Accounting Ch10 part2

Accounting Ch10 part2 - Mergers and acquisitions are...

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Mergers and acquisitions are accounted for using purchase accounting. Under purchase accounting, the net assets acquired are recorded by the acquiring company at their fair market value at the date of acquisition. Contingencies and commitments: It is not unusual for a firm to be involved in litigation, the results of which are not known when the financial statements are prepared. If the firm is denying liability in a lawsuit in which it is a defendant, it is appropriate to disclose the fact of the lawsuit to readers of the financial statements. It has been emphasized that the financial statements do not reflect the impact of inflation. A business segment is a group of the firm’s business activities that has a common denominator. Many firms include in the explanatory notes “management’s statement of responsibility” which explains that the responsibility for the financial statements lives with the management of the firms, not the external auditor & certified public accountants who
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This note was uploaded on 03/02/2011 for the course ACCT 502 taught by Professor Jaggi during the Fall '10 term at Rutgers.

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