Mergers & acquisitions: A snapshot

Download Mergers & acquisitions: A snapshot March 2010

The Consolidation Standard is effective as of January 1, 2010 for calendar year-end companies and the impact will soon be reported in the first quarter reporting cycle. As a result of applying the new guidance, certain entities may need to be consolidated while other entities may need to be deconsolidated. Determining who consolidates is just the beginning. There are several other accounting considerations that could follow—such as acquisition accounting for newly consolidated entities, potential changes to impairment tests, and measuring the impact of deconsolidation of an entity under the M&A Standards. This volume of Mergers & Acquisitions—A snapshot discusses accounting considerations that companies may face related to the M&A accounting standards upon adoption of the consolidation standard.

Download Volume 8 (February 2010): Accounting for contingent consideration — Don't let earnouts lead to earnings surprises

In many M&A transactions, when the buyer and seller cannot agree on the total purchase price in an acquisition, the two parties agree to an additional payment, or contingent consideration, based on the outcome of future events. These payments are commonly referred to as earnouts and are typically based on revenue or earnings targets that the acquired company must meet after the acquisition date. The accounting for these arrangements under the M&A standards represents a significant change from past practice.

This volume of Mergers & acquisitions: A snapshot discusses the accounting for earnouts from a buyer's perspective, and how the accounting guidance may impact the buyer's acquisition accounting and introduce a level of volatility in the buyer's earnings in post acquisition periods that results from the earnout arrangement.

Download Mergers & acquisitions: A snapshot November 2009

In many M&A transactions, a buyer may acquire assets it does not intend to use. Prior to the M&A standards, buyers generally would assign little or no value to assets that are not intended to be used when accounting for an M&A transaction. Now, such assets are required to be recognized at fair value from a market participant perspective, even if that perspective differs from that of the actual buyer.

One common type of asset that a buyer does not intend to actively use that is receiving considerable attention is called a "defensive asset." This volume of Mergers & acquisitions: A snapshot, focuses on some of the issues companies may face when initially recognizing, measuring and subsequently accounting for defensive assets.

Download Mergers & acquisitions: A snapshot July 2009

Accounting for partial acquisitions and disposals — it's not so simple! In an economic environment where many companies are buying and selling portions of businesses, the M&A standards will 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 volume of Mergers & acquisitions: A snapshot, 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.

Download Mergers & acquisitions: A snapshot April 2009

This installment of Mergers & acquisitions: A snapshot explores some of the more common issues related to employee compensation arrangements typically seen in business combinations:
  • Contingent consideration
  • Golden parachutes and stay bonuses, and
  • Exchanges of stock compensation awards
Employee compensation decisions agreed upon during deal negotiations could impact the acquirer's future financial results.

Download Mergers & acquisitions: A snapshot March 2009

This edition focuses on how the accounting for merger and acquisition transactions will create volatility in an acquirer's effective tax rate in periods before and after an acquisition.
  • Deal costs
  • Acquired valuation allowances
  • Acquirer's deferred tax adjustments
  • Income tax contingencies
  • Income tax indemnifications
  • Contingent consideration
  • Share-based compensation
  • Step acquisitions
Download Mergers & acquisitions: A snapshot February 2009

This edition will help you avoid last-minute surprises by understanding how the new accounting and reporting standards for M&A may affect your financial reporting even though you haven't closed a deal. Even with no merger and acquisition activity, the new M&A standards could:
  • Increase the number of reporting units
  • Change the amount of goodwill impairment
  • Result in more transactions or other events being recorded as business combinations
  • Cause tax adjustments to be recorded in earnings
  • Change the presentation of your financial statements

Download Mergers & acquisitions: A snapshot December 2008

This edition of focuses on some of the issues companies may face in preparing goodwill impairment tests in the current environment.
  • Goodwill impairment testing: What's old is new again
  • Revisiting the goodwill impairment testing framework
  • Assessing recent developments

Download Mergers & acquisitions: A snapshot October 2008

  • Valuation date
  • Transaction and restructuring costs