Method of accounting for a merger that treats the acquirer as having purchased the assets and assumed the liabilities of the acquiree, which are then written up or down to their respective fair market values. The difference between the purchase price and the net assets acquired is attributed to goodwill.
Similarly one may ask, what is the definition of purchase in accounting?
A temporary account used in the periodic inventory system to record the purchases of merchandise for resale. (Purchases of equipment or supplies are not recorded in the purchases account.) This account reports the gross amount of purchases of merchandise.
What is purchase price accounting?
Purchase price allocation (PPA) is an application of goodwill accounting whereby one company (the acquirer), when purchasing a second company (the target), allocates the purchase price into various assets and liabilities acquired from the transaction.
What is the acquisition method of accounting?
Acquisition method of accounting. May 04, 2017. When an acquiree buys another company and the acquirer uses GAAP, the acquirer must record the event using the acquisition method. This approach mandates a series of steps to record the acquisitions, which are: Measure any tangible assets and liabilities that were