LN -On the Date of Business Combination (Ch 2)

LN -On the Date of Business Combination (Ch 2) - Ch 2:...

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Ch 2: Consolidation of Financial Information ACCT 501, SP 12 1. Business combinations and the consolidation process 1) A business combination is the formation of a single economic entity, an event that occurs whenever one company gains control over another. Often referred to as 2) Motivations for Business combinations 3) Advantages of Business combinations 4) Top M&A Deals Worldwide, 2000-2007
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Ch 2: Consolidation of Financial Information ACCT 501, SP 12 2 5) Business combinations can be created in several different ways: A. Statutory merger (through asset acquisition) — a. Acquiring company acquires ________________________ of the acquired company. b. Acquired company ____________________________________ c. Acquired company’s books are permanently closed and the acquiring company’s books are adjusted at the acquisition date for the newly acquired accounts. d. ______________________________________________ B. Statutory merger (through stock acquisition) — a. Acquiring company acquires _____________ of the acquired company, and then ______________________________ of the acquired company to its own books. b. Acquired company ________________________________ but often remains as a division of the acquiring company. c. ___________________________________________ C. Statutory consolidation— a. _______________________________________________ of the original companies. b. _______________________________________________________ as the acquirer c. ______________________________________________________ are reported by the new corporation at fair value on date of acquisition d. ___________________________ , but often remain as divisions of the new company. D. Acquisition by one company of a controlling interest in the voting stock of a second company. a. acquiring company acquires the ____________________ of another company, and is able to _______________________________ b. acquiring company records the investment in the stock of the acquired company. c. acquired company ______________________________________, but as a subsidiary of the acquiring company, or parent company. E. Control of a variable interest entity (VIE)
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Ch 2: Consolidation of Financial Information ACCT 501, SP 12 3 6) Financial information from the members of a business combination must be consolidated into a single set of financial statements representing as if the companies were a single economic entity. A. If the acquired company is _______________________________ a. a permanent consolidation is produced on the date of acquisition b. by entering all account balances into the financial records of the surviving company. c. Dissolved company’s records are closed out. Surviving company’s accounts are adjusted to include all balances of the dissolved company.
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This note was uploaded on 02/22/2012 for the course ACCT 501 taught by Professor Ma during the Spring '11 term at South Carolina.

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LN -On the Date of Business Combination (Ch 2) - Ch 2:...

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