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Business combinations

BAR Chapter 15 · Area II · Blueprint II.F

When one company takes control of another, GAAP asks it to remeasure almost everything it bought at fair value, record what it paid for the rest as goodwill and keep adjusting for a year as facts become clear. The Blueprint asks you to recall the concepts (business or asset purchase, contingent consideration, measurement period adjustments), calculate the consideration transferred, and prepare entries that produce goodwill, a bargain purchase gain or a noncontrolling interest. Summit Outdoor Brands buys Ridgeway Gear, and we record the deal from the first offer letter to the final appraisal.

In this chapter

1. Buying a business or buying assets?
2. The acquisition method, step by step
3. What was paid: the consideration transferred
4. Measuring what was acquired
5. Recording goodwill
6. Bargain purchases
7. Noncontrolling interest and partial acquisitions
8. The measurement period and later changes

This chapter has 8 lessons, 51 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Business versus asset purchase
• consideration transferred
• contingent consideration
• goodwill or bargain purchase gain
• noncontrolling interest

Chapter 14: Research and development costs · Chapter 16: Consolidation topics