The analysis of changes in cash for a consolidated entity begins with the consolidated balance sheets. There are several issues that you should keep in mind when preparing a consolidated statement of cash flow, including cash acquisition of a controlling interest, noncash acquisition of a controlling interest, and adjustments resulting from a business combination.

Please respond to  all of the following prompts in the class discussion section of your online course:

  • In the context of the cash acquisition of a controlling interest form of business combination, how would you describe the difference between an investing activity and a financing activity? What is the importance of this distinction?
  • From an accounting perspective related to adjustments resulting from business combinations, if you had to choose between purchasing subsidiary shares or intercompany bonds, which would you choose? Why?
  • In the example of the process of preparing a consolidated statement of cash flows where there has been a business combination presented on page 331 of  Advanced Accounting, which part did you find the most difficult? The most straight-forward?
  • Assume you are working for the parent company of a group with five subsidiaries. Of the information presented, which do you think would be the most difficult to obtain? Explain.

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