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Title: Advanced Accounting: Business Combination
Description: Summary for Business Combination
Description: Summary for Business Combination
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Business Combination – a transaction or other event in which an acquirer obtains control of one
or more businesses
...
Merger
- The Acquirer purchases the assets and liabilities/net assets of the Acquiree
...
2
...
- Both Acquirer company and Acquiree company will be existing
...
Aggregate:
1
...
Cash
b
...
Issued bonds @FMV
d
...
Liability
ii
...
FMV Non-Controlling Interest (Stock Acquisition)
3
...
Aggregate > FMV identifiable net assets of Acquiree, result is Goodwill
...
Aggregate < FMV identifiable net assets of Acquiree, result Gain on Bargain Purchase
...
Stock Issuance Costs – exhaust up to the resulting Share Premium and any excess will be
debited to Stock Issuance account and will be a contra-account in order of the following:
Previously related APIC/APIC Acquirer; Retained Earnings Acquirer
...
SEC registration fee
b
...
Newspaper Publication Fee
d
...
Acquisition Related Costs – Expense
a
...
Legal fee
c
...
Listing fee
Asset – Acquirer @ BV
Asset – Acquiree @ FMV
Goodwill
Cash Payments
Investment in Subsidiary Account
Total Assets/Consolidated Asset
xx
xx
xx
(xx)
(xx)
xx
Liab – Acquirer @ BV
Liab – Acquiree @ FMV
Contingent Consideration (Liab)
Issued Bonds @ FMV
Bond Issue Cost @ Amortized Cost
Unpaid Costs (SIC/ARC)
Total Liab/Consolidated Liab
xx
xx
xx
xx
(xx)
xx
xx
RE – Acquirer
Gain on Bargain Purchase
ARC
Bond Issue Cost @ FVPL
Excess SIC (2nd Priority)
Total RE
xx
xx
(xx)
(xx)
(xx)
xx
* Contingent Consideration – Equity = Share Premium
Total Share Capital
Total Share Premium
Total RE
Contingent Consideration (Equity)
FMV – NCI
Total SHE
xx
xx
xx
(xx)
(xx)
xx
Control Premium
- The excess paid by a buyer over the market price of a target company in order to gain
control
...
- If NCI is assumed, exclude in the computation for the assumed NCI
...
1
...
2
...
3
...
*Except:
1
...
Target Net Income
3
...
Workpaper Entries:
1
...
Update to FV of Assets and Liab of Subsidiary
Undervalued Asset
Overvalued Liab
Overvalued Asset
Undervalued Liab
Investment in Subsidiary (% Parent)
Non-Controlling Interest (% NCI)
xx
xx
xx
xx
xx
xx
3
Title: Advanced Accounting: Business Combination
Description: Summary for Business Combination
Description: Summary for Business Combination