This document discusses business combinations and provides learning objectives about key concepts. It begins with an introduction to business combinations and objectives like describing historical trends, reasons for combinations, and factors to consider in due diligence. It then covers terminology around asset vs stock acquisitions and different combination methods. The document discusses defensive acquisition tactics, takeover premiums, factors for due diligence, and approaches for determining price and payment methods in combinations. Slides include examples, definitions, and review questions.
PSAK 24 mengatur tentang akuntansi untuk imbalan kerja. PSAK ini merevisi beberapa ketentuan seperti pengakuan keuntungan dan kerugian aktuaria, komponen liabilitas imbalan pasti dan aset program, serta persyaratan pengungkapan.
Solution Manual Advanced Accounting Chapter 15 9th Edition by BakerSaskia Ahmad
The document provides information about partnerships, including:
1) Partnerships are easy to form, allow individuals to combine talents and skills, provide more equity capital than one person, and allow risk sharing.
2) Most states have enacted the Uniform Partnership Act of 1997 to regulate partnerships, describing partners' rights during formation, operation, and liquidation.
3) Partnership agreements typically include the name, business type and duration, capital contributions, profit/loss distribution, admission of new partners, and accounting methods.
Teks tersebut membahas pembelian dengan diskon menurut PSAK 22 (revisi 2010) tentang Kombinasi Bisnis. PSAK 22 menyatakan bahwa pembelian dengan diskon terjadi ketika nilai wajar aset neto yang diperoleh melebihi imbalan yang dialihkan. Pihak pengakuisisi harus mengakui keuntungan pada tanggal akuisisi, setelah mengkaji kembali identifikasi aset dan liabilitas serta pengukuran nilai wajar.
Penilaian saham dilakukan untuk menentukan nilai saham yang sesuai dengan tingkat pengembalian yang diharapkan. Terdapat tiga jenis nilai saham yaitu nilai buku, nilai pasar, dan nilai intrinsik. Analisis fundamental dan teknikal digunakan untuk menghitung nilai intrinsik dengan mempertimbangkan kondisi ekonomi, industri, dan kinerja perusahaan. Dividen discounted model sering digunakan dalam penilaian saham berdasarkan nilai saham yang di
1. PSAK 16 mengatur tentang pengakuan, pengukuran, penyajian, dan pengungkapan aset tetap. Aset tetap didefinisikan sebagai aset berwujud yang dimiliki untuk digunakan dalam produksi atau penyediaan barang atau jasa, untuk disewakan kepada pihak lain, atau untuk tujuan administratif dan diharapkan untuk digunakan lebih dari satu periode.
PSAK 24 mengatur tentang akuntansi untuk imbalan kerja. PSAK ini merevisi beberapa ketentuan seperti pengakuan keuntungan dan kerugian aktuaria, komponen liabilitas imbalan pasti dan aset program, serta persyaratan pengungkapan.
Solution Manual Advanced Accounting Chapter 15 9th Edition by BakerSaskia Ahmad
The document provides information about partnerships, including:
1) Partnerships are easy to form, allow individuals to combine talents and skills, provide more equity capital than one person, and allow risk sharing.
2) Most states have enacted the Uniform Partnership Act of 1997 to regulate partnerships, describing partners' rights during formation, operation, and liquidation.
3) Partnership agreements typically include the name, business type and duration, capital contributions, profit/loss distribution, admission of new partners, and accounting methods.
Teks tersebut membahas pembelian dengan diskon menurut PSAK 22 (revisi 2010) tentang Kombinasi Bisnis. PSAK 22 menyatakan bahwa pembelian dengan diskon terjadi ketika nilai wajar aset neto yang diperoleh melebihi imbalan yang dialihkan. Pihak pengakuisisi harus mengakui keuntungan pada tanggal akuisisi, setelah mengkaji kembali identifikasi aset dan liabilitas serta pengukuran nilai wajar.
Penilaian saham dilakukan untuk menentukan nilai saham yang sesuai dengan tingkat pengembalian yang diharapkan. Terdapat tiga jenis nilai saham yaitu nilai buku, nilai pasar, dan nilai intrinsik. Analisis fundamental dan teknikal digunakan untuk menghitung nilai intrinsik dengan mempertimbangkan kondisi ekonomi, industri, dan kinerja perusahaan. Dividen discounted model sering digunakan dalam penilaian saham berdasarkan nilai saham yang di
1. PSAK 16 mengatur tentang pengakuan, pengukuran, penyajian, dan pengungkapan aset tetap. Aset tetap didefinisikan sebagai aset berwujud yang dimiliki untuk digunakan dalam produksi atau penyediaan barang atau jasa, untuk disewakan kepada pihak lain, atau untuk tujuan administratif dan diharapkan untuk digunakan lebih dari satu periode.
Teks tersebut membahas mengenai kompensasi manajemen khususnya rencana insentif jangka pendek dan panjang. Rencana insentif jangka pendek mencakup metode seperti bonus berdasarkan persentase laba, kenaikan laba tahun berjalan, dan carryovers. Sedangkan rencana insentif jangka panjang mencakup metode seperti opsi saham yang memberikan hak untuk membeli saham dengan harga tertentu di masa depan.
Dokumen tersebut membahas tentang sosialisasi penerapan ISAK 35 mengenai penyajian laporan keuangan untuk entitas berorientasi nonlaba seperti yayasan. ISAK 35 menjelaskan penyesuaian terminologi yang sesuai untuk entitas nonlaba dalam penyajian laporan posisi keuangan, laporan aktivitas, dan laporan arus kas berdasarkan pedoman PSAK 1. ISAK 35 berlaku untuk entitas nonlaba terlepas dari badan hukum mereka.
SIKLUS PEROLEHAN, DAN PEMBAYARAN ASSET TETAP,SIKLUS PENDAPATANSsusanti Ssusanti
Siklus perolehan dan pembayaran aset tetap dan siklus pendapatan mencakup proses perolehan, penerimaan, pencatatan, dan pembayaran aset serta penjualan barang dan jasa dan pencatatan piutang. Audit memerlukan pemahaman pengendalian intern, penilaian risiko, dan pengujian untuk memperoleh keyakinan atas laporan keuangan.
Rangkuman mata kuliah auditing i (audit siklus pendapatan i) jiantari kel. 4Jiantari Marthen
Dokumen tersebut membahas tentang audit siklus pendapatan perusahaan yang mencakup aktivitas penjualan, penerimaan kas, dan penyesuaian penjualan. Dibahas pula aktivitas pengendalian dan dokumen yang terkait untuk masing-masing transaksi serta tujuan dan prosedur audit untuk menguji asersi laporan keuangan terkait siklus pendapatan.
