Page 13 - Finac2 Test 1 Slides - 2. Business Combinations

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Acquisition method

When did the acquisition occur (.8 &.9)? (Step 2)

• The date on which the acquirer obtains control of the acquiree.

• A business combination occurs at the “acquisition date”

• Date that acquirer obtains control of acquiree

• Normally date consideration is transferred
• But could be earlier or later

• Look to substance of contractual agreements

• At the acquisition date in a business combination:

• Goodwill arises

• Must calculate the FV of identifiable assets and liabilities of acquiree
• Must measure NCIs

• Goodwill can only arise on the date that the control threshold

is crossed

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