Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
To prepare: Value Analysis as well as Determination and distribution of excess schedule.
Answer to Problem 2.10.1P
Determination and distribution of excess schedule
Explanation of Solution
Acquisition is a corporate term to define buying all of another company and gain the ownership of the company.
Identify the acquirer: for acquisition it is very important for acquiree’s to know the acquirer.
Following things should be kept in mind voting rights, large minority interest, governing body of combined entity and terms of exchange.
Determine the acquisition date of the company.
Measures the fair value of acquiree: the fair value of the aquiree as an entity is assumed to be paid by the acquirer. The price includes the contingent consideration, the costs of acquisition are not included in the price of the company acquired and expended.
Record acquiree’s assets and liabilities that are assumed: the fair value of all identifiable assets and liabilities of the acquire are determined and recorded.
Contingent consideration: contingent consideration is consideration given on the happening or non-happening of event. It is generally added in purchase consideration and increase goodwill.
Calculation:
Determination and distribution of excess schedule
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Chapter 2 Solutions
ADVANCED ACCOUNTING
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