Asked by Richy Amato on May 25, 2024
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Using the purchase accounting method to report mergers,goodwill is not amortized; rather,it is subject to an annual impairment test.
Purchase Accounting Method
A set of accounting techniques used to assess the acquisitions of assets, liabilities, and non-controlling interests of a company.
Goodwill
An intangible asset that arises when a business is acquired for more than the sum of the fair value of its identifiable net assets.
Annual Impairment Test
A review conducted yearly to determine if an asset's carrying value exceeds its recoverable amount, leading to an adjustment if necessary.
- Understand the accounting practices used in mergers and how they influence financial reports.
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Learning Objectives
- Understand the accounting practices used in mergers and how they influence financial reports.
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