Section 2: 35–45%B8
Business Combinations and Consolidations
Exam insight
Business combinations and consolidations are among the most heavily tested BAR topics because a single problem can stack fair-value measurement, goodwill math, noncontrolling interest, and intercompany eliminations all at once. Examiners want to see you compute goodwill correctly and clean up intercompany transactions on a consolidation worksheet.
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.
Patterns in this topic
The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.
Exam tip
Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.