Accounting Questions: Goodwill, Intangible Assets, Non-controlling Interest, Impairment Testing, IFR

Goodwill and Intangible Assets- Coca Cola

Q1)How does Coca Cola Company account for Goodwill, Trademarks and Other Intangible Assets? State the amounts of each intangible asset as it appears in the financial statement for 2018 and 2019.

2)Does Coca Cola Company make any acquisitions during 2019? and how these acquisitions affect the goodwill?

3)From the annual report for the fiscal year 2019

Determine the total amount of non-controlling interest 

State in which statement it is disclosed and in which section. 

State the amount of non-controlling interest share in Coca Cola Company’s profit

State the amount of non-controlling interest share in Coca Cola Company’s dividends. Explain. 

Discuss how Coca Cola Company responded to the latest amendment issued by FASB to simplify the test for goodwill Impairment

Q2)Firms should conduct the impairment test for goodwill at least annually. Accounting standards require more frequent impairment testing if some events occur.

a)Identify the main events upon which goodwill undergoes a test for its impairment. 

b)Provide one recent example from the real world for a company that made the goodwill impairment test and reported goodwill impairment charges (Excluding Coca Cola Company). Your answer must be in a tabular format, and cover all the following points:

Q3)Explain in details, the differences between the IFRS and GAAP (after FASB issued ASU 2017-04 to simplify the accounting for goodwill impairment) regarding the following:

Assignment/allocation of goodwill. (i.e. The levels at which goodwill is assigned /allocated) 

Impairment of goodwill and test(s) applied and its steps (i.e. Methods of determining impairment of goodwill)

How impairment loss is recognized and allocated.(i.e. impairment loss[charge] calculation and allocation)

Amortization and impairment of intangible assets other than goodwill.

Q4)Explain in details the differences between Merger, Consolidation, and Acquisitions. Support your answer with one recent example from the real world for each type. 

Q5)  If the accountant did not prepare the elimination entry of unrealized profit in inventories at the end of any year, this will affect the consolidated net income in that year and in all subsequent years. Discuss this statement and support your answer with a numerical example.

Q6)  What is the difference between upstream sale of inventory and a downstream sale? Why is it important to know the direction of sale when preparing the consolidated financial statements?

Q7) On January 1, 2018, Panorama Corporation made the following investments

Acquired for cash, 70 percent of the outstanding common stock of Silly Corporation at $140 per share

Acquired for cash, 60 percent of the outstanding common stock of Sky Corporation at $80 per share

The stockholders’ equity of the two companies on January 1, 2018 were as follows:

After these investments were made, Panorama was able to exercise control over the operations of both companies. An analysis of the retained earnings of each company for 2018 is as follows:

1. What entries should have been made on the books of Panorama during 2018 to record the Parent’s share of subsidiary income or loss

2. What amount should be reported as consolidated retained earnings of Panorama Corporation and subsidiaries as of December 31, 2018? Why?

3. Compute the correct balances of Panorama’s Investment in Silly and Investment in Sky accounts at December 31, 2018, before consolidation.

Q8) At December 31, 2020, The Comparative income statements of Philly Corporation and Silly Corporation were as follows (in thousands):

1. Philly Corporation acquired 80 percent of Silly for $1,600,000 on January 1, 2018, when Silly’s stockholders’ equity at book value was $1,400,000.

2. The excess of the cost of Philly’s investment in Silly over book value acquired was allocated $60,000 to undervalued inventories that were sold in 2018, $80,000 to undervalued equipment with a four-year remaining useful life, and the remainder to goodwill.

Prepare a consolidated income statement for Philly Corporation and Subsidiary for the year ended December 31, 2020.