mergers and acquisitions

merger

Merging For Tax Dollars

The COVID-19 pandemic has had an enormous impact on the economy, but different types of businesses have been affected differently. Some businesses — such as restaurants, bars, entertainment venues, airlines and other transportation companies — have suffered significant losses as a result of lockdowns, travel restrictions and other disruptions. Others — such as health care…

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accounting for business combinations

Accounting for Business Combinations

If your company is planning to merge with or buy another business, your attention is probably on conducting due diligence and negotiating deal terms. But you also should address the post-closing financial reporting requirements for the transaction. If not, it may lead to disappointing financial results, restatements and potential lawsuits after the dust settles. Here’s…

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goodwill impairment

The Art and Science of Goodwill Impairment Testing

Goodwill shows up on a company’s balance sheet when the company has been acquired in a business combination. It represents what’s left over after the purchase price in a merger or acquisition is allocated to the company’s tangible assets, identifiable intangible assets and liabilities. Periodically, companies must test goodwill for “impairment” — that is, whether…

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FASB simplifies merger accounting for nonprofits

FASB Simplifies Merger Accounting for Nonprofits

The Financial Accounting Standards Board (FASB) recently issued guidance that should ease the financial reporting burden on nonprofits that enter “business combinations,” such as mergers and acquisitions. The title of the guidance is a mouthful, but it probably tells you everything you need to know: Accounting Standards Update (ASU) No. 2019-06, Intangibles — Goodwill and…

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Measuring fair value for financial reporting

Measuring Fair Value for Financial Reporting

Business assets are generally reported at the lower of cost or market value for financial reporting. Under this accounting principle, certain assets are reported at fair value, such as asset retirement obligations and derivatives. Fair value also comes into play in M&A transactions. That is, if one company acquires another, the buyer must allocate the…

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business professionals reviewing QOE report

Put a QOE Report to Work for You

An independent quality of earnings (QOE) report can be a valuable tool in mergers and acquisitions. It’s important for both buyers and sellers to look beyond the quantitative information provided by the selling company’s financial statements. Quality matters There’s a lack of guidance from the American Institute of Certified Public Accountants (AICPA) regarding scope and…

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