ACC 703 Chapter Notes - Chapter 3: Issued Shares, Ias 39, Historical Cost
30 Nov 2014
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Common shareholder has power through voting rights and exposure to variable returns. If control is achieved by purchasing net assets, the combining takes place in the accounting records of the acquirer. If control is achieved by purchasing shares or through contractual agreements, the combining takes place in the consolidated financial statements: variations. Purchase method: statutory amalgamation: two or more companies combine to form a single legal entity. Shareholders of combining companies become shareholders of surviving company, and non- surviving companies are wound up. If only one company survives, it is essentially a purchase of net assets with shares being the method of payment. Consolidated statements are not required when an acquirer directly purchases the net assets of a business. Methods of accounting for business combinations. Measurement basis for net assets of: Acquiring company acquired company. Acquisition method carrying amount. New- entity method fair value. If purchase price is greater than fair value, excess is allocated to goodwill.
