Define: Purchase Method

Business, Legal & Accounting Glossary

Definition: Purchase Method

Quick Summary of Purchase Method


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.

Synonyms For Purchase Method

acquisition method

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Purchase Method. Payroll & Accounting Heaven Ltd. April 06, 2020
Chicago Manual of Style (CMS):
Purchase Method. Payroll & Accounting Heaven Ltd. (accessed: April 06, 2020).
American Psychological Association (APA):
Purchase Method. Retrieved April 06, 2020, from website:

Definition Sources

Definitions for Purchase Method are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 11th January, 2020