Rule Atlas
FASB ASC 810: BAR Masterclass: Advanced Consolidation, VIEs, and Business Combinations
Under FASB ASC 810 (AICPA / FASB / IRS), bAR Masterclass: Advanced Consolidation, VIEs, and Business Combinations establishes the authoritative rules tested on the CPA Exam. Master the complete consolidation process for the BAR exam. VoraPrep verifies every threshold, worked table, and practice question below against the current CPA Exam blueprint.
Current Statutory Thresholds & Limits in Effect
Triggers deposit by the next banking day AND converts monthly depositors to semiweekly status for the remainder of the current and entire next calendar year.
Comprehensive Worked Example: From Acquisition to Consolidated Statements
| Component | Amount | Calculation |
|---|---|---|
| Consideration Transferred (Parent's 80%) | $900,000 | Given |
| Fair Value of NCI (20%) | $225,000 | Given |
| Total Fair Value of Sub Inc. | $1,125,000 | Sum |
| Less: Fair Value of Net Assets | ||
| Book Value of Net Assets ($1M Assets - $200k Liab) | ($800,000) | Given |
| FV Adjustment (Equipment) | ($50,000) | Given |
| FV Adjustment (Patent) | ($20,000) | Given |
| Total Fair Value of Net Assets | ($870,000) | Sum |
Pioneer Corp. is evaluating its relationship with Venture Labs, a special-purpose entity established to conduct research and development. To determine if it must consolidate Venture Labs as a variable interest entity (VIE), Pioneer's controller is identifying all of its variable interests in Venture Labs. Which of the following arrangements between Pioneer and Venture Labs would LEAST likely be considered a variable interest under FASB ASC 810?
Comprehensive Worked Example: From Acquisition to Consolidated Statements
Let's build a complete consolidation from the ground up.
- Scenario: On January 1, 20X1, Parent Corp acquires 80% of Sub Inc. for $900,000 cash. On that date, the fair value of the 20% noncontrolling interest (NCI) is determined to be $225,000. Sub Inc.'s balance sheet shows assets with a book value of $1,000,000, liabilities of $200,000, and equity consisting of Common Stock & APIC of $400,000 and Retained Earnings of $400,000. An unrecorded patent is valued at $20,000 with a 5-year life, and a piece of equipment is undervalued by $50,000 with a 10-year remaining life.
- 20X1 Performance: Parent Corp: Revenue $2,000,000; COGS $1,200,000; Operating Expenses $450,000; Dividends Paid $100,000. Sub Inc: Net Income $100,000 (from Revenue $500k, COGS $300k, OpEx $100k); Dividends Paid $30,000. Intercompany Transaction: Parent Corp sells inventory to Sub Inc. for $100,000 (cost $70,000); all of it remains in Sub's inventory at year-end.
- Step 1: Calculate Goodwill Goodwill is the excess of the consideration transferred over the fair value of the identifiable net assets acquired.
- | Component | Amount | Calculation | | :--- | :--- | :--- | | Consideration Transferred (Parent's 80%) | $900,000 | Given | | Fair Value of NCI (20%) | $225,000 | Given | | Total Fair Value of Sub Inc. | $1,125,000 | Sum | | Less: Fair Value of Net Assets | | | | Book Value of Net Assets ($1M Assets - $200k Liab) | ($800,000) | Given | | FV Adjustment (Equipment) | ($50,000) | Given | | FV Adjustment (Patent) | ($20,000) | Given | | Total Fair Value of Net Assets | ($870,000) | Sum | | Goodwill | $255,000 | $1,125,000 - $870,000 |
Common CPA Exam Distractors on FASB ASC 810
- 1DR: Retained Earnings (Sub) -- Eliminates Sub's book value equity
- 2CR: Investment in Sub -- Removes the Parent's investment account
- 3CR: Noncontrolling Interest (NCI) -- Creates NCI if <100% ownership
- 4DR: Balance Sheet Adjustments to Fair Value (e.g., PP&E, Inventory)
- 5DR: Identifiable Intangible Assets (e.g., patents, customer lists not on Sub's books)
Frequently Asked Questions: FASB ASC 810
What is the core rule under FASB ASC 810 (BAR Masterclass: Advanced Consolidation, VIEs, and Business Combinations)?
Under FASB ASC 810 (AICPA / FASB / IRS), bAR Masterclass: Advanced Consolidation, VIEs, and Business Combinations establishes the authoritative rules tested on the CPA Exam. Master the complete consolidation process for the BAR exam. VoraPrep verifies every threshold, worked table, and practice question below against the current CPA Exam blueprint.
How is FASB ASC 810 tested on the CPA Exam?
DR: Retained Earnings (Sub) -- Eliminates Sub's book value equity CR: Investment in Sub -- Removes the Parent's investment account
Where can I practice CPA Exam questions on BAR Masterclass: Advanced Consolidation, VIEs, and Business Combinations?
Test yourself instantly with the free playable CPA Exam question on this page, or launch VoraPrep's full CPA Exam adaptive question bank, interactive lessons, and 1:1 exam simulator at voraprep.com/cpa.