This document discusses intangible assets and related accounting issues. It begins by describing the characteristics of intangible assets, such as being identifiable, lacking physical existence, and not being monetary assets. It then discusses the valuation and amortization of purchased and internally created intangible assets. The document identifies six major categories of intangible assets and provides examples. It also explains the conceptual issues and accounting procedures related to goodwill. Finally, it discusses impairment testing and accounting for impairments of intangible assets.
Dokumen tersebut membahas tentang kewajiban pengusaha kena pajak terkait pembuatan faktur pajak PPN dan sanksi yang terkait, termasuk syarat faktur pajak yang sah, objek dan subjek PPN, serta berbagai fasilitas yang tersedia di bidang PPN seperti kawasan berikat dan KAPET.
Dokumen tersebut membahas tentang akuntansi untuk program pensiun dan tunjangan pasca pensiun perusahaan. Secara garis besar dibahas tentang definisi rencana pensiun, tipe-tipe program pensiun, pengakuan status pendanaan program pensiun, akuntansi biaya pensiun, dan pengungkapan yang disyaratkan dalam catatan atas laporan keuangan terkait program pensiun.
Dokumen tersebut membahas Standar Audit 600 mengenai pertimbangan khusus dalam audit atas laporan keuangan grup, termasuk identifikasi komponen signifikan, tanggung jawab auditor grup, dan pekerjaan yang perlu dilakukan terhadap informasi keuangan komponen."
Dokumen tersebut membahas tentang pengakuan pendapatan sekolah tinggi ilmu ekonomi tuah negeri. Terdapat definisi PSAK 23 tentang pendapatan dan prinsip pengakuan pendapatan. Juga dibahas klasifikasi pengakuan pendapatan berdasarkan sifat transaksi seperti penjualan barang dan jasa serta penggunaan aset. Metode pengakuan pendapatan untuk kontrak jangka panjang adalah metode persentase penyelesaian dan metode kontrak
LAPORAN ARUS KAS Metode Langsung dan Metode Tidak LangsungRiki Ardoni
Dokumen tersebut membahas tentang pentingnya laporan keuangan, khususnya laporan arus kas, dalam menjalankan bisnis. Laporan arus kas memberikan informasi mengenai arus masuk dan keluar kas perusahaan selama periode tertentu. Ada dua metode penyusunan laporan arus kas yaitu metode langsung dan tidak langsung.
Dokumen tersebut membahas tentang pelaporan dan analisis keuangan, yang mencakup lingkungan pelaporan keuangan, konsep-konsep penting seperti laba ekonomi dan akuntansi, serta prinsip-prinsip akuntansi seperti akuntansi akrual dan nilai wajar. Dokumen ini juga membahas analisis laporan keuangan, tujuan akuntansi, dan keterbatasan informasi laporan keuangan."
Makalah ini membahas tentang utang jangka pendek yang meliputi pengertian, jenis-jenis, dan contoh pencatatan akuntansi utang jangka pendek seperti utang dagang, utang dividen, utang biaya, utang gaji, dan pendapatan diterima dimuka.
Merancang pengujian atas rincian saldo pptRina Limiati
Ringkasan dokumen tersebut adalah:
1. Dokumen tersebut menjelaskan metodologi pengujian piutang usaha yang mencakup enam tahap yaitu mengidentifikasi risiko bisnis, menetapkan materialitas dan risiko inheren, menilai risiko pengendalian, melakukan pengujian pengendalian dan transaksi, melakukan prosedur analitis, serta merancang pengujian rincian saldo.
Teks tersebut membahas mengenai kompensasi manajemen khususnya rencana insentif jangka pendek dan panjang. Rencana insentif jangka pendek mencakup metode seperti bonus berdasarkan persentase laba, kenaikan laba tahun berjalan, dan carryovers. Sedangkan rencana insentif jangka panjang mencakup metode seperti opsi saham yang memberikan hak untuk membeli saham dengan harga tertentu di masa depan.
Dokumen tersebut membahas tentang sosialisasi penerapan ISAK 35 mengenai penyajian laporan keuangan untuk entitas berorientasi nonlaba seperti yayasan. ISAK 35 menjelaskan penyesuaian terminologi yang sesuai untuk entitas nonlaba dalam penyajian laporan posisi keuangan, laporan aktivitas, dan laporan arus kas berdasarkan pedoman PSAK 1. ISAK 35 berlaku untuk entitas nonlaba terlepas dari badan hukum mereka.
SIKLUS PEROLEHAN, DAN PEMBAYARAN ASSET TETAP,SIKLUS PENDAPATANSsusanti Ssusanti
Siklus perolehan dan pembayaran aset tetap dan siklus pendapatan mencakup proses perolehan, penerimaan, pencatatan, dan pembayaran aset serta penjualan barang dan jasa dan pencatatan piutang. Audit memerlukan pemahaman pengendalian intern, penilaian risiko, dan pengujian untuk memperoleh keyakinan atas laporan keuangan.
Rangkuman mata kuliah auditing i (audit siklus pendapatan i) jiantari kel. 4Jiantari Marthen
Dokumen tersebut membahas tentang audit siklus pendapatan perusahaan yang mencakup aktivitas penjualan, penerimaan kas, dan penyesuaian penjualan. Dibahas pula aktivitas pengendalian dan dokumen yang terkait untuk masing-masing transaksi serta tujuan dan prosedur audit untuk menguji asersi laporan keuangan terkait siklus pendapatan.
This document discusses intangible assets and related accounting issues. It begins by describing the characteristics of intangible assets, such as being identifiable, lacking physical existence, and not being monetary assets. It then discusses the valuation and amortization of purchased and internally created intangible assets. The document identifies six major categories of intangible assets and provides examples. It also explains the conceptual issues and accounting procedures related to goodwill. Finally, it discusses impairment testing and accounting for impairments of intangible assets.
Dokumen tersebut membahas tentang kewajiban pengusaha kena pajak terkait pembuatan faktur pajak PPN dan sanksi yang terkait, termasuk syarat faktur pajak yang sah, objek dan subjek PPN, serta berbagai fasilitas yang tersedia di bidang PPN seperti kawasan berikat dan KAPET.
Dokumen tersebut membahas tentang akuntansi untuk program pensiun dan tunjangan pasca pensiun perusahaan. Secara garis besar dibahas tentang definisi rencana pensiun, tipe-tipe program pensiun, pengakuan status pendanaan program pensiun, akuntansi biaya pensiun, dan pengungkapan yang disyaratkan dalam catatan atas laporan keuangan terkait program pensiun.
Dokumen tersebut membahas Standar Audit 600 mengenai pertimbangan khusus dalam audit atas laporan keuangan grup, termasuk identifikasi komponen signifikan, tanggung jawab auditor grup, dan pekerjaan yang perlu dilakukan terhadap informasi keuangan komponen."
