Accounting for Business Combinations

Business Acquisitions, or ’Combinations,’ are among the most important decisions that managers make regarding the future success of the firm. Combinations have the potential to radically alter the economics of the acquiring company in integrating the acquired firm into the company’s business model(s). Therefore, it is inherent that practicing managers get the ’economics’ right when making business acquisitions as they will be communicated to users in the company’s financial statements. Accounting for business combinations is one of the most complex accounting challenges that the finance and accounting functions of the company will encounter. The application of the fair value measurement standards as well as the recognition and measurement of acquired intangible assets and contingencies, both acquired and promised, require a unique blend of skills in accounting and valuation. This book is designed for managers and executives to be a comprehensive, yet accessible resource, in understanding the economics of both sides of the transaction; assets and liabilities acquired and consideration transferred. The book’s primary purpose is to provide managers and executives with practical advice and counsel on ’structuring’ business acquisitions for the economic benefit of the acquiring firm. This is accomplished by having knowledge of the financial statement impacts that business acquisitions will have on the company’s reported financial statements.