Corporate Accounting Assignment 2022

CORPORATE ACCOUNTING 1
CORPORATE
ACCOUNTING

CORPORATE ACCOUNTING 2
Part A:
Acquisition method:
Any company that takes over another company would record its acquisition by the way of
applying the following requirements of the stated method.
This method requires the following:
 Acquirer identification
 Recognising and measuring the identifiable assets and the liabilities. Also, the
liabilities that have been assumed and the non-controlling interests shall be
determined
 Date on which acquisition took place
 Also, the amount of the goodwill will have to be calculated.
Identification of the acquirer:
For each one of the business combination, any one of the entities would be identified as an
acquirer. The guidance of AASB 3 is used for the purposes of identifying the acquirer, which
is defined as the company which gets and takes over the control over the other company
which is the acquiree.
In case the business combination has taken place by the way of following the relevant rules
and regulations as have been laid down under AASB 3, but it is yet not clear as to who is the
acquirer, then there are some of the other considerations that will have to be undertaken into
account.
Determination of the date of acquisition:
The acquirer would identify the date of acquisition which is considered to be the date on
which the control has been obtained of the acquiree. The date on which the acquirer has taken
the control of the acquiree would be the date on which the acquirer has transferred the control
of all the assets and the liabilities to the acquirer. Further, the date of acquisition is also the
date on which the consideration has been transferred from acquirer to the acquiree. The
acquirer may be able to control the acquiree on that day which may be earlier or may be later
than the closing date. In order to illustrate, if the date on which the acquisition was done
precedes the date of closing, then this would be possible when there is a written agreement
which provides the fact that the acquirer shall control the acquire as on the date of closing.

CORPORATE ACCOUNTING 3
An acquirer is duty bound to consider all of the facts and the scenarios while calculating the
date of acquisition.
Recognising and measuring the identifiable assets and the liabilities. Also, the liabilities
that have been assumed and the non-controlling interests shall be determined:
This includes all of the assets and the liabilities that have been taken over and are now under
the management of the acquirer. For the recognition principles, the acquirer shall report all
the assets and the liabilities that he has taken control over and the various amounts of the
liabilities that have been assumed along with the amount of the shared held by outsiders in
the acquiree. Also, the amount of the goodwill will have to be reported in the final accounts
of the acquirer. There are some of the terms and the conditions that have to be complied with
when it comes to recognition and the measurement of the assets and the liabilities that could
be identified.
With regard to the conditions of recognizing the assets and the liabilities and the business
combination, in order to qualify the recognition of the acquisition method, all of the assets
and the liabilities that have been assumed must conform with the assets and liabilities that
come under the framework for the presentation and preparation of the financial statements as
per the rules as have been laid down under AASB 1048 which deals with the interpretations
of the standards. This shall be done as on the date of acquisition. In order to illustrate, all of
the costs that may be incurred by the acquire as on the future date in respect of meeting any
obligation of the acquiree or to terminate the employment of any employee of the acquiree or
to relocate the business of the acquiree, would not be classified as liabilities as on the date of
acquisition. Hence the acquiree would not identify and recognize these costs when he applied
the acquisition method. But it is also not that these costs would not be reported in the final
accounts. These would be reported in the final accounts as part of the post combination
financials as per the relevant Australian Accounting Standards.
For the purposes of qualifying the criteria of recognition, all of the assets and the liabilities
that have been identified by the acquiree should form the part of what has been exchanged
between the acquiree and the acquiree. This exchange between the acquiree and the acquiree
shall form the part of the business combination transaction instead of the separate
transactions (Accounting tools, 2019). The acquiree shall apply the guidance that has been
listed down in the accounting standards for the purposes of determining the assets and the
liabilities that have bene acquired and which, forms the part of the exchange between the