CPA Exam Tips and Common Pitfalls

Exam Strategy

CPA FAR questions often combine multiple consolidation concepts into a single problem. Success requires understanding the acquisition method, goodwill, noncontrolling interest, elimination entries, and intercompany transactions.

• Determine the accounting method first.
• Identify fair value adjustments.
• Calculate goodwill carefully.
• Eliminate all intercompany balances.
• Do not forget noncontrolling interest allocations.
• Separate acquisition costs from purchase consideration.

Think of the parent and subsidiary as one company—the goal of every consolidation adjustment is to make the financial statements reflect that economic reality.