Professional Documents
Culture Documents
Intercorporate
Acquisitions and
Investment in
Other Entities
1
Electronic Presentation
by Douglas Cloud
Pepperdine University
McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
1-2
Additional Thoughts
Additional Thoughts
• Statutory Merger
• Statutory Consolidation
• Stock Acquisition
1-17
Statutory Merger
AA Company
AA Company
BB Company
Only
Only one
one of
of the
the combining
combining companies
companies survives
survives
and
and the
the other
otherloses
loses its
its separate
separate identify.
identify.
1-19
Statutory Consolidation
AA Company
CC Company
BB Company
Both
Boththethecombining
combiningcompanies
companiesare aredissolved
dissolvedand
and
the
theassets
assetsand
andliabilities
liabilitiesof
ofboth
bothcompanies
companiesareare
transferred
transferredto
toaanewly
newlycreated
createdcorporation.
corporation.
1-21
Stock Acquisition
AA Company AA Company
BB Company BB Company
One
One company
company acquires
acquires the
the voting
voting shares
shares
of
of another
anothercompany
company andand the
the two
two
companies
companies continue
continue to
to operate
operate separately.
separately.
1-23
Stock Acquisition:
Parent-Subsidiary Relationship
Stock Acquisition:
Parent-Subsidiary Relationship (con’t)
Valuation of Individual
Assets and Liabilities
Valuation of Individual
Assets and Liabilities
Purchase Method
Pooling Method
Pooling Method
Purchase Method—
Critical Concepts and Terms
Purchase Method—
Critical Concepts and Terms
Purchase Price
--Direct Costs
Purchase Price
--Costs of Issuing Securities
Purchase Price
--Costs of Issuing Securities
Purchase Price
--Indirect and General Costs
Goodwill
Total Differential
• Calculation of Goodwill:
Investment Cost:
Fair value of stock issued Rp600,000,000
PLUS: Other acquisition costs 40,000,000
Total purchase price Rp 640,000,000
LESS:
Fair value of net assets 510,000,000
Goodwill Rp 130,000,000
1-58
Additional Thoughts
Financial Reporting
Subsequent to a Purchase
Financial Reporting
Subsequent to a Purchase
Chapter 1
End of Chapter