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Walex

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tT
发表于 2011-7-13 13:48 | 只看该作者

Aquisition method: Cash Vs Equity offer

method, Thank, would
A buys 80% B assuming:
for 500 Cash

Equity on the consolidated B/S would be: Equity_A + Equity_B + NCI - 500 cash

for 500 new Equity:
Equity_consolidated = Equity_A + Equity_B + NCI + 500

Please confirm. Thank you
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benbenxiong

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2#
发表于 2011-7-13 13:48 | 只看该作者
if bought for Cash,

Then Equity = A + B (point to note is that retained earnings wouldn't get aggregated).
also you don't subtract cash from equity, cash would hit cash ac separately, and your assets would go down, but so would your NI.

if bought for new Equity

Then Equity = A + 500 + B.

someone pls confirm.

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Kapie

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3#
发表于 2011-7-13 13:49 | 只看该作者
Ignore the above post i think the answer is

In all-cash transaction
No change to acquirer's equity.

In all-equity transaction
date of acquisition: Equity = Old Equity + MV of the equity issued.
post acquisition reporting: Equity = Equity on date of acquisition + Target's Retained earnings.

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giants2010

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4#
发表于 2011-7-13 13:49 | 只看该作者
thanks pepp.

if offered by cash, Parent as well as consolidated b/s will show a decrease in cash. no change to equity.

for stock offers, parent+consolidated all increase equity by the amount raised.
for ownership less than 100%, don't forget to increase equity by NCI in equity.

Good luck with studying

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