Section 1: 30–40%1A6
Consolidated Financial Statements
Consolidation is heavily tested in FAR. AICPA wants you to understand when to consolidate, how to eliminate intercompany transactions, and how to handle noncontrolling interests.
What AICPA Wants You to Know
- 1Apply the consolidation requirement (control = >50% voting interest, or variable interest entity)
- 2Eliminate intercompany transactions: sales, loans, dividends
- 3Calculate noncontrolling interest (NCI) on the balance sheet and income statement
- 4Recognize goodwill on acquisition and subsequent impairment testing
- 5Distinguish consolidation from equity method and cost method