Purchase accounting

(redirected from Purchase Accounting Method)

Purchase accounting

Method of accounting for a merger that treats the acquirer as having purchased the assets and assumed the liabilities of the acquiree, which are then written up or down to their respective fair market values. The difference between the purchase price and the net assets acquired is attributed to goodwill.

Purchase Accounting

In mergers and acquisitions, a method of accounting that treats the acquiring company as if it bought the assets and assumed the liabilities of the target company; all the assets and liabilities are placed on the acquiring company's balance sheet according to their current market value. Because the purchase price of the target company often exceeds this, pooling-of-assets accounting is more common. See also: Goodwill.
References in periodicals archive ?
Under FAS 141, companies must use the purchase accounting method for new M&A transactions, since the pooling of interests method has been eliminated.
NEW FASB STANDARDS PROHIBIT the pooling-of-interests method of accounting for business combinations and require a purchase accounting method that does not allow goodwill amortization.
The transaction is expected to close sometime next week and will be accounted for under the purchase accounting method.
43 shares of Intel stock and the merger will be accounted for using the purchase accounting method.
Community Partners Bancorp acquired The Town Bank on April 1, 2006 in a transaction that was accounted for under the purchase accounting method for financial reporting purposes, with Two River Community Bank as the acquiring entity.
Use of the purchase accounting method will also bring the United States in step with other countries, because widespread use of the pooling-of-interests method is a U.
Community Partners acquired The Town Bank on April 1, 2006 in a transaction that was accounted for under the purchase accounting method for financial reporting purposes, with Two River as the acquiring entity.
For the fourth quarter of fiscal year 2007 ending May 31, 2007, the company is estimating GAAP revenues of $187 million to $195 million, excluding approximately $1 million of deferred maintenance and services revenue written down under the purchase accounting method used for the Intentia acquisition.
9 million of deferred maintenance and service revenue that was written down under the purchase accounting method used for the acquisition of Intentia.
Community Partners acquired the banks on April 1, 2006 in a transaction that was accounted for under the purchase accounting method for financial reporting purposes, with Two River as the acquiring entity for accounting purposes.
30, 2007, the company is estimating GAAP revenue of $172 million to $180 million, excluding approximately $3 million of deferred maintenance and services revenue written down under the purchase accounting method used for the Intentia acquisition.
As a result, its financial statements have been materially impacted by non-cash charges due to the application of the purchase accounting method, which includes amortization of inventory write-up that negatively impacts the gross profit that is expected to continue until March 2005, and the reduction of amortization and depreciation of intangible and fixed assets that positively impact the operating expenses.