M&A Accounting
Asset and Stock Deals
A business combination can be effected as either an asset acquisition or a stock acquisition.
Asset acquisition
The acquirer buys some or all of the...
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Subsidiary Accounting
There are three possible ways to account for the investment by one company in the common stock of another, depending on the resulting degree of influence...
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Equity Method Accounting
When Company A (the investor) has significant influence over Company B (the investee)—but not majority voting power—Company A accounts for...
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Important Accounting Changes
In December 2007, the FASB introduced FAS 141r and FAS 160, changing longstanding accounting rules for business combinations and noncontrolling (minority)...
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Purchase Price Allocation I
Equity Purchase Price
The first step in purchase price allocation, or PPA, is to determine the purchase price. Also known as the transaction price/value,...
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Purchase Price Allocation II
Let's now consider some slightly more advanced purchase price allocation (PPA) topics related to the fair valuation of assets acquired and liabilities...
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Purchase Price Allocation III
Purchase Price Allocation Under the Equity Method
In an M&A context under the equity method of accounting, we record the initial investment in an...
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Noncontrolling (Minority) Interest
Noncontrolling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest...
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Treatment of Options (FIN 44)
FASB Interpretation No. 44 ("FIN 44") governs the accounting treatment of stock options in business combinations, among other transactions involving...
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