Purchase Accounting

2011 ◽  
Keyword(s):  
Purchase Accounting

Purchase accounting: Will an acquisition come back to haunt you?

1993 ◽  
Vol 4 (3) ◽  
pp. 345-351
Author(s):  
Luther E. Birdzell
Keyword(s):  
Purchase Accounting

Purchase accounting after eitf consensus 95-3: How have the requirements changed?

1995 ◽  
Vol 7 (1) ◽  
pp. 81-88
Author(s):  
Luther E. Birdzell
Keyword(s):  
Purchase Accounting

Purchase accounting without goodwill two-step falls out of style

1990 ◽  
Vol 2 (2) ◽  
pp. 137-143
Author(s):  
Stephen M. Ditman
Keyword(s):  
Purchase Accounting

Pooling and Rescinded or Forgone Stock Repurchases

2001 ◽  
Vol 1 (1) ◽  
pp. 115-133
Author(s):  
Stephen R. Moehrle ◽  
Jennifer A. Reynolds-Moehrle ◽  
James S. Wallace
Keyword(s):  
Opportunity Cost ◽  
Securities And Exchange Commission ◽  
Stock Repurchases ◽  
Anecdotal Evidence ◽  
Additional Consideration ◽  
Best Interest ◽  
Stock Repurchase ◽  
To Receive ◽  
Financial Press ◽  
Purchase Accounting

Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 96 requires that firms rescind stock repurchase plans to receive pooling treatment for a business acquisition. In this study, we document the additional opportunity cost to pooling imposed by SAB No. 96 and revisit the purchase vs. pooling question with the additional consideration. Specifically, we examine whether firms should rescind or forgo stock repurchase plans to qualify to pool or simply accept purchase accounting treatment for mergers. We begin by establishing why firms choose to pool. We find that, consistent with anecdotal evidence in the financial press, firms pool to avoid the decreased earnings caused by amortization of goodwill that is recorded in a purchase. Next, given this motivation for pooling, we examine the purchase vs. pooling decision with the additional consideration imposed by the prohibition of stock repurchases. Our results suggest that forgoing stock repurchases to pool may not be in the best interest of shareholders. These findings support the decision of the FASB to eliminate pooling as an alternative.

Main Issues in Purchase Accounting

2020 ◽  
pp. 25-49
Author(s):  
Eli Amir ◽  
Marco Ghitti
Keyword(s):  
Purchase Accounting

The Value Relevance of Earnings and Book Value Under Pooling and Purchase Accounting

2005 ◽  
Vol 21 ◽  
pp. 25-59 ◽  
Author(s):  
C.S. Agnes Cheng ◽  
Kenneth R. Ferris ◽  
Su-Jane Hsieh ◽  
Yuli Su
Keyword(s):  
Value Relevance ◽  
Book Value ◽  
Purchase Accounting

Accounting Rules and Post-Acquisition Profitability in Business Combinations

2016 ◽  
Vol 30 (4) ◽  
pp. 427-447 ◽  
Author(s):  
Victoria Dickinson ◽  
Daniel D. Wangerin ◽  
John J. Wild
Keyword(s):  
Research And Development ◽  
Fair Value ◽  
Process Research ◽  
Data Availability ◽  
Financial Statement ◽  
Business Combinations ◽  
Downward Pressure ◽  
Accounting Rules ◽  
Acquisition Method ◽  
Purchase Accounting

SYNOPSIS: Prior studies report a decline or no change in acquirers' profitability after a merger or business acquisition. Those studies, however, do not consider the downward impact on profitability that stems from use of the “purchase accounting” (and in later periods, “acquisition”) method for business combinations. Drawing on financial statement data from both targets and acquirers, we estimate the effects of the application of purchase/acquisition method accounting rules on post-acquisition profitability. We find that recognition rules for acquired inventories, deferred revenues, in-process research and development (IPR&D), and depreciation and amortization expense resulting from writing acquired assets up to fair value vis-á-vis purchase/acquisition accounting methods are all important sources of downward pressure in post-acquisition profitability. We find that investors and analysts appear to recognize the effects of IPR&D in assessing post-acquisition profitability of the combined entity. The findings also suggest that investors and analysts do not appear to fully incorporate the accounting effects related to inventories, deferred revenues, and depreciation and amortization expense for post-acquisition profitability. Data Availability: All data are publicly available from sources identified.

Pooling and Purchase Accounting.

1970 ◽  
Vol 25 (4) ◽  
pp. 967
Author(s):  
Arthur R. Wyatt ◽  
Dean S. Eiteman
Keyword(s):  
Purchase Accounting
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