Section 2: 35–45%B8
Business Combinations and Consolidations
Exam Insight
Business combinations and consolidations are among the most heavily tested topics on BAR because they combine fair-value measurement, goodwill math, noncontrolling interest, and intercompany eliminations into multi-step problems. Examiners love testing whether you can compute goodwill correctly and clean up intercompany transactions on a consolidation worksheet.
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What AICPA Wants You to Know
- 1Apply the acquisition method under ASC 805 and identify the acquirer, acquisition date, and consideration transferred.
- 2Compute goodwill (or a bargain purchase gain) including the fair value of noncontrolling interest and any previously held equity interest.
- 3Measure and present noncontrolling interest (NCI) at the acquisition date and in subsequent periods.
- 4Eliminate intercompany sales, unrealized profit in ending inventory, and intercompany receivables, payables, and debt.
- 5Understand the variable interest entity (VIE) model and identify the primary beneficiary who must consolidate.
- 6Build a basic consolidation worksheet from separate parent and subsidiary trial balances.