This course covers the accounting for business combinations (ASC 805), the preparation of consolidated financial statements (ASC 810), and other related topics including, but not limited to: step-by-step acquisition, deconsolidation, segments reporting, and the goodwill impairment test. This course begins with a discussion of the scope of ASC 805 and the differences between business combinations and asset acquisitions. Next, the course explores the measurement and recognition principles of the acquisition method to account for business combinations. Then, the course covers the consolidation process. You will learn how to prepare the consolidated financial statements and make all of the necessary consolidation adjustments.
Advanced Financial Reporting: Accounting for Business Combinations and Preparation of Consolidated Financial Statements
University of Illinois at Urbana-Champaign via Coursera
Overview
Syllabus
- Course Orientation
- You will become familiar with the course, your instructor and your classmates, and our learning environment. This orientation will also help you obtain the technical skills required to navigate and be successful in this course.
- Module 1: Control of a Business
- In this module, you will be introduced to the concepts of control over a business. You will learn different accounting methods used to account for investments in equity securities, the basics of control, the scope of "Business Combination" (ACS 805), as well as the methods to record an acquisition of a group under asset acquisition and business combination.
- Module 2: Acquisition Method
- In this module, you will be introduced to the acquisition method of accounting for a business combination. You will learn the measurement principles for an acquisition and the goodwill equation to calculate the goodwill or gain from a bargain purchase as a result of the business combination. You will also learn how to prepare the consolidated financial statements on the business combination date.
- Module 3: Components of Consideration Transferred in a Business Combination
- In this module, you will be introduced to different components of consideration transferred in a business combination. You will learn the measurement principles of share-based payment awards and will examine a real-life merger between Express Scripts and Medco companies. Moreover, you will be introduced to the concept of contingent consideration and learn the methods to classify, recognize, and record contingent considerations.
- Module 4: Assets Acquired and Liabilities Assumed
- In this module, you will gain a deeper understanding of the assets acquired and the liabilities assumed in a business combination. You will be introduced to different types of identifiable assets acquired, such as defensive intangible assets and in-process research and development (IPR&D), and the rules to recognize and measure them under U.S. GAAP and IFRS. You will also learn the difference between a taxable transaction and a non-taxable transaction and how to calculate deferred taxes on an acquisition date.
- Module 5: Preparation of Consolidated Financial Statements After the Acquisition Date
- In this module, you will learn how to prepare the consolidated financial statements after the acquisition date. The concept of accounting acquisition premium (AAP), and the methods to calculate identifiable and unidentifiable portions of the accounting acquisition premium will be introduced. You will also learn the effects of accounting acquisition premium on the consolidated financial statements and the relevant consolidation adjustments. Moreover, you will be introduced to intercompany inventory transactions and learn to make consolidation adjustments for intercompany inventory sales and intercompany inventory profits.
- Module 6: Intercompany Transactions and Noncontrolling Interest
- In this module, you will be introduced to more types of intercompany transactions as well as noncontrolling interests. You will learn the consolidation adjustments for intercompany transactions with depreciable assets and intercompany debt. The noncontrolling interest (NCI) will be introduced. You will learn the definition, calculation, and presentation of noncontrolling interest and net income attributable to NCI in the consolidated financial statements. You will also learn how to report consolidated retained earnings and the subsequent measurement of noncontrolling interests. Lastly, an example of consolidation with noncontrolling interest will be shown.
- Module 7: Change in the Percentage of Ownership and Other Related Topics
- In this module, we will explore the accounting rules for changes in the percentage of ownership of a Subsidiary and other topics that relate to business combinations. You will learn how to account for a business combination that was achieved in stages, and how to calculate the gain or loss on deconsolidation of the Subsidiary. Also, you will be introduced to the situation in which the Subsidiary acquires shares of the Parent and learn the methods to measure and record the transaction.
- Module 8: Segment Reporting and Goodwill Impairment Test
- In this module, you will be introduced to segment reporting and the goodwill impairment test. You will learn the rules for public companies to disclose segment information in the notes to annual and interim financial statements. You will also learn what information should be presented in the entity-wide disclosures and when. Then, the methods for identifying the reporting units, qualitative assessment for goodwill impairment, and the quantitative one-step goodwill impairment test will be introduced. You will also learn the goodwill impairment test under IFRS and the rules for private companies to account for goodwill.
Taught by
Michael Kustanovich
