a parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in the next year. in a step acquisition of this type, the original 32 percent acquisition should be

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26-10-2022
Business

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a parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in the next year. in a step acquisition of this type, the original 32 percent acquisition should be

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qwdeeppink qwdeeppink · Answer 1 · 2022-10-31T09:19:30-04:00

The acquisition type is adjusted to market value on the subsequent inception of the contract, with a gain or loss recorded.

Acquisition accounting is a set of formal guidelines that govern how a buyer must record a purchased company's assets, liabilities, non-controlling interest (NCI), and goodwill on its consolidated statement of financial condition.

On the buyer's balance sheet, the fair market value of the purchased company is distributed between the buyer's net tangible and intangible assets. Any resulting change is seen as goodwill. Acquisition accounting is also known as business combination accounting.

According to International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS), all business combinations must be treated as acquisitions for accounting purposes, which means that one company must be identified as an acquirer and one company must be identified as an acquirer even if the transaction creates a new company.

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