a merger accounting treatment whereby a buyer purchases the assets (and liability obligations) of a company at their market price and then records the difference between the purchase price and the book value of the assets as goodwill. This goodwill need not be amortized but must be valued annually and any decreases or increases in value must be reflected in the buyer's financial statements.
Accounting for an acquisition using market value for the consolidation of the two entities' net assets on the balance sheet. Generally, depreciation/amortization will increase for this method (due to the creation of goodwill) compared to the pooling method resulting in lower net income.
Requires that the buyer must be identified, and therefore goodwill created, in accounting for mergers and acquisitions.... more on: Purchase method
The accounting method employed when a parent company acquires a controlling share of the voting stock of a subsidiary by a means other than by the exchange of voting common stock.
A method of accounting for controlling investments in which similar accounts from the parent's and subsidiaries' statements are combined.
Accounting for an acquisition using market value for the consolidation of the two entities' net assets on the balance sheet. Generally, depreciation/amortization will increase for this method compared with pooling and will result in lower net income.
A method used to prepare consolidated financial statements when one company has acquired a controlling interest in another company with similar activities by exchanging cash or other assets for more than 50 percent of the acquired company's outstanding voting stock.