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    Acctg 315 Forum

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    Cherryjane Ruiz
    The document discusses business combinations, including: 1. A business combination occurs when one company obtains control of another through acquiring more than 50% of its voting rights. The main advantages are eliminating competition and increasing productivity and earnings, while disadvantages include creating monopolies and difficulties integrating cultures. 2. An acquirer is the company that obtains control of another, called the acquiree. The acquisition date is when control is obtained. Goodwill represents future economic benefits from assets acquired, while a gain on a bargain purchase is recognized if assets exceed liabilities. 3. Non-controlling interest refers to the portion of a subsidiary's equity not owned by the parent company.

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    Acctg 315 Forum

    Uploaded by

    Cherryjane Ruiz
    24 views2 pages
    The document discusses business combinations, including: 1. A business combination occurs when one company obtains control of another through acquiring more than 50% of its voting rights. The main advantages are eliminating competition and increasing productivity and earnings, while disadvantages include creating monopolies and difficulties integrating cultures. 2. An acquirer is the company that obtains control of another, called the acquiree. The acquisition date is when control is obtained. Goodwill represents future economic benefits from assets acquired, while a gain on a bargain purchase is recognized if assets exceed liabilities. 3. Non-controlling interest refers to the portion of a subsidiary's equity not owned by the parent company.

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    The document discusses business combinations, including: 1. A business combination occurs when one company obtains control of another through acquiring more than 50% of its voting rights. The main advantages are eliminating competition and increasing productivity and earnings, while disadvantages include creating monopolies and difficulties integrating cultures. 2. An acquirer is the company that obtains control of another, called the acquiree. The acquisition date is when control is obtained. Goodwill represents future economic benefits from assets acquired, while a gain on a bargain purchase is recognized if assets exceed liabilities. 3. Non-controlling interest refers to the portion of a subsidiary's equity not owned by the parent company.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    24 views2 pages

    Acctg 315 Forum

    Uploaded by

    Cherryjane Ruiz
    The document discusses business combinations, including: 1. A business combination occurs when one company obtains control of another through acquiring more than 50% of its voting rights. The main advantages are eliminating competition and increasing productivity and earnings, while disadvantages include creating monopolies and difficulties integrating cultures. 2. An acquirer is the company that obtains control of another, called the acquiree. The acquisition date is when control is obtained. Goodwill represents future economic benefits from assets acquired, while a gain on a bargain purchase is recognized if assets exceed liabilities. 3. Non-controlling interest refers to the portion of a subsidiary's equity not owned by the parent company.

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    Discussion Forum Prelim

    Business Combination (Recognition and measurement)

    1. What is business combination?


    A business combination is when one company obtains control of one or more businesses.
    Control exist when an investor holds more than 50% interest in the subsidiary’s voting rights.

    2. Give the advantages of a business combination

    1. The competition between similar entities is eliminated or lessened.


    2. Results in greater productivity.
    3. Business opportunities will increase and high earnings will be generated.
    4. Operating costs of the combined entity may be reduced.
    5. The cost of business expansion may be lessened when a company acquires another
    company instead of putting up a branch.

    3. Give the disadvantage of a business combination

    1. The business combination brings a monopoly in the market which may have a negative impact
    on society.
    2. Management of the combined entity may become difficult due to incompatible internal
    cultures, systems, and policies.
    3. The identity of one or both of the combining constituents may cease, leading to loss of sense of
    identity for existing employees and loss of goodwill.

    4. When does a business combination occurs?

    A business combination occurs when one company acquires another or when two or more
    companies merge into one.

    5. Differentiate an acquirer and acquiree

    Parent or acquirer- company that obtains control over the other

    Subsidiary or acquiree- other company that is controlled

    6. Discuss the acquisition date

    Acquisition date is the date on which the acquirer obtains control of the acquire

    7. Differentiate Goodwill and Gain on a bargain purchase

    Goodwill is an asset representing the future economic benefits arising from other assets
    acquired in a business combination. Meanwhile, gain on a bargain purchase is recognized in
    profit or loss in the year of acquisition only after the reassessment of the assets acquired and
    liabilities assumed in the business combination.

    8. What is non-controlling interest

    Non-controlling interest (NCI) or “minority interest” is the equity in a subsidiary not attributable,
    directly or indirectly, to a parent.
    Business Combination (other topics)

    Instruction: Please answer the following questions

    1. Discuss the Account for business combinations

    a. Accomplished through share for share exchange

    b. Achieved in stages

    c. Achieved without transfer of consideration.

    2. Discuss the measurement period in relation to business combinations

    3. Differentiate what is part of a business combination and what is part of a separate transactions.

    4. Discuss or account for settlement of pre-existing relationship between an acquirer and an acquiree.

    5. Discuss the methods of estimating goodwill

    6. Discuss or account for reverse acquisitions.

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