ACC exam / A+

vi) Goodwill- The beginning balance for Goodwill was determined by finding the difference between Total Assets and Total Liabilities at the beginning . Goodwill accounts for all the intangible assets that were transferred from the old company to the new company, including brand name, as well as a premium paid for the company. Goodwill was not amortized in this model.

Give an example. (5 marks) Briefly discuss whether the short-term differences between applications in (a) are removed when the investment is sold. (3 marks) Briefly suggest reasons why short-term differences may not be irrelevant. (2 marks)

a. Is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period.

6. In an era of global competition, what is the case for antitrust authorities to permit the formation of large domestic firms through mergers and acquisitions?

A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate

| making a reduction of share capital to which Division 1 of Part 2J.1 applies (other than a reduction that consists only of the cancellation of a share or shares for no consideration)

sale in the Arley financing then can be characterized as the sale of a share of common stock plus a

extracted from the combination of the two businesses. For example, such a consolidation would allow

Goodwill being a controversial topic in Accounting has derived its definitions from various accounting bodies in us and overseas. The concept of goodwill has been around probably as long as formal accounting systems have been in place, going back probably to the Phoenicians. A variety of definitions of goodwill have evolved over the last two centuries. However, these attempts have been surprisingly unable to capture a comprehensive definition of the term once and for all and in all situations. (Valuing Intangible Assets, 1999, pg.7) Below are some of the definitions and descriptions of goodwill.

* To reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination if the acquirer’s interest in the net fair value of the items recognised exceeds the cost of the combination. Any excess remaining after that reassessment must be recognised by the acquirer immediately in profit or loss.

Mergers and Acquisitions (M&A) is a precise significant strategic interchange to sustain in competitiveness within the global market and it turns out to be one of a popular tools for corporate-level strategy. M&A is the amalgamation of two corporate entities to convert into solitary legitimate entity by combining resources and capabilities in order to attain a competitive advantage. Merger typically means reunion two particular companies together on equivalent basic whereas acquisition ordinarily means a greater sized corporation procuring a smaller sized corporation. The M&A activity has been continuously increased over the last 100 years and this phenomena is described by several M&A ‘waves’ (refer to Table 1).

Statutory merger: any business combination in which only one of the companies remains as a “survivor” or “parent”.

One of these is with regards to goodwill and intangible assets with identifiable useful lives.

1 A business combination is a union of business entities in which two or more previously separate and independent companies are brought under the control of a single management team. APB Opinion No. 16 describes three situations that establish the control necessary for a business combination, namely, when one or more corporations become subsidiaries, when one company transfers its net assets to another, and when each combining company transfers its net assets to a newly formed corporation.

Identify 6 resources of the business considered as assets from an accounting point of view. Explain why these resources are considered as assets of the business.