Monday, May 3, 2010

Business combinations: Purchase method, Pooling of interests and Acquisition method

Business combinations: Purchase method, Pooling of interests and Acquisition method
methodPurchase methodPooling of interests(***)Acquisition
Historically usedYesYes
Required under US.GAAP and IFRS over the last few years?(Eliminated)Required
assets and liabilities of the purchased firmincluded on the balance sheet of the acquiring firmincluded on the balance sheet of the acquiring firm
adjustment of balance sheet asset and liability values to their fair values?NoYes. Fair value at the time of the purchase.
goodwillNo(*)Yes
assets and liabilities of the purchased firm are included on the B/S of the acquiring firm?YesYes
assets and liabilities - fair value adjustment?No (Historical BV)Yes (**)
Operating results for prior periodsRestated as though the two firms were always combined.
Ownership interests and former accounting basesmaintained

(*) The purchase price is not reflected on the balance sheet of the acquiring firm.

(**) fair value at the time of the purchase

(***) AKA uniting-of-interests method under IFRS

0 comments:

Post a Comment