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  • Concept Map 4

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    mike ranin
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    Direct costs of an acquisition such as legal and professional fees are expensed as incurred. Costs of issuing equity securities like stamps and underwriting fees debit the additional paid-in capital account. Bond issue costs are deducted from the carrying amount of financial liabilities. An acquisition affects common stock, additional paid-in capital, retained earnings, liabilities, and assets - with the acquiree's amounts recorded at fair value and acquisition-related expenses reducing retained earnings.

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    Direct costs of an acquisition such as legal and professional fees are expensed as incurred. Costs of issuing equity securities like stamps and underwriting fees debit the additional paid-in capital account. Bond issue costs are deducted from the carrying amount of financial liabilities. An acquisition affects common stock, additional paid-in capital, retained earnings, liabilities, and assets - with the acquiree's amounts recorded at fair value and acquisition-related expenses reducing retained earnings.

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    17 views7 pages

    Concept Map 4

    Uploaded by

    mike ranin
    Direct costs of an acquisition such as legal and professional fees are expensed as incurred. Costs of issuing equity securities like stamps and underwriting fees debit the additional paid-in capital account. Bond issue costs are deducted from the carrying amount of financial liabilities. An acquisition affects common stock, additional paid-in capital, retained earnings, liabilities, and assets - with the acquiree's amounts recorded at fair value and acquisition-related expenses reducing retained earnings.

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    © All Rights Reserved
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    of 7

    Acquisition Cost

    Direct Cost

    • Professional fees paid, legal • Expense as incurred (RE)


    fees, valuers and other
    consultants.
    Indirect Cost

    • General admin. • Expense as incurred (RE)


    Cost of Issuing Eq. Sec

    • Transaction costs (stamps, • Debit to APIC or Share Prem.


    duties, advisers Acct.
    fee,underwriting cost and
    brokerage fees.
    Bonds Issue Cost

    • Bonds issue cost • Deducted from carrying


    amount of Financial Liabilities.
    FAQ’s
    • Common stocks • Existing Common Stocks
    • New Common Stocks
    • Additional Paid In capital • Existing APIC
    • Resulting APIC
    • Less(Absorbable SIC)
    • Retained earnings
    • Existing R.E.
    • Income from Acq.
    Less(In/Direct Exp.)
    (Can’t be absorbed SIC
    FAQ’s
    • Existing Liabilities of acquirer
    • Liabilities
    (@BV)
    • Existing Liabilities of
    acquiree (@FV)
    • Contingent Consideration
    • Assets
    • Existing Assets of acquirer
    (@BV)
    • Existing Assets of
    acquiree(@FV)
    • Goodwill from BC
    • All cash payments

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