Dokumen tersebut membahas tentang pengakuan pendapatan sekolah tinggi ilmu ekonomi tuah negeri. Terdapat definisi PSAK 23 tentang pendapatan dan prinsip pengakuan pendapatan. Juga dibahas klasifikasi pengakuan pendapatan berdasarkan sifat transaksi seperti penjualan barang dan jasa serta penggunaan aset. Metode pengakuan pendapatan untuk kontrak jangka panjang adalah metode persentase penyelesaian dan metode kontrak
LAPORAN ARUS KAS Metode Langsung dan Metode Tidak LangsungRiki Ardoni
Dokumen tersebut membahas tentang pentingnya laporan keuangan, khususnya laporan arus kas, dalam menjalankan bisnis. Laporan arus kas memberikan informasi mengenai arus masuk dan keluar kas perusahaan selama periode tertentu. Ada dua metode penyusunan laporan arus kas yaitu metode langsung dan tidak langsung.
Dokumen tersebut membahas tentang pelaporan dan analisis keuangan, yang mencakup lingkungan pelaporan keuangan, konsep-konsep penting seperti laba ekonomi dan akuntansi, serta prinsip-prinsip akuntansi seperti akuntansi akrual dan nilai wajar. Dokumen ini juga membahas analisis laporan keuangan, tujuan akuntansi, dan keterbatasan informasi laporan keuangan."
Makalah ini membahas tentang utang jangka pendek yang meliputi pengertian, jenis-jenis, dan contoh pencatatan akuntansi utang jangka pendek seperti utang dagang, utang dividen, utang biaya, utang gaji, dan pendapatan diterima dimuka.
Merancang pengujian atas rincian saldo pptRina Limiati
Ringkasan dokumen tersebut adalah:
1. Dokumen tersebut menjelaskan metodologi pengujian piutang usaha yang mencakup enam tahap yaitu mengidentifikasi risiko bisnis, menetapkan materialitas dan risiko inheren, menilai risiko pengendalian, melakukan pengujian pengendalian dan transaksi, melakukan prosedur analitis, serta merancang pengujian rincian saldo.
Danh sách forum nước ngoài pr cao chất lượngỚt Cay
The document appears to be a list of website URLs. There are over 100 URLs listed with the domain name and a number indicating the page or ranking. The URLs span a wide variety of topics including music, news, cooking, forums, and more. Many are ranked highly on search engines.
Social is the trend of the moment.
Everybody wants to do it, everybody plans on doing it more and better.
But is this trend temporary, or is it here to stay?
In Five years from now, will we say that "Social was the New Black" or that "Social is the new normal" ?
It Depends on its ROI.
This document contains several poems published in the journal Literator. It begins with four poems by Chris Mann exploring themes of childhood, family, memory, and loss. It then includes a short poem "Cairn" by Elizabeth Joss about a dream encounter with a stranger. The document concludes with information about Literator's section for publishing creative works, providing submission guidelines.
This document contains poems by various authors published in the literary journal Literator. It also provides submission guidelines for the journal's "Litera" section for creative works. The poems cover various themes including remembering a friend who participated in the Comrades Marathon, the relationship between matter, time and energy, and an experience of feeling Christ's presence upon waking. The submission section provides details on prizes awarded for best creative works published each year and instructions for electronic and mail submissions.
Online Storytelling - Vétérinaire Sans Frontières Case (Final Results)Florent Diverchy
The document describes an online storytelling campaign used to engage people, increase awareness, and convert new donors. It outlines the process of brainstorming a story about sending rabbits to Rwanda, slicing the story into chapters, and transforming the chapters into a campaign calendar. Each chapter was sent out in newsletters to gather opt-ins, clicks, and views. The final results showed a doubling of the opt-in database, high engagement rates, and an increase in donations, gifts, and new donors for the client that exceeded their yearly targets and was done at a lower cost than typical marketing campaigns. The key takeaways are that online storytelling can have a positive ROI, impact on recruitment, help identify interests, and provide
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive function. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms for those who already suffer from conditions like anxiety and depression.
This document provides an introduction to business combinations and the conceptual framework. It outlines 10 learning objectives related to business combinations, including describing historical trends in types of combinations, identifying reasons firms combine, and factors to consider in due diligence. It also defines key terms like asset acquisitions, stock acquisitions, and mergers. The document contains examples and review questions to illustrate the concepts.
Legal aspects of mergers and acquisition
Acquisition is the combination of two companies where one corporation is completely absorbed by another corporation. The less important company loses its identity and becomes part of the more important corporation, which retains its identity. It may involve absorption or consolidation.
Merger is also defined as amalgamation. Merger is the fusion of two or more existing companies. All assets, liabilities and the stock of one company stand transferred to Transferee Company in consideration of payment in the form of:
I) Equity shares in the transferee company,
II) Debentures in the transferee company,
III) Cash, or
IV) A mix of the above mode
The first chapter introduces us to Corporate finance is essential .docxoreo10
The first chapter introduces us to Corporate finance is essential to all managers as it provides all the skills managers need to; Identify corporate strategies and individual projects that add value to the organization and come up with plans for acquiring the funds. The types of business forms are; sole proprietorship, corporation and partnerships. A sole proprietorship form of business possesses different advantages and disadvantages. A partnership maintains roughly similar pros and cons of a sole proprietorship. A corporation is a legal entity that is separate from its owners and managers. Advantages include a smooth transfer of ownership, limited liability, ease of raising capital. The disadvantages include; double taxation, and a high cost of set-up and report filing. The chapter then deals with Objective of the firm, which is to maximize wealth. The final topic is an in-depth look at Financial Securities, which are markets and institutions.
In the second chapter, we are introduced to financial statements, Cash flow and taxes. Financial statements include; the Income statement and the Balance sheet. An income statement is a financial statement that shows a company’s financial performance regarding revenues and expenses, over a particular period, mostly one year. A balance sheet, on the other hand, is a financial statement that states a company’s assets, liabilities and capital at a particular point in time. Under the cash flow, the chapter covers on the Statement of cash flows, indicates how various changes in balance sheet and income statement accounts affect cash and analyses financing, investing and operating activities. A free cash flow shows the cash that an organization is capable of generating after investment to either maintain or expand its database. Under taxes, Corporate and personal taxes are well explained and the scenarios under which they apply.
Chapter Three analyzes Financial Statements. This analysis is broken down into; Ratio Analysis, DuPont equation. The effects of improving ratios, the limitations of ratio analysis and the Qualitative factors. Ratios help in comparison of; one company over time and one company versus other companies. Ratios are used by; Stockholders to estimate future cash flows and risks, lenders to determine their creditworthiness and managers to identify areas of weaknesses and strengths. Liquidity ratios show whether a company can meet its short-term commitments using the resources it has at that particular time. Asset management ratios exemplify how well an organization utilize its assets. Debt management ratios, leverage ratios as well as profitability ratios are explained.
