CHAPTER 17

BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENT

Perspective and Issues

Background and Historical Perspective

Definitions of Terms

Concepts, Rules, and Examples

ASC 805 and ASC 810 and Convergence with International Standards

Objectives

Scope

Transactions and Events Accounted for as Business Combinations

Qualifying as a Business

Techniques for Structuring Business Combinations

Accounting for Business Combinations under the Acquisition Method

Step 1—Identify the acquirer

Step 2—Determine the acquisition date

Step 3—Identify assets and liabilities requiring separate accounting

Step 4—Classify or designate identifiable assets acquired and liabilities assumed

Step 5—Recognize and measure the identifiable tangible and intangible assets acquired and liabilities assumed

Step 6—Recognize and measure any noncontrolling interest in the acquiree

Step 7—Measure the consideration transferred

Step 8—Recognize and measure goodwill or gain on a bargain purchase

Application Guidance

Business combinations achieved in stages (step acquisitions)

Changes in the parent’s ownership interest in a subsidiary

Allocation of net income and other comprehensive income to the parent and noncontrolling interest

Disclosures

Special Purpose Entities and Variable Interest Entities

Introduction and background

GAAP treatment of special-purpose entities

Problems in past practice

FASB’s response to Enron

Scope exceptions

Terminology

Initial determination of VIE status

Determination and redetermination ...

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