By consolidating the

20-Dec-2015 06:02 by 10 Comments

By consolidating the - datingdating wordpress theme

Treatment of Purchase Differentials: At the time of purchase, purchase differentials arise from the difference between the cost of the investment and the book value of the underlying assets.

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Under the Halsbury's Laws of England, 'amalgamation' is defined as "a blending together of two or more undertakings into one undertaking, the shareholders of each blending company, becoming, substantially, the shareholders of the blended undertakings.

Upon consolidation, the original organizations cease to exist and are supplanted by a new entity.

A parent company can acquire another company by purchasing its net assets or by purchasing a majority share of its common stock.

Such disclosures are: When a company purchases 20% or less of the outstanding common stock, the purchasing company’s influence over the acquired company is not significant.

(APB 18 specifies conditions where ownership is less than 20% but there is significant influence).

If the acquired company is liquidated then the company needs an additional entry to distribute the remaining assets to its shareholders.

Treatment to the purchasing company: When the purchasing company acquires the subsidiary through the purchase of its common stock, it records in its books the investment in the acquired company and the disbursement of the payment for the stock acquired.

The result is one set of financial statements that reflect the financial results of the consolidated entity. horizontal integration:is the combination of firms in the same business lines and markets. vertical integration: is the combination of firms with operations in different but successive stages of production or distribution or both. Conglomeration: is the combination of firms with unrelated and diverse products or services functions, or both.

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Regular dividends are recorded as dividend income whenever they are declared.

Impairment loss : An impairment loss occurs when there is a decline in the value of the investment other than temporary.

Regardless of the method of acquisition; direct costs, costs of issuing securities and indirect costs are treated as follows: Treatment to the acquiring company: When purchasing the net assets the acquiring company records in its books the receipt of the net assets and the disbursement of cash, the creation of a liability or the issuance of stock as a form of payment for the transfer.