The DuPont equation focuses on several issues. These are; Debt Utilization, Asset utilization and the Expense Control. Consequently, Ratio analysis has various problems and limitations. These include; Distortion of ratios from seasonal factors, various operating and accounting practices can distort comparisons and also it i ...
A corporation has several key characteristics that distinguish it from other business forms:
1. It is a separate legal entity that exists independently of its owners and can act under its own name.
2. Shareholders have limited liability, meaning they are only responsible for the amount invested and not company debts.
3. Ownership is represented by shares that can be freely transferred to other parties.
4. A corporation can exist indefinitely regardless of changes in ownership because it has a legal existence separate from its owners.
As Google grew larger, it needed more complex management structures and funding sources to support its growth. The document discusses different types of business organizations and how firms obtain funding. It also covers financial statements, corporate governance, and tools to analyze firms' financial information.
Debt and equity are the two important sources of finance for the firms. Basically, capital structure of the firm revolves around the judicious mix of the debt and equity. Upon Debt and equity mix much research has been done and many have designed the capital structure in a very different manner.
Capital structure theory can be said as the manner in which a company or organization finance its economic activities. Basically, capital structure of a firm is the combination of equity and debt. It is a very important decision for every organization or business house. This decision revolves around a question “How to make an optimal capital’s structure for the firm?” and what are the factors that influence the decision. Because the capital structure decision ultimately affects the management, investors and lenders. So, it becomes very crucial for the firms. Earlier many researchers have made investigation on the capital structure determinants but still there are loopholes to be filled up. The theory of Capital Structure began with the phenomenal work made by Modigliani and Miller (1958, 1963). It stirred the academic world to pour more thoughts into that and many interesting works came out.
Capital structure refers to the way a firm chooses to finance its assets and investments through some combination of equity, debt, or internal funds. It is in the best interests of a company to find the optimal ratio of debt to equity to reduce their risk of insolvency, continue to be successful and ultimately remain or to become profitable.
DETERMINANTS OF CAPITAL STRUCTURE:
The capital structure of a concern depends upon a large number of factors such as leverage or trading on equity, growth of the company, nature and size of business, the idea of retaining control, flexibility of capital structure, requirements of investors, cost of floatation of new securities, timing of issue, corporate tax rate and the legal requirements. It is not possible to rank hem because all such factors are of different important and the influence of individual factors of a firm change over a period of time.
1. Financial Leverage or Trading on Equity: Financial leverage is one of the important considerations in planning the capital structure of a company. One common method of examining the impact of leverage is to analyse the relationship between Earnings Per Share (EPS) and EBIT. The companies with high level of leverage can make profitable use of the high degree of leverage to increase return on the shareholders' equity.
2. Growth and Stability of Sales: The capital structure of a firm is highly influenced by the growth and stability of its sales. If the sales of a firm are expected to remain fairly stable, it can raise a higher level of debt. Stability of sales ensures that the firm will not face any difficulty in meeting its fixed commitments of interest payment and repayments of debt. Similarly, the rate of growth in sales also affects the capital structure decision.
3. Cost o
The document discusses mergers and acquisitions. It provides an overview of the topic, including definitions of key terms like mergers, acquisitions, takeovers, and de-mergers. It also discusses some of the main reasons why companies pursue mergers and acquisitions, such as procuring supplies, revamping operations, expanding into new markets, and increasing efficiency. Additionally, it outlines important factors for success like assessing target quality thoroughly and having strong local networks and flexibility.
A Case study on mergers and acquisitions
we have in the folder - Types of Acquisitions what all is required for an acquisition and the legal aspects for it.
Also, Advantages and disadvantages of Mergers and Acquisition (M&A)
This document provides an overview of the topics covered in a financial management course, including definitions of key terms, understanding financial statements and cash flows, valuation of financial assets and capital budgeting, capital structure and dividend policy, and working capital management. The chapter summarized discusses capital structure theory, including the independence hypothesis, dependence hypothesis, and moderate view of how leverage impacts a firm's weighted average cost of capital and stock price. It also covers agency costs, free cash flow, and tools for capital structure management, such as EBIT-EPS analysis.
This document provides an overview of various investment instruments, focusing on equities, bonds, and money market instruments. It defines equities as securities representing a claim on the earnings and assets of a corporation. Equity returns come from dividends and capital appreciation. While equity offers high return potential, it also carries high risk since investors' capital is last in line to be paid out. Bonds are defined as debt securities where the issuer promises to repay the principal and pay interest to bondholders. Bonds generally have lower risk than equities but also lower expected returns. Features of bonds include maturity date, coupon rate, and credit quality, which determines risk.
The document provides an overview of corporate mergers and acquisitions (M&A), including considerations in M&A transactions, the current state of the market, general concepts, and the transaction process timeline. It also discusses accretion/dilution analysis and adjustments that are made to the income statement for stock-for-stock and cash-for-stock acquisitions, such as accounting for new shares issued, debt financing, synergies, and other transaction-related impacts.
This document discusses key concepts related to mergers and acquisitions from an MBA course. It includes types of mergers such as horizontal, concentric, vertical, and conglomerate mergers. It also discusses the steps to a successful merger and the goals of mergers. The document provides details on the merger process, creating synergy between merging companies, reasons for divesture, and rules related to employee stock ownership plans (ESOPs).
Corporations obtain financial resources from two main sources: shareholders and debt holders. Shareholders are concerned with maximizing the firm's value and their return, while debt holders focus on the firm's ability to repay principal and interest. There are agency problems that arise between these groups due to the separation of ownership and control of corporations. Managers may make decisions that benefit themselves over shareholders. Debt holders also conflict with shareholders if risky projects are undertaken that could jeopardize the firm's solvency. Efficient solutions aim to align the interests of all parties.
This document provides an overview of key concepts related to consolidated financial statements at the date of acquisition. It defines control and subsidiary, explains why companies acquire subsidiaries rather than assets, and outlines the requirements for inclusion of subsidiaries in consolidated statements. The learning objectives cover recording the investment at acquisition, preparing consolidated workpapers and eliminating entries, computing any difference between implied and book value, and comparing U.S. GAAP and IFRS treatment. Worked problems demonstrate journal entries to record stock acquisitions and the computation and allocation of differences between implied and book values.
The document discusses various aspects of corporate restructuring through mergers and acquisitions. It defines different types of mergers such as mergers, acquisitions, and consolidations. It also describes friendly and unfriendly takeover procedures. Reasons for mergers include synergies, growth, diversification, and economies of scale. Defensive tactics that target companies use to resist takeovers are also outlined.
Mergers and acquisitions refer to the corporate strategy of buying, selling, and combining companies. There are several types of M&A transactions. A merger occurs when two companies combine to form a single new company, while an acquisition happens when one company purchases another. Mergers and acquisitions can be financed through cash payments, borrowing, issuing bonds, or offering stock in the acquiring company. Accurate business valuations are important for determining the purchase price in an M&A deal.
