ch03 - Chapter 3 Accounting for M&As Accounting...

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3 3 Chapter Chapter
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Chapter 3-2 Importance of Accounting M&As require understanding of accounting Need to see “behind the numbers” Combining firms results in substantially different financial statements Purchase accounting Pooling-of-interests accounting
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Chapter 3-3 Historical Background 1970 – Accounting Principles Board (APB) ruling established: Pooling-of-interests method: retains historical basis Purchase method: requires determination of new basis Rules regarding treatment of goodwill
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Chapter 3-4 Historical Background January 2001 – FASB decides to eliminate pooling method Controversial decision Merrill Lynch predicted a decline in consolidation and the economy Cisco executives predicted a decline in innovative technology Lehman Brothers director: “Managements care about this issue intensely. They’ll try to avoid goodwill at all cost.”
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This note was uploaded on 05/10/2011 for the course MGT D72 taught by Professor Chau during the Spring '11 term at University of Toronto- Toronto.

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ch03 - Chapter 3 Accounting for M&As Accounting...

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