4. Inventory – Finished Products – You would record FG`s inventories at their selling price, minus their MARGIN – DISPOSITION COSTS. But this can be difficult to calculate if the finished products have variable prices depending on the place or quantities they sell – in this case, the determination of the selling price should be based on the history of the most common sales transactions. If z.B. 80% of all units sold are in purchase volumes that result in a unit price of $1.50, that is the most appropriate price. The table above shows the initial accounting costs of each account in the statement of the acquis, followed by a list of the required valuation of each account as part of the purchase method, the necessary adjustment and the reassessment of the account. The new account valuation on the right side of the table can then be taken directly into account in the recipient company`s records. In a recent acquisition I made for a business in Santa Cruz, the buyer decided to acquire the shares of the company with cash and not its assets. Acquisitions by buying shares or shares are a common method of buying a business. From an administrative point of view, share purchase acquisitions are one of the easiest deal structures to implement. It is the duty of the company accountant to determine what financing opportunities are useful to the company with any type of investment. Stock purchases generally require the entity to pay in cash for these assets. In this case, the company must use excess cash or borrow cash from a lender to make the purchase.
The purchase of assets offers not only cash purchases, but also financing opportunities. The accountant assesses the cost of financing the asset. The administrative advantage of a share purchase transaction is that the owner simply changes by transferring all of the company`s shares. Compare this with an asset purchase structure in which each office, chair and PC must be accounted for and sold to the buyer. Whether the entity has acquired shares or assets, it indicates this value on the balance sheet. Equity and asset investments are displayed in the asset sector. Investment is posted in the area of balance sheet assets, while investment in equities with other long-term assets appears on the balance sheet. The goodwill displayed in the “Required Adjustment” column is deducted by subtracting the purchase price of $15,000 from the sum of all fair market and other valuations in the “Assessment of The Purchasing Method” column. In this case, we have a fair market valuation of 18,398 USD for all assets, minus a fair market valuation of 8.075 USD for all commitments, which gives a fair value for the purchase of 10,323 DOLLARS. If this fair value is deducted from the purchase price of US$15,000, we receive a balance of $4,677 that appears on the Goodwill account.
If the beneficiary company (Lie Dharma Corporation) buys the shares of the acquirer (Robinson Ma Corporation) with $500,000 in cash, the entry into Lie Dharma`s books would be as follows: in short, a business acquisition is, from an accounting point of view, a transaction in which the acquired and acquired business end as separate units at the end of the transaction.