Mergers and acquisitions (M&A) refer to the aspect of corporate strategy dealing with buying, selling, and combining companies. There are several types of M&A transactions, including mergers, acquisitions, and asset purchases. Motives for M&A include achieving economies of scale, increasing market share, cross-selling opportunities, and tax advantages. However, M&A also carry risks such as overpayment, cultural clashes, and failure to achieve expected synergies.
This document provides answers to questions about corporate finance fundamentals. It discusses key topics like capital budgeting, capital structure, and working capital management. The answers describe things like the advantages and disadvantages of different business forms, the goals of for-profit versus not-for-profit organizations, and how agency problems can arise between managers and shareholders. The document also addresses questions about financial statements, taxes, cash flow, and issues like executive compensation.
Mergers and acquisitions are increasing in the Indian banking sector. The largest merger to date was HDFC Bank merging with Times Bank, creating the largest private sector bank. Overseas, mergers like Travelers Group with Citibank and Bank of America with Nations Bank have triggered more banking mergers worldwide. Europe and Japan are also restructuring their financial sectors through mergers and acquisitions. Bank mergers in India allow for added money power, expanded reach, improved products, economies of scale, and risk diversification. Proposed mergers like UTI Bank with Centurian Bank would create one of the largest private banks in India. State Bank of India is also planning mergers to consolidate its position. Some Indian financial players are pursuing
Corporate restructuring involves changes to a company's ownership, structure, or operations. There are several forms of restructuring, including expansion, diversification, collaboration, spinning off business units, and mergers, amalgamations, and acquisitions. Mergers involve one company acquiring another, while amalgamations combine two companies into a new entity. Acquisitions occur when one company gains control of another. Determining the appropriate exchange ratio of shares is a key part of mergers and amalgamations. The process also requires approval from boards of directors, shareholders, creditors, and sometimes courts or regulatory bodies. Diversification grows a company through new products or services, while disinvestment sells non-profitable business units to focus resources.
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This presentation is a curated compilation of PowerPoint diagrams and templates designed to illustrate 20 different digital transformation frameworks and models. These frameworks are based on recent industry trends and best practices, ensuring that the content remains relevant and up-to-date.
Key highlights include Microsoft's Digital Transformation Framework, which focuses on driving innovation and efficiency, and McKinsey's Ten Guiding Principles, which provide strategic insights for successful digital transformation. Additionally, Forrester's framework emphasizes enhancing customer experiences and modernizing IT infrastructure, while IDC's MaturityScape helps assess and develop organizational digital maturity. MIT's framework explores cutting-edge strategies for achieving digital success.
These materials are perfect for enhancing your business or classroom presentations, offering visual aids to supplement your insights. Please note that while comprehensive, these slides are intended as supplementary resources and may not be complete for standalone instructional purposes.
Frameworks/Models included:
Microsoft’s Digital Transformation Framework
McKinsey’s Ten Guiding Principles of Digital Transformation
Forrester’s Digital Transformation Framework
IDC’s Digital Transformation MaturityScape
MIT’s Digital Transformation Framework
Gartner’s Digital Transformation Framework
Accenture’s Digital Strategy & Enterprise Frameworks
Deloitte’s Digital Industrial Transformation Framework
Capgemini’s Digital Transformation Framework
PwC’s Digital Transformation Framework
Cisco’s Digital Transformation Framework
Cognizant’s Digital Transformation Framework
DXC Technology’s Digital Transformation Framework
The BCG Strategy Palette
McKinsey’s Digital Transformation Framework
Digital Transformation Compass
Four Levels of Digital Maturity
Design Thinking Framework
Business Model Canvas
Customer Journey Map
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This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
INCLUDED FRAMEWORKS/MODELS:
1. Stanford’s Design Thinking
2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
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13. The Double Diamond
14. Lean Six Sigma DMAIC
15. TRIZ Problem-Solving Framework
16. Edward de Bono’s Six Thinking Hats
17. Stage-Gate Model
18. Toyota’s Six Steps of Kaizen
19. Microsoft’s Digital Transformation Framework
20. Design for Six Sigma (DFSS)
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3. Slide
1-3
1. Describe historical trends in types of business combinations.
2. Identify the major reasons firms combine.
3. Identify the factors that managers should consider in exercising due diligence in
business combinations.
4. Identify defensive tactics used to attempt to block business combinations.
5. Distinguish between an asset and a stock acquisition.
6. Indicate the factors used to determine the price and the method of payment for a
business combination.
7. Calculate an estimate of the value of goodwill to be included in an offering price by
discounting expected future excess earnings over some period of years.
8. Describe the two alternative views of consolidated financial statements: the economic
entity and the parent company concepts.
9. List and discuss each of the Statements of Financial Accounting Concepts (SFAC).
10. Describe some of the current joint projects of the FASB and the International
Accounting Standards Board (IASB), and their primary objectives.
Learning Objectives
4. Slide
1-4
On December 4, 2007, FASB released two new standards,
FASB Statement No. 141 R, Business Combinations, and
FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements. [ASC 805, ―Business
Combinations‖ and ASC 810, ―Consolidations‖, based on FASB‘s new
codification system]
These standards
Became effective for years beginning after December 15,
2008, and
Are intended to improve the relevance, comparability and
transparency of financial information related to business
combinations, and to facilitate the convergence with
international standards.
Introduction
5. Slide
1-5
Business Combination - operations of two or more
companies are brought under common control.
Nature of the Combination
A business combination may be:
Friendly - the boards of directors of the potential
combining companies negotiate mutually agreeable
terms of a proposed combination.
Unfriendly (hostile) - the board of directors of a
company targeted for acquisition resists the
combination.
6. Slide
1-6
Defensive Tactics
Nature of the Combination
1. Poison pill: Issuing stock rights to existing
shareholders; exercisable only in the event of a
potential takeover.
2. Greenmail: Purchasing shares held by acquiring
company at a price substantially in excess of fair value.
3. White knight: Encouraging a third firm to acquire or
merge with the target company.
7. Slide
1-7
Defensive Tactics (continued)
Nature of the Combination
4. Pac-man defense: Attempting an unfriendly takeover
of the would-be acquiring company.
5. Selling the crown jewels: Selling valuable assets to
make the firm less attractive to the would-be acquirer.
6. Leveraged buyouts: Purchasing a controlling interest
in the target firm by its managers and third-party
investors, who usually incur substantial debt.
8. Slide
1-8
The defense tactic that involves purchasing shares held
by the would-be acquiring company at a price
substantially in excess of their fair value is called
a. poison pill.
b. pac-man defense.
c. greenmail.
d. white knight.
Review Question
Nature of the Combination
9. Slide
1-9
Advantages of External Expansion
Business Combinations: Why? Why Not?
LO 2 Reasons firms combine.
