1. Please explain step-acquisition.

2. How is push-down accounting being done?

3. What is reverse acquisition?

A step acquisition occurs when an investor obtains control over an investee through multiple
transactions or when there is more than one exchange of transactions between the parties involved
because of successive share purchases. When the investor obtains control of the investee, it remeasures
any investment previously held to fair value as of acquisition date, and any gain or loss coming from the
remeasurement of the previously held equity investment shall be recognized in the profit or loss. Step
acquisition is also known as piecemeal acquisition, in relation to how its goodwill is determined on a
piecemeal basis.

Under push-down accounting, allocations are directly recorded to the separate financial statements of
the subsidiary through adjusting entries. It revalues the subsidiary accounts directly on the books of the
subsidiary based on the adjustments in the distribution and allocation of excess schedule. Through this
method, it no longer required to adjust the accounts on the consolidation working paper.

In reverse acquisition, there is like a reverse in the role of the parties involve. Usually, we identify an
acquirer as the one that issues its equity interests, but in reverse acquisition, for accounting purposes,
the role is reversed because the entity that issues its equity interest is identified as the acquiree and the
one whose equity interest are acquired is identified as the acquirer. This arrangement usually takes
place when a private firm wants to become a public firm without going through the registration of its
equity shares.