Acquisition Accounting

Acquisition Accounting will have the acquirer recognize assets and liabilities at the acquired date, with fair value measures. Fair value applies if the acquiring company already had an ownership interest, or for the non controlling interest if owning less than 100%. It also applies to individual assets, liabilities, and the consideration for exchanges.

​It is important to note that costs in consuming a business combination are charged as an acquisition expense.

Goodwill is measured and recognized based on the difference between total fair value minus the fair value of the asset. Fair value is compared at the acquisition-date, and the excess is of course goodwill. Therefore, if the acquirer pays 100 for net assets of the acquiree of 80, goodwill will be 20.