1. Rapid expansion
2. Operating synergies
3. International marketplace
4. Financial synergy
5. Diversification
6. Divestitures
10. Slide
1-10
Three distinct periods
Business Combinations: Historical Perspective
1880 through 1904, huge holding companies, or trusts, were
created to establish monopoly control over certain industries
(horizontal integration).
1905 through 1930, to bolster the war effort, the
government encouraged business combinations to obtain
greater standardization of materials and parts and to
discourage price competition (vertical integration).
LO 1 Describe historical trends in types of business combinations.
11. Slide
1-11
Three distinct periods
Business Combinations: Historical Perspective
1945 to the present, many of the mergers that occurred
from the 1950s through the 1970s were conglomerate
mergers.
In contrast, the 1980s were characterized by a relaxation in
antitrust enforcement and by the emergence of high-yield
junk bonds to finance acquisitions.
Deregulation undoubtedly played a role in the popularity of
combinations in the 1990s.
LO 1 Describe historical trends in types of business combinations.
12. Slide
1-12
Asset acquisition, a firm must acquire 100% of the assets of the
other firm.
Stock acquisition, control may be obtained by purchasing 50% or
more of the voting common stock (or possibly less).
Terminology and Types of Combinations
LO 5 Distinguish between an asset and a stock acquisition.
What Is Acquired? What Is Given Up?
Net assets of S Company
(Assets and Liabilities)
Common Stock
of S Company
1. Cash
2. Debt
3. Stock
4. Combination of
above
Figure 1-1
13. Slide
1-13
Possible Advantages of Stock Acquisition
Lower total cost.
Direct formal negotiations may be avoided.
Maintaining the acquired firm as a separate legal
entity.
Liability limited to the assets of the individual
corporation.
Greater flexibility in filing individual or consolidated
tax returns.
Terminology and Types of Combinations
LO 5 Distinguish between an asset and a stock acquisition.
14. Slide
1-14
Classification by Method of Acquisition
Terminology and Types of Combinations
LO 5 Distinguish between an asset and a stock acquisition.
A Company B Company A Company+ =
Statutory Merger
One company acquires all the net assets of another
company.
The acquiring company survives, whereas the acquired
company ceases to exist as a separate legal entity.
15. Slide
1-15
Classification by Method of Acquisition
Terminology and Types of Combinations
LO 5 Distinguish between an asset and a stock acquisition.
A Company B Company C Company+ =
Statutory Consolidation
A new corporation is formed to acquire two or more other
corporations through an exchange of voting stock; the
acquired corporations then cease to exist as separate legal
entities.
Stockholders of A and B become stockholders in C.
16. Slide
1-16
Classification by Method of Acquisition
Terminology and Types of Combinations
LO 5 Distinguish between an asset and a stock acquisition.
Financial
Statements of
A Company
Financial
Statements of
B Company
Consolidated
Financial
Statements of
A Company and
B Company
+ =
Consolidated Financial Statements
When a company acquires a controlling interest in the
voting stock of another company, a parent–subsidiary
relationship results.
17. Slide
1-17
When a new corporation is formed to acquire two or
more other corporations and the acquired corporations
cease to exist as separate legal entities, the result is a
statutory
a. acquisition.
b. combination.
c. consolidation.
d. merger
Review Question
Terminology and Types of Combinations
LO 5 Distinguish between an asset and a stock acquisition.
18. Slide
1-18
Takeover Premium – the excess amount agreed upon in an
acquisition over the prior stock price of the acquired firm.
Possible reasons for the premiums:
Acquirers‘ stock prices may be at a level which makes it
attractive to issue stock (rather than cash) in the
acquisition.
Credit may be generous for mergers and acquisitions.
Bidders may believe target firm is worth more than its
current market value.
Acquirer may believe growth by acquisitions is essential and
competition necessitates a premium.
Takeover Premiums
LO 5 Distinguish between an asset and a stock acquisition.
19. Slide
1-19
The factors to beware of include the following:
Be cautious in interpreting any percentages.
Do not neglect to include assumed liabilities in the
assessment of the cost of the merger.
Watch out for the impact on earnings of the allocation of
expenses and the effects of production increases, standard
cost variances, LIFO liquidations, and byproduct sales.
Note any nonrecurring items that may boost earnings.
Be careful of CEO egos.
Avoiding the Pitfalls Before the Deal
LO 3 Factors to be considered in due diligence.
20. Slide
1-20
When an acquiring company exercises due diligence in
attempting a business combination, it should:
a. be skeptical about accepting the target company‘s
stated percentages
b. analyze the target company for assumed liabilities as
well as assets
c. look for nonrecurring items such as changes in
estimates
d. all the above
Review Question
Avoiding the Pitfalls Before the Deal
LO 3 Factors to be considered in due diligence.
21. Slide
1-21
When a business combination is effected by a stock
swap, or exchange of securities, both price and method
of payment problems arise.
The price is expressed as a stock exchange ratio
(generally defined as the number of shares of the acquiring company to be
exchanged for each share of the acquired company).
Each constituent makes two kinds of contributions to
the new entity—net assets and future earnings.
Determining Price and Method of Payment
in Business Combinations
LO 6 Factors affecting price and method of payment.
22. Slide
1-22
Net Asset and Future Earnings Contributions
Determining Price and Method of Payment
in Business Combinations
LO 6 Factors affecting price and method of payment.
Determination of an equitable price for each
constituent company requires:
The valuation of each company‘s net assets and
Each company‘s expected contribution to the future
earnings of the new entity.
23. Slide
1-23
Excess Earnings Approach to Estimate Goodwill
LO 6 Factors affecting price and method of payment.
Step 1:Identify a normal rate of return on assets for firms
similar to the company being targeted.
Step 2: Apply the rate of return (step 1) to the net assets of
the target to approximate ―normal earnings.‖
Step 3: Estimate the expected future earnings of the target.
Exclude any nonrecurring gains or losses.
Step 4: Subtract the normal earnings (step 2) from the
expected target earnings (step 3). The difference is
―excess earnings.‖
Determining Price and Method of Payment
24. Slide
1-24
Excess Earnings Approach to Estimate Goodwill
LO 6 Factors affecting price and method of payment.
Step 5: Compute estimated goodwill from ―excess earnings.‖
If the excess earnings are expected to last indefinitely,
the present value may be calculated by dividing the
excess earnings by the discount rate.
For finite time periods, compute the present value of an
annuity.
Determining Price and Method of Payment
Step 6: Add the estimated goodwill (step 5) to the fair value
of the firm‘s net identifiable assets to arrive at a
possible offering price.
25. Slide
1-25
A potential offering price for a company is computed by
adding the estimated goodwill to the
a. book value of the company‘s net assets.
b. book value of the company‘s identifiable assets.
c. fair value of the company‘s net assets.
d. fair value of the company‘s identifiable net assets.
