Prepare yourself for CPA Board Exam through these kind of problems, like this Advanced Fin. Acctg. and Reporting problem:
You may have heard of ARMYs and Buddies talking about BigHit’s purchase of Source Music. While some are excited on this, others are not happy with it. Let’s see what will happen afterwards, but expect a better future for these groups they manage.
If you are the lead Accountant of the company, what will you do? Use all concepts that you learned in Advanced Accounting. Solve this problem:
This last week, BigHit acquired Source Music and is planning to do the same with RBW. This has effect of the latter two agencies as being subsidiaries of BigHit. As a consequence, GFRIEND, ONEUS, MAMAMOO, and other groups under two labels will be indirectly managed by the parent group.
Source Music is on its way to relocate its headquarters to BigHit’s new building.
- Is BigHit exercising significant influence or control? Explain.
- Does this purchase fall under merger or consolidation? Explain.
- (Independent case) Assume that royalties on every comebacks are divided as follows: 60% to BigHit and 40% to Source Music. Explain and/or illustrate where will these portion/s of income go. (Hint: non-controlling interest in net income of subsidiary)
Advanced Fin. Acctg. and Reporting Problem prepared by: TweetNewscaster
Featured Image Credit: Logo of two agencies. For illustrative purposes only.