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    Chapter 2 Business Combinations - Part 2

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    latte aeri
    The document discusses accounting for different types of business combinations, including: 1) Share-for-share exchanges, which measure consideration transferred at the acquisition-date fair value of the equity interests exchanged. 2) Business combinations achieved in stages, which require remeasuring any previously held equity interest and recognizing gains or losses. 3) Combinations achieved without consideration transferred, which substitute the fair value of the acquirer's interest for consideration. It also covers the measurement period for adjusting provisional amounts, determining separate transactions, accounting for reacquired rights, and settling pre-existing relationships between acquirers and acquirees.

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    Chapter 2 Business Combinations - Part 2

    Uploaded by

    latte aeri
    99 views9 pages
    The document discusses accounting for different types of business combinations, including: 1) Share-for-share exchanges, which measure consideration transferred at the acquisition-date fair value of the equity interests exchanged. 2) Business combinations achieved in stages, which require remeasuring any previously held equity interest and recognizing gains or losses. 3) Combinations achieved without consideration transferred, which substitute the fair value of the acquirer's interest for consideration. It also covers the measurement period for adjusting provisional amounts, determining separate transactions, accounting for reacquired rights, and settling pre-existing relationships between acquirers and acquirees.

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    CHAPTER 2 BUSINESS COMBINATIONS - PART 2

    Original Title

    CHAPTER 2 BUSINESS COMBINATIONS - PART 2

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    The document discusses accounting for different types of business combinations, including: 1) Share-for-share exchanges, which measure consideration transferred at the acquisition-date fair value of the equity interests exchanged. 2) Business combinations achieved in stages, which require remeasuring any previously held equity interest and recognizing gains or losses. 3) Combinations achieved without consideration transferred, which substitute the fair value of the acquirer's interest for consideration. It also covers the measurement period for adjusting provisional amounts, determining separate transactions, accounting for reacquired rights, and settling pre-existing relationships between acquirers and acquirees.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    99 views9 pages

    Chapter 2 Business Combinations - Part 2

    Uploaded by

    latte aeri
    The document discusses accounting for different types of business combinations, including: 1) Share-for-share exchanges, which measure consideration transferred at the acquisition-date fair value of the equity interests exchanged. 2) Business combinations achieved in stages, which require remeasuring any previously held equity interest and recognizing gains or losses. 3) Combinations achieved without consideration transferred, which substitute the fair value of the acquirer's interest for consideration. It also covers the measurement period for adjusting provisional amounts, determining separate transactions, accounting for reacquired rights, and settling pre-existing relationships between acquirers and acquirees.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    Chapter 2 BUSINESS COMBINATIONS (Part 2)

      Learning Objectives
    • Account for business combinations (a) accomplished
    through share-for-share exchanges, (b) achieved in stages,
    and (c) achieved without transfer of consideration.
    • Explain the “measurement period” in relation to business
    combinations.
    • Distinguish what is part of a business combination and
    what is part of a “separate transaction.”
    • Account for settlement of pre-existing relationship
    between an acquirer and an acquiree.
    ACCOUNTING FOR BUSINESS
    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    Share-for-share exchanges

    • The consideration transferred in a business combination


    accomplished through a mere exchange of equity
    interests between the acquirer and the acquiree (or its
    former owners) is measured at the acquisition-date
    fair value of the acquiree’s or acquirer’s equity
    interests, whichever is more reliably determinable.

    ACCOUNTING FOR BUSINESS


    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    Business combination achieved in stages
    • A business combination achieved in stages occurs when an investor
    acquires additional shares from an investee which it had
    previously held equity interest and the additional shares purchased
    results to the investor obtaining control over the investee.
    • Accounting for a business combination achieved in stages :
    1. Remeasure the previously held equity interest in the acquiree at its
    acquisition-date fair value; and
    2. Recognize the gain or loss on the remeasurement in:
    • Profit or loss – if the previously held equity interest was
    classified as FVPL, Investment in Associate, or Investment in
    Joint Venture.
    • Other comprehensive income – if the previously held
    equity interest was classified as FVOCI.
    ACCOUNTING FOR BUSINESS
    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    Business combination achieved without transfer of consideration

    • In a business combination in which no consideration is


    transferred, the acquirer substitutes the acquisition-date fair
    value of its interest in the acquiree for the acquisition-date fair value
    of the consideration transferred to measure goodwill or a gain on a
    bargain purchase.

    ACCOUNTING FOR BUSINESS


    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    Measurement period

    • If the initial accounting for a business combination is incomplete by the


    end of the reporting period in which the combination occurs, the acquirer
    shall report in its financial statements provisional amounts for the
    items for which the accounting is incomplete.

    • If new information is obtained during the measurement period which


    provides evidence of facts and circumstances that existed as of the
    acquisition date that, if known, would have affected the measurement of the
    amounts recognized as of that date, the acquirer shall retrospectively
    adjust the provisional amounts recognized at the acquisition date.
     
    • The measurement period shall not exceed one year from the acquisition
    date. ACCOUNTING FOR BUSINESS
    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    Determining what is part of the business combination transaction

    • A transaction that is arranged primarily for the benefit of


    the acquirer or the combined entity rather than primarily
    for the benefit of the acquiree or its former owners
    before the combination is likely to be a separate
    transaction. Thus, the portion of the transaction price
    is excluded from the consideration transferred
    when applying the acquisition method.

    ACCOUNTING FOR BUSINESS


    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    REACQUIRED RIGHTS

    • A right that an acquirer has previously granted to the acquiree that


    is reacquired as a result of a business combination is recognized as
    an intangible asset separately from goodwill.

    ACCOUNTING FOR BUSINESS


    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    SETTLEMENT OF PRE-EXISTING RELATIONSHIP

    1. CONTRACTUAL
    2. NON-CONTRACTUAL

    ACCOUNTING FOR BUSINESS


    COMBINATIONS (Advanced
    Accounting 2) - (by: MILLAN)
    END
    ACCOUNTING FOR BUSINESS COMBINATIONS (Advanced Accounting 2) - (by:
    MILLAN)

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