Which entity is the larger This could be measured by reference to the fair

Which entity is the larger this could be measured by

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Which entity is the larger? This could be measured by reference to the fair value of each of the combining entities, or relative revenues or profits. In a takeover, it is normally the larger company that takes over the smaller company (that is, the larger company is the acquirer). Which entity iniated the exchange? Normally the entity that is the acquirer is the one that undertakes action to take over the acquiree.
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The need to identify the acquirer stems from the need to measure the acquiree's assets at fair value, but not those of the acquirer. 3. Determine the acquisition date . Acquisition date = The date on which the acquirer obtains control of the acquiree. Acquisition date is when the net assets of the acquiree become the net assets of the acquirer — in essence, the date on which the acquirer can recognise the net assets acquired in its own records. Identifying right date is important, because: - The identifiable assets acquired and liabilities assumed by the acquirer are measured at their fair values on the acquisition date. Volatile markets date could affect the fair value. - The consideration paid by the acquirer is determined as the sum of the fair values of assets given, equity issued and/or liabilities undertaken in exchange for the net assets or shares of another entity. Share prices can fluctuate daily, so the choice of date can affect the measure of fair value. - The acquirer may acquire only some of the shares of the acquiree. The owners of the balance of the shares of the acquiree are called the non-controlling interest. This non-controlling interest is measured at fair value at acquisition date. - The acquirer may have previously held an equity interest in the acquiree prior to obtaining control of the acquiree. For example, entity X may have previously acquired 20% of the shares of entity Y, and now acquires the remaining 80% giving it control of entity Y. The acquisition date is the date when entity X acquired the 80% interest. The 20% share holding
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  • Fall '17
  • Balance Sheet, Generally Accepted Accounting Principles, acquiree

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