Abiblo Finance – Acquisition Accounting
Acquisition accounting are procedures which need to be followed when one company is being taken over by another.
Acquisition accounting is provided under the Financial Reporting Standard 6, Acquisitions and Mergers and Financial Reporting Standard 7, Fair Values in Acquisition Accounting.
It has been superseded by International Reporting Standard 3, Business Combinations, for UK listed Companies.
The fair value of the purchase consideration for the purpose of consolidated financial statement shall be allocated between the underlying net tangible and intangible assets.
Any differences between the fair value of the consideration and the aggregate of the fair values of the separable net assets such as licenses, trademark and patents will represent the goodwill.
The results of the acquired company should be brought into the consolidated profit and loss account from the date of the acquisition only.