Acc405 Project One

What Is ACC 405 Project One?

Acc405 Project One: ACC 405 is commonly a course titled Advanced Accounting, often offered at universities (for example, Southern New Hampshire University) as a higher-level accounting course dealing with consolidations, intercompany transactions, and complex corporate accounting techniques. The Project One assignment in ACC 405 is typically the first major project in the course that tests your mastery of consolidation accounting, worksheet preparation, and specialized adjustments.

In general, Project One requires students to:

• Prepare consolidation worksheets combining parent and subsidiary entities

• Compute goodwill, investment balances, and noncontrolling interest

• Handle intercompany eliminations and internal transfers

• Prepare a memo discussing special consolidation or foreign currency issues, especially if a subsidiary uses a non-U.S. functional currency

Because of its central role in measuring a student’s understanding of advanced accounting theory and GAAP consolidation principles, doing well on Project One is critical to success in ACC 405.

Key Components & Requirements

The rubric and guidelines for ACC 405 Project One lay out specific critical elements you must address.Key required components include:

1. Calculation of Purchase Percentage (Acquisition Percentage)
   You must compute the percentage of the subsidiary (for example “Soho acquired by Perry”) that the parent has acquired.

2. Differential Schedule / Book Value vs. Implied Value
   Prepare a schedule comparing the book value of net assets at acquisition with the purchase price implied value, identifying differentials, allocation to land, goodwill, etc.

3. Consolidated Balance Sheet Workpaper
   Draft a three-part consolidation worksheet (Parent, Subsidiary, Elimination/Adjustments) as of a specific acquisition date (e.g., January 1, 20X7).

4. Excel Workbook with Supporting Computations
   You must build supporting calculations (e.g., goodwill, investment in subsidiary, noncontrolling interest, gain/loss on bond retirement) and journal entries in Excel.

5. Memo (Narrative Section)
   In addition to the numerical worksheets, the project requires a memo in which you discuss unique calculations needed in the consolidation (especially for foreign currency consolidations), and impacts on statement of cash flows when an acquired subsidiary uses a non-U.S. functional currency.

6. Milestones & Revision
   The project is often scaffolded into Milestone One (due earlier) and the final submission (due later). You build the core worksheet first, submit it, get feedback, and then incorporate improvements plus the memo for final submission

The grading rubric typically weights the numerical computations (goodwill, investment, NCI, worksheet, entries) and the memo portion, as well as clarity, correctness, and proper formatting.

Steps & Workflow to Complete Project One

To succeed, follow a structured workflow. Here’s a recommended sequence:

1. Read the Scenario Carefully

Start by thoroughly reading the Project One scenario document. Note acquisition date, subsidiary percent acquired, book values, fair values, intercompany transactions, bond retirements, or any foreign currency elements.

2. Build Supporting Computations

Compute in Excel:

• Goodwill at acquisition = Purchase Price minus fair value of identifiable net assets

• Initial investment balance of parent’s stake in subsidiary

• Noncontrolling interest (NCI) at acquisition

• Income assignment to NCI after acquisition

• Gain or loss on bond retirement or elimination if there are intercompany bonds

Do not round intermediate steps; round final results to whole dollars per assignment guidelines.

3. Draft Consolidation Entries & Adjustments

Based on those computations, draft elimination journal entries such as:

• Eliminate investment and equity accounts

• Adjust for differential allocations

• Eliminate intercompany sales, profits in inventory, bond interest, bond intercompany holdings

• Adjust for foreign currency translation, if applicable

Combine entries logically rather than posting dozens of small entries

4. Prepare Three-Part Worksheet

Create a worksheet with three columns (Parent, Subsidiary, Consolidation entries) and compute consolidated totals. Use negative signs (minus) for amounts to be deducted.

This should culminate in a consolidated balance sheet, income statement, and potentially statement of retained earnings.

5. Write the Memo Section

Write a concise (1–2 page) memo that:

• Explains any unique consolidation calculations, especially when there is a non-U.S. functional currency subsidiary

• Discusses cash flow statement adjustments (translation adjustments, remeasurement, dual currency flows)

• Uses accounting standards terminology and clear logic

6. Review & Refine

After Milestone One feedback, revise your worksheet and memo. Ensure alignment of numbers, consistency across sections, correct formatting, and clear narrative.

Submit the Excel workbook as the core deliverable plus the memo. Be sure all required critical elements are addressed per the rubric.

Challenges & Tips for Success

While Project One is a chance to show mastery, students often stumble on certain areas. Here are common pitfalls and how to avoid them:

Foreign Currency & Translation Adjustments

If the subsidiary uses a non-U.S. functional currency, you must apply special remeasurement rules, translation rates (spot, average, closing rates), and record translation gains or losses in equity translation adjustment.

In your memo, explain how translation impacts assets, equity, and cash flow statements.

Intercompany Eliminations & Internal Profit

Eliminating internal sales and profits in inventory is tricky. You must remove unrealized profits that remain in inventory at year end, adjust COGS, and ensure no double counting.

Also eliminate intercompany bond holdings and interest, which can generate adjustments or gains when “constructively retired.”

Goodwill & Differential Allocation

Allocating the acquisition differential correctly among land, depreciation, amortization, and possibly impairment is critical. Mistakes here cascade through investment and NCI calculations.

Noncontrolling Interest (NCI) Treatment

Understand whether to measure NCI at fair value or proportionate share of net assets; the scenario instructs which method to use. Then assign NCI share of net income correctly.

Spreadsheet Logic & Roundings

Use Excel formula consistency. Don’t hard-code numbers across worksheets. Keep formulas dynamic, label clearly, and check that totals balance. Adhere to rounding rules (intermediate vs final) per guidelines.

Clear, Professional Memo

Your memo shouldn’t just restate numbers. It should explain rationale, highlight complex areas (currency, adjustments), and integrate accounting theory. Use proper APA or style as required.

Time Management & Milestone Use

Don’t leave the project until the last minute. Use the Milestone One submission to catch errors early and benefit from instructor feedback.

Why Project One Matters (Skills & Applications)

Beyond just a graded assignment, Project One demonstrates key professional skills and reinforces major accounting competencies:

• You practice consolidated financial statements, a real-world exercise relevant to any company owning subsidiaries

• You apply GAAP consolidation rules, eliminating intercompany balances, recognizing goodwill, and allocating NCI

• You gain exposure to foreign currency translation issues, remeasurement, and flux in equity translation

• You sharpen your Excel modeling, formula design, and worksheet linkage — essential for accountants

• You develop written communication skills via the memo, explaining complex accounting to stakeholders

Successfully completing ACC 405 Project One builds confidence for the rest of the course (later projects often build on this foundation). It also mirrors real accounting work when firms consolidate multiple entities or cross‐border holdings.