolidate the financial statements will be determined by several factors which the parent company must consider. A company will need to consolidate the financial statements if it has financial interests in controlling another company (Umoren, & Enang, 2015). If the policy of the company by the shareholders in all its subsidiaries is to have consolidated financial statements, then the company will need to consolidate the statement with the said small company it has acquired. A company will need to prepare the consolidated financial statement when its shares are traded on the stock exchange…
550 words