Category: Accounting
How acquisitions are recorded in the financial statements of the buyer.
10 articles in this category.
- ASC 805 — Business Combinations — The U.S. GAAP standard governing accounting for business combinations. Largely converged with IFRS 3 since 2008.
- Bargain purchase — An acquisition in which the fair value of net identifiable assets exceeds the consideration paid. The excess is recognised immediately in earnings rather than deferred as goodwill.
- Contingent consideration — Purchase-price components whose payment depends on future events, such as earnouts. Initially measured at fair value at acquisition date, with subsequent changes generally hitting earnings.
- Deferred tax in M&A — The deferred tax assets and liabilities recognised on differences between book and tax basis of assets and liabilities acquired in a business combination.
- Goodwill — The intangible asset recorded when a buyer pays more than the fair value of net assets.
- Goodwill impairment — A write-down of goodwill when its carrying amount exceeds its recoverable amount. Tested at least annually under both IFRS and U.S. GAAP.
- IFRS 3 — Business Combinations — The IFRS standard governing the accounting treatment of business combinations, including the acquisition method, goodwill recognition and post-acquisition reporting.
- Intangible assets in M&A — Identifiable non-physical assets — customer relationships, brands, technology, contracts — recognised separately from goodwill in purchase price allocation.
- Measurement-period adjustments — Adjustments to provisional acquisition-accounting amounts within a one-year window after acquisition, as new information about facts existing at acquisition date emerges.
- Purchase price allocation — The process of assigning an acquisition’s price to the assets and liabilities acquired.