Review Question
LO 6 Factors affecting price and method of payment.
Determining Price and Method of Payment
26. Slide
1-26
Exercise 1-1: Plantation Homes Company is considering the
acquisition of Condominiums, Inc. early in 2008. To assess the
amount it might be willing to pay, Plantation Homes makes the
following computations and assumptions.
A. Condominiums, Inc. has identifiable assets with a total fair
value of $15,000,000 and liabilities of $8,800,000. The assets
include office equipment with a fair value approximating book
value, buildings with a fair value 30% higher than book value,
and land with a fair value 75% higher than book value. The
remaining lives of the assets are deemed to be approximately
equal to those used by Condominiums, Inc.
LO 7 Estimating goodwill.
Determining Price and Method of Payment
27. Slide
1-27
Exercise 1-1: (continued)
B. Condominiums, Inc.‘s pretax incomes for the years 2005
through 2007 were $1,200,000, $1,500,000, and $950,000,
respectively. Plantation Homes believes that an average of
these earnings represents a fair estimate of annual earnings
for the indefinite future. The following are included in pretax
earnings:
Depreciation on buildings (each year) 960,000
Depreciation on equipment (each year) 50,000
Extraordinary loss (year 2007) 300,000
Sales commissions (each year) 250,000
LO 7 Estimating goodwill.
Determining Price and Method of Payment
C. The normal rate of return on net assets is 15%.
28. Slide
1-28
Exercise 1-1: (continued)
Required:
A. Assume further that Plantation Homes feels that it must
earn a 25% return on its investment and that goodwill is
determined by capitalizing excess earnings. Based on these
assumptions, calculate a reasonable offering price for
Condominiums, Inc. Indicate how much of the price consists
of goodwill. Ignore tax effects.
LO 7 Estimating goodwill.
Determining Price and Method of Payment
29. Slide
1-29
Exercise 1-1: (Part A)
LO 7 Estimating goodwill.
Determining Price and Method of Payment
Step 1 Identify a normal rate of return on assets
for firms similar to the company being targeted.
Excess Earnings Approach
15%
Step 2 Apply the rate of return (step 1) to the net assets of
the target to approximate ―normal earnings.‖
Fair value of assets $15,000,000
Fair value of liabilities 8,800,000
Fair value of net assets 6,200,000
Normal rate of return 15%
Normal earnings $ 930,000
30. Slide
1-30
Determining Price and Method of Payment
Step 3 Estimate the expected future earnings of the target.
Exclude any nonrecurring gains or losses.
Pretax income of Condominiums, Inc., 2005 1,200,000$
Subtract: Additional depreciation on building ($960,000 x 30%) (288,000)
Target’s adjusted earnings, 2005 912,000$
Pretax income of Condominiums, Inc., 2006 1,500,000
Subtract: Additional depreciation on building (288,000)
Target’s adjusted earnings, 2006 1,212,000
Pretax income of Condominiums, Inc., 2007 950,000
Add: Extraordinary loss 300,000
Subtract: Additional depreciation on building (288,000)
Target’s adjusted earnings, 2007 962,000
Target’s three year total adjusted earnings 3,086,000
Target’s three year average adjusted earnings ($3,086,000 / 3) 1,028,667$
LO 7 Estimating goodwill.
31. Slide
1-31
Determining Price and Method of Payment
Step 4 Subtract the normal earnings (step 2) from the
expected target earnings (step 3). The difference is ―excess
earnings.‖
LO 7 Estimating goodwill.
Expected target earnings $1,028,667
Less: Normal earnings 930,000
Excess earnings, per year $ 98,667
32. Slide
1-32
Determining Price and Method of Payment
Step 5 Compute estimated goodwill from ―excess earnings.‖
LO 7 Estimating goodwill.
Excess earnings $ 98,667
Present value of excess earnings (perpetuity) at 25%:
25%
= $394,668
Estimated
Goodwill
Step 6 Add the estimated goodwill (step 5) to the fair value of
the firm‘s net identifiable assets to arrive at a possible offering
price.
Net assets $6,200,000
Estimated goodwill 394,668
Implied offering price $6,594,668
33. Slide
1-33
Exercise 1-1 (continued)
Required:
B. Assume that Plantation Homes feels that it must earn a 15%
return on its investment, but that average excess earnings
are to be capitalized for three years only. Based on these
assumptions, calculate a reasonable offering price for
Condominiums, Inc. Indicate how much of the price consists
of goodwill. Ignore tax effects.
LO 7 Estimating goodwill.
Determining Price and Method of Payment
34. Slide
1-34
Determining Price and Method of Payment
Part B
LO 7 Estimating goodwill.
Excess earnings of target (same a Part A) $ 98,667
PV factor (ordinary annuity, 3 years, 15%) x 2.28323
Estimated goodwill $ 225,279
Fair value of net assets 6,200,000
Implied offering price $ 6,425,279
The types of securities to be issued by the new entity in exchange
for those of the combining companies must be determined.
Ultimately, the exchange ratio is determined by the bargaining
ability of the individual parties to the combination.
35. Slide
1-35
LO 8 Economic entity and parent company concepts.
Parent Company Concept - primary purpose of consolidated
financial statements is to provide information relevant to
the controlling stockholders.
The noncontrolling interest presented as a liability or as a
separate component before stockholders‘ equity.
Alternative Concepts of Consolidated
Financial Statements
Economic Entity Concept - affiliated companies are a
separate, identifiable economic entity.
The noncontrolling interest presented as a component of
stockholders‘ equity.
36. Slide
1-36
Consolidated Net Income
Parent Company Concept, consolidated net income
consists of the realized combined income of the parent
company and its subsidiaries after deducting the
noncontrolling interest in income (noncontrolling interest
in income is an expense item).
Economic Entity Concept, consolidated net income
consists of the total combined income of the parent
company and its subsidiaries. Total combined income is
then allocated proportionately to the noncontrolling
interest and the controlling interest.
Alternative Concepts
LO 8 Economic entity and parent company concepts.
37. Slide
1-37
Consolidated Balance Sheet Values
Parent Company Concept, the net assets of the subsidiary
are included in the consolidated financial statements at
their book value plus the parent company‘s share of the
difference between fair value and book value on the date
of acquisition.
Economic Entity Concept, on the date of acquisition, the
net assets of the subsidiary are included in the
consolidated financial statements at their book value plus
the entire difference between their fair value and their
book value.
Alternative Concepts
LO 8 Economic entity and parent company concepts.
38. Slide
1-38
According to the economic unit concept, the primary
purpose of consolidated financial statements is to
provide information that is relevant to
a. majority stockholders.
b. minority stockholders.
c. creditors.
d. both majority and minority stockholders.
Review Question
Alternative Concepts
LO 8 Economic entity and parent company concepts.
