Computer Project part 2

Computer Project part 2

OK THIS IS AN EXCEL PROJECT I HAVE BEEN ASSIGNED MY OWN 2 PARTS ARE HIGHLIGHTED. PLEASE DO WHAT IS ASKED. This is the art i need done :Prepare a word-processed report that describes and discusses the following worksheet results: The effects of alternative investment accounting methods on the parent’s trial balances and the final consolidation figures.

The problem is in the 1. Computer Project file. Then 3 file is the partial equity that is done which was part 1 of my part. What I need to :Prepare a word-processed report that describes and discusses the following worksheet results: The effects of alternative investment accounting methods on the parent’s trial balances and the final consolidation figures.

At the acquisition date, the computer software had a 4-year remaining life, and the Internet domain name was estimated to have a 10-year life. By the end of 2012, it became clear that the acquired in-process research and development would yield no economic benefits and Hi-Speed. com recognized an impairment loss. At December 31, 2013, Wi-Free’s accounts payable include a $30,000 amount owed to Hi-Speed.

 

The December 31, 2013, trial balances for the parent and subsidiary follow:

Required

• a. Using Excel, prepare calculations showing how Hi-Speed derived the $856,000 amount for its investment in Wi-Free.
• b. Using Excel, compute consolidated balances for Hi-Speed and Wi-Free. Either use a worksheet approach or compute the balances directly.

Computer Project

Alternative Investment Methods, Goodwill Impairment, and Consolidated Financial Statements

In this project, you are to provide an analysis of alternative accounting methods for controlling interest investments and subsequent effects on consolidated reporting. The project requires the use of a computer and a spreadsheet software package (e.g., Microsoft Excel, etc.). The use of these tools allows you to assess the sensitivity of alternative accounting methods on consolidated financial reporting without preparing several similar worksheets by hand. Also, by modeling a 141142worksheet process, you can develop a better understanding of accounting for combined reporting entities.

Consolidated Worksheet Preparation

You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent company’s trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss.

The project requires preparation of the following four separate worksheets:

• a.Consolidated information worksheet (follows).
• b.Equity method consolidation worksheet.
• c.Initial value method consolidation worksheet.
• d.Partial equity method consolidation worksheet.

If your spreadsheet package has multiple worksheet capabilities (e.g., Excel), you can use separate worksheets; otherwise, each of the four worksheets can reside in a separate area of a single spreadsheet.

 

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Prepare a word-processed report that describes and discusses the following worksheet results: The effects of alternative investment accounting methods on the parent’s trial balances and the final consolidation figures.

 

Under the equity method of accounting, the income is recorded as per the ownership percentage of the reported income of the subsidiary irrespective whether the same has been received by the parent company or not. Under this method the investment in the subsidiary is like a passive investment by recording income only when the subsidiary declares the dividends. The income is added in the investment account of the parent company. Under this the investment account of the parent company is lowered.  Dividends received from the parent company are considered as portion of the investment account and is added under cash and reduces the investment account of the company.

Under partial equity method, the parent’s investment account is adjusted for parent’s share of subsidiary’s reported net income (or net loss) and the dividends which are declared by the subsidiary whereas under the initial value method, the parent’s investment includes only the cost of acquiring the subsidiary.  Any other adjustments to reflect equity method information are done on subsequent consolidated worksheets.

 

Thus with different methods the consolidated statements have different values for its investment, net income etc.

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