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Section 1 Example: push-down accounting, v. 2. A new version of an old fave. Pro...

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Finance

Section 1 Example: push-down accounting, v. 2. A new version of an old fave.

Pro Co. purchases 100% of Semi Co.'s net assets for $15M in a transaction to be accounted for as a statutory amalgamation. Data ($M):

P S FMV

Cash 100 10

PPE&E 50 10 12

Other 10 5

Liabilities 20 20

CS 100 4

RE 40 1

__________________________________________________________________ a. Prepare the DOA reconciliation. b. Provide the DOA merger entry P would make (on P's books). c. Instead of merging S onto P's books, suppose P instead elects to maintain S' books and use 'push-down' accounting. Prepare the entries on P's and S' books to accomplish the merger through 'push-down' accounting.

d. What would the combined DOA B/S ('balance sheet') of Semi-Pro Co. look like following c.? e. Would this B/S be the same had P merged S on P's books (b. above) instead? f. Where did P's cash payment (15M) go?

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