39. Slide
1-39
Intercompany Profit
Two alternative points of view:
1. Total (100%) elimination
2. Partial elimination
Alternative Concepts
LO 8 Economic entity and parent company concepts.
Under total elimination, the entire amount of unconfirmed
intercompany profit is eliminated from combined income
and the related asset balance. Under partial elimination,
only the parent company‘s share of the unconfirmed
intercompany profit is eliminated.
40. Slide
1-40
Conceptual Framework
LO 8 Economic entity and parent company concepts.
Figure 1-2
Conceptual
Framework for
Financial
Accounting and
Reporting
41. Slide
1-41
Economic Entity vs. Parent Concept and the
Conceptual Framework
The parent concept is tied to the historical cost
principle, which would suggest that the net assets
related to the noncontrolling interest remain at their
previous book values.
This approach might be argued to produce more
―reliable‖ values (SFAC No. 8).
LO 8 Economic entity and parent company concepts.
FASB’s Conceptual Framework
42. Slide
1-42
Economic Entity vs. Parent Concept and the
Conceptual Framework
The economic entity assumption views a parent and
its subsidiaries as one economic entity even though
they are separate legal entities.
The economic entity concept is an integral part of
the FASB‘s conceptual framework and is named
specifically in SFAC No. 5 as one of the basic
assumptions in accounting.
LO 8 Economic entity and parent company concepts.
FASB’s Conceptual Framework
43. Slide
1-43
Overview of FASB’s Conceptual Framework
LO 9 Statements of Financial Accounting Concepts.
FASB’s Conceptual Framework
SFAC No.1- Objectives of Financial Reporting (replaced by SFAC
No. 8)
SFAC No.2 - Qualitative Characteristics of Accounting Information
(replaced by SFAC No. 8)
SFAC No.3 - Elements of Financial Statements (replaced by
SFAC No. 6)
The Statements of Financial Accounting Concepts issued by
the FASB include:
44. Slide
1-44
Overview of FASB’s Conceptual Framework
LO 9 Statements of Financial Accounting Concepts.
FASB’s Conceptual Framework
SFAC No.4 - Objectives of Financial Reporting by Nonbusiness
Organizations
SFAC No.5 - Recognition and Measurement in Financial Statements
SFAC No.6 - Elements of Financial Statements (replaces SFAC No. 3)
SFAC No.7 - Using Cash Flow Information and Present Value in
Accounting Measurements
SFAC No.8 – The Objective of General Purpose Financial Reporting
(replaces SFAC No. 1 and No. 2)
The Statements of Financial Accounting Concepts issued by
the FASB include:
45. Slide
1-45
Distinguishing Between Earnings and
Comprehensive Income
LO 9 Statements of Financial Accounting Concepts.
FASB’s Conceptual Framework
Earnings is essentially revenues and gains minus
expenses and losses, with the exception of any losses or
gains that bypass earnings and, instead, are reported as
a component of other comprehensive income.
SFAC No. 5 describes them as ―principally certain
holding gains or losses that are recognized in the period
but are excluded from earnings such as some changes in
market values of investments... and foreign currency
translation adjustments.‖
46. Slide
1-46
Asset Impairment and the Conceptual Framework
LO 9 Statements of Financial Accounting Concepts.
FASB’s Conceptual Framework
SFAC No. 5 provides guidance with respect to expenses
and losses:
Consumption of benefit. Earnings are generally recognized when
an entity‘s economic benefits are consumed in revenue earnings
activities (or matched to the period incurred or allocated
systematically) (Example: amortization of limited-life
intangibles); or
Loss or lack of benefit. Expenses or losses are recognized if it
becomes evident that previously recognized future economic
benefits of assets have been reduced or eliminated, or that
liabilities have increased, without associated benefits (Example:
review for impairment for indefinite-life intangibles).
47. Slide
1-47
LO 10 Describe some of the current joint projects of the FASB and the International
Accounting Standards Board (IASB), and their primary objectives.
Appendix: FASB Codification Project
On July 1, 2009, the FASB launched the FASB Accounting
Standards Codification.
Single source of authoritative nongovernmental U.S.
generally accepted accounting principles (GAAP).
Codification is effective for interim and annual periods
ending after September 15, 2009.
All existing accounting standards documents are
superseded as described in FASB Statement No. 168,
―The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles.‖
48. Slide
1-48
LO 10 Describe some of the current joint projects of the FASB and the International
Accounting Standards Board (IASB), and their primary objectives.
Appendix: FASB Codification Project
Structure of the Codification
Roughly 90 accounting topics
Contains four groupings of numbers.
1) the topic,
2) the subtopic,
3) the section, and
4) the paragraph
The code 450-20-25-2 refers to topic 450 (which is
‗contingencies‘); subtopic 20 (which is loss ‗contingencies‘); section
25 (which is recognition); and 2 (refers to the second paragraph).
49. Slide
1-49
a. Financial Accounting Standards Board (FASB)
1. Statements (FAS)
2. Interpretations (FIN)
3. Technical Bulletins (FTB)
4. Staff Positions (FSP)
5. Staff Implementation Guides (Q&A)
6. Statement No. 138 Examples
b. Emerging Issues Task Force (EITF)
1. Abstracts
2. Topic D
c. Derivative Implementation Group (DIG) Issues
d. Accounting Principles Board (APB) Opinions
e. Accounting Research Bulletins (ARB)
f. Accounting Interpretations (AIN)
g. American Institute of Certified Public Accountants (AICPA)
1. Statements of Position (SOP)
2. Audit and Accounting Guides (AAG)—only incremental accounting guidance
3. Practice Bulletins (PB), including the Notices to Practitioners elevated to Practice
Bulletin status by Practice Bulletin 1
4. Technical Inquiry Service (TIS)—only for Software Revenue Recognition
LO 10 Describe some of the current joint projects of the FASB and the International
Accounting Standards Board (IASB), and their primary objectives.
Appendix: FASB Codification Project
Literature
included in the
Codification
50. Slide
1-50
(a) Regulation S-X (SX)
(b) Financial Reporting Releases (FRR)/Accounting Series
Releases (ASR)
(c) Interpretive Releases (IR)
(d) SEC Staff guidance in
1. Staff Accounting Bulletins (SAB)
2. EITF Topic D and SEC Staff Observer comments.
LO 10 Describe some of the current joint projects of the FASB and the International
Accounting Standards Board (IASB), and their primary objectives.
Appendix: FASB Codification Project
Additional SEC literature included in the
Codification for reference
51. Slide
1-51
LO 10 Describe some of the current joint projects of the FASB and the International
Accounting Standards Board (IASB), and their primary objectives.
Appendix: FASB Codification Project
Changes to GAAP: Updating the FASB Standards
Updates to the Codification are called Accounting
Standards Updates and are referenced as
ASU YYYY-xx, where the Ys indicate the year of
Update and xx represents the number of the update
For that year.