Define: Purchase Method

UK Accounting Glossary

Definition: Purchase Method


Quick Summary of Purchase Method


Method of producing consolidated financial statements (see acquisition method).



What is the dictionary definition of Purchase Method?

Dictionary Definition



Full Definition of Purchase Method


A method of accounting for a merger or combination in which one firm is considered to have purchased the assets of the other firm. If the price paid for the acquired firm exceeds the market value of the acquired firm’s assets, the difference is recorded as goodwill on the acquiring firm’s balance sheet. The goodwill must be written off over a period of years.



Examples of Purchase Method in a sentence


We used the purchase method as our primary accounting method to record the transactions in our books with regards to the merger.

The accountants calculated the purchase method for the acquisition. They wanted to ensure the acquisition wasn’t going to negatively impact the value of their books.


Purchase Method FAQ's



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Purchase Method. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 21, 2019 https://payrollheaven.com/define/purchase-method/.
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Purchase Method. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/purchase-method/ (accessed: July 21, 2019).
American Psychological Association (APA):
Purchase Method. PayrollHeaven.com. Retrieved July 21, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/purchase-method/

Definition Sources


Definitions for Purchase Method are sourced/syndicated from:

  • Oxford Dictionary Of Economics
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd December 2018.