The Acquisition Method Overview
Five Basic Steps
The acquisition method requires the acquiring company to recognize the acquired assets, liabilities, and any noncontrolling interest at fair value on the acquisition date. Goodwill or a bargain purchase gain is then determined.
- Identify the acquirer.
- Determine the acquisition date.
- Measure the consideration transferred.
- Recognize identifiable assets acquired and liabilities assumed at fair value.
- Recognize goodwill or a bargain purchase gain.
Tip
Remember the acquisition method as a step-by-step process beginning with identifying the acquiring entity.
Summary
The acquisition method measures acquired businesses using acquisition-date fair values.