Asset vs. business acquisition: The differences you need to know

05/07/20

The deal is done. Now what? PwC partners discuss key differences in the accounting for asset acquisitions and business combinations.

Even in a challenging market, deals are still being done. In this podcast episode, we turn our attention to the area of business combinations, specifically the differences in accounting for the acquisition of an asset versus a business. Heather Horn is joined by PwC partners Andreas Ohl and Dan Goerlich to walk through the accounting models.

Topics include:

5:13 - Transaction costs. Taking the perspective of the buyer, Andreas and Dan discuss how to think about transaction costs in the two models.
8:52 - In-process R&D. When the target company invests heavily in research and development, accounting at the purchase date is starkly different between the two models. Andreas discusses the impact on net income.
11:20 - Contingent considerations. What is contingent consideration and when is it recorded? Dan explains.
15:40 - Goodwill and other considerations. Does the transaction generate goodwill? Andreas and Dan discuss.
19:14 - The seller’s side. What should sellers be thinking about? We close by taking a look at derecognition.

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About our guests

Andreas Ohl is a partner in PwC's National office where he focuses on mergers and acquisitions under US GAAP and IFRS. Andreas is chairman of the Business Valuation Standards Board at the International Valuation Standards Council, is a member of the working group that authored the AICPA's In-Process R&D guide, and has served as a member of the FASB's Valuation Resource Group.

Dan Goerlich is a deals partner at PwC with over 15 years of experience in public accounting, servicing clients primarily in the banking and capital markets industry, including broker dealers and asset managers, as well as the automotive, industrial products, and real estate sectors. Dan focuses on assisting clients with transformative and complex transactions, specializing in the related accounting and financial reporting.

About our host

Heather Horn is PwC's National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 25 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.