Acquisition Method
Accounting glossary · Understand, connect, apply
The acquisition method accounts for a business combination by identifying the acquirer and acquisition date, measuring the acquired identifiable net assets and any non-controlling interest, and determining goodwill or a bargain purchase gain.
Example
A buyer pays 850,000 for all of a business whose identifiable assets and liabilities have a net recognised amount of 800,000 at acquisition. With no other adjustments, goodwill is 50,000.
Remember the difference
Fair value is the usual acquisition-date measurement basis for identifiable assets and liabilities, with exceptions specified by IFRS 3.
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Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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