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(Business Combination)

A transaction or other event in which an


acquirer obtains control of one or more
businesses.
IFRS 3

In May 2004, Citizens Financial Group,


Inc., announced an agreement to acquire
Charter One Financial, Inc., for $10.5
billion, making Citizens one of the 10
largest U.S. commercial banks.

In 2001, America Online (AOL) acquired


control of Time Warner for $147 billion.

1.

INTEGRASI SECARA HORIZONTAL

2.

INTEGRASI SECARA VERTIKAL

3.

KONGLOMERASI

KEUNTUNGAN DARI SISI BIAYA


MEMINIMALISASI RESIKO
MEMPERPENDEK WAKTU TUNDA BAGI
KEGIATAN OPERASIONAL
MENGHINDARI PENGAMBILALIHAN
SECARA PAKSA
PENGUASAAN ASET TAK BERWUJUD
FAKTOR-FAKTOR LAIN

1.
2.
3.

Merger
Consolidation
Acquisition

AA Company
AA Company
BB Company
(a) Statutory Merger

AA Company
CC Company
BB Company
(b) Statutory Consolidation

AA Company

AA Company

BB Company

BB Company
(c) Stock Acquisition

Big Picture: Valuation of the acquired company


In the past, there were two methods:
Pooling of Interests Method (Investment = BV of Sub)
Purchase Method (Investment in Sub = FV given)

SFAS 141 (Effective July 2001) required purchase method.


SFAS 141R (Effective December 2008) modified rules
Acquisition Method

In 2007, the FASB issued the revised version of


FASB Statement No. 141, Business
Combination (revised 2007) (FASB 141R, ASC
805), that replaced the purchase method with
the acquisition method, now the only
acceptable method of accounting for business
combinations.
The acquisition method must be used to
account for all business combinations for which
the acquisition date is in fiscal years beginning
on or after December 15,2008.

Under the acquisition method, the acquirer


recognizes all assets acquired and liabilities
assumed in a business combination and
measures them at their acquisition-date fair
values.

a)
b)
c)

d)

Identifying the acquirer;


Determining the acquisition date;
Recognising and measuring the identifiable
assets acquired, the liabilities assumed and
any non-controlling interest in the acquiree;
and
Recognising and measuring goodwill or a gain
from a bargain purchase

If acquisition price > FMV, goodwill exists.


Recognize as an asset.
Do not amortize.
Evaluate periodically for possible impairment.

If acquisition price < FMV, a bargain purchase


element (formerly called negative goodwill)
exists.

Goodwill
Conceptually, goodwill as it relates to
business combinations consists of all those
intangible factors that allow a business to earn
above-average profits.
From an accounting perspective, the FASB has
stated that goodwill is an asset representing
the future economic benefits arising from
other assets acquired in a business
combination that are not individually identified
and separately recognized.

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