Business, Legal & Accounting Glossary
Method of producing consolidated financial statements.
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.
Purchase acquisition accounting is a way of accounting for a firm’s acquisition on the balance sheet of the company that acquires it. It considers the target company to be an investment. There is no asset pooling. Rather, the target firm’s assets are added to the acquirer’s balance sheet at a price that reflects their fair market worth. As a result, the acquirer’s fair market value rises. The target’s liabilities are deducted from the fair value of the assets.
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.
acquisition method
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This glossary post was last updated: 14th January, 2022 | 0 Views.