07/01/2009 (Updated on October 1, 2015*)
This edition discusses several intricacies in the M&A Standards relating to the accounting for partial acquisitions and disposals that may impact how companies report financial results and communicate to shareholders.
In an economic environment where many companies are buying and selling portions of businesses, the M&A Standards** have an impact on how companies account for these types of transactions. At first glance, the fundamental concept of “control” that drives the accounting seems easy to understand. If a company gains control, the acquisition is a business combination. If a company loses control, it deconsolidates the subsidiary. If a company maintains control, the transaction is recorded in equity. Simple, right? Not so fast!
This edition of Mergers & Acquisitions — A snapshot will discuss several intricacies in the M&A Standards relating to the accounting for partial acquisitions and disposals that may impact how companies report financial results and communicate to shareholders.
* This snapshot, updated since its original issuance to reflect changes for, among other things, contacts and branding, contains guidance that remains relevant as of the publication date.
** Accounting Standards Codification 805 is the US standard on business combinations, Accounting Standards Codification 810 is the US standard on consolidation and noncontrolling interests (collectively the “M&A Standards”).
© 2016 - 2017 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.