Chapter_12收购、兼并和重组课后题目

2Acquisition
Purchase (Acquisition) Method of Accounting
• Requirements: – Record acquired tangible and intangible assets and assumed liabilities at fair market value on acquiring firm’s balance sheet. – Record the excess of the price paid (PP) plus any non-controlling interests1 over the target’s net asset value (i.e., FMVTA - FMVTL) as goodwill (GW) on the consolidated balance sheet, where FMVTA and FMVTL are the fair market values of total acquired assets and liabilities. • These relationships can be summarized as follows: – Purchase price: PP = FMVTA– FMVTL+ FMVGW – Goodwill estimation:2 FMVGW = PP – FMVTA + FMVTL = PP - (FMVTA - FMVTL)
Ch. 16: Divestitures, Spin-Offs, Split-Offs, and Equity Carve-Outs
Ch. 3: Takeover Tactics, Defenses, and Corporate Governance
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Ch. 6: M&A Postclosing Integration
Structuring the Deal: Tax and Accounting Considerations
One person of integrity can make a difference, a difference of life and death.
—
Elie Wiesel
Exhibit 1: Course Layout: Mergers, Acquisitions, and Other Restructuring Activities
Ch. 18: Cross-Border Transactions
Learning Objectives
• Primary Learning Objective: To provide students with knowledge of how accounting treatment and tax considerations impact the deal structuring process. • Secondary Learning Objectives: To provide students with knowledge of – Purchase (acquisition method) accounting used for financial reporting purposes; – Goodwill and how it is created; and – Alternative taxable and non-taxable transactions.
Ch. 2: Regulatory Considerations
Ch. 5: Search through Closing Activities
Ch. 8: Relative Valuation Methodologies
Ch. 12: Accounting & Tax Considerations
1The
balance sheets of acquirers with a controlling interest that is less than 100% ownership must still record 100% of goodwill reflecting their effective control over all of the target firm’s assets and liabilities. 2Goodwill and net acquired assets must be checked annually (or whenever a key event such as the loss of a major acquired customer or patent takes place impacting value) for impairment.
Accounting Treatment Background
• Statement of Financial Accounting Standard 141 (SFAS 141) required effective 12/15/01 purchase accounting to be employed for all business combinations by allocating the purchase price to acquired net assets. Limitations included difficulty in comparing transactions (e.g., those with minority shareholders to those with none) and mixing of historical and current values (e.g., staged purchases). Pooling of interest method was grandfathered. Effective 12/15/08, SFAS 141R required that acquirers must – Recognize, separately from goodwill,1 identifiable assets, and assumed liabilities at their acquisition date2 fair values;3 – Recognize goodwill attributable to non-controlling shareholders;4 – Revalue acquired net assets in each stage of staged transactions to their current fair value; – Compute fair value of contingent payments5 as part of total consideration, revalue as new data becomes available, and reflect on income statement; – Capitalize “in-process” R&D on acquisition date with indefinite life until project’s outcome is known (amortize if successful/write-off if not); and – Expense investment banking, accounting, and legal fees at closing; capitalize financing related expenses
Ch. 1: Motivations for M&A
Ch. 4: Business and Acquisition Plans
Ch. 7: Discounted Cash Flow Valuation
Ch. 11: Payment and Legal Considerations
Ch. 15: Business Alliances
•
1Goodwill
is an asset representing future economic benefits from acquired assets not identified separately (i.e., control, brand name, etc.) date is the point at which control changes hands (i.e., closing). 3Fair value is the amount at which an asset could be bought or sold in a current transaction between willing parties with access to the same information. 4An acquirer must recognize 100% of the goodwill even if they acquired less than 100% of the target’s assets, if they have a c ontrolling interest giving them effective control over 100% of the assets. 5Recognize as a liability on balance sheet.
Part I: M&A Environment
Part II: M&A Process
Part III: M&A Valuation and Modeling
Part IV: Deal Structuring and Financing
Part V: Alternative Business and Restructuring Strategies