Consolidating journal entries

If the acquirer cannot reasonably determine the fair value of preacquisition contingencies, it still must recognize the contingent assets and liabilities as long as they are probable and can be reasonably estimated.ASC 805 also requires that the acquirer reflect all consideration transferred (i.e., the purchase price) at fair value.

Pushdown accounting establishes a new basis for reporting assets and liabilities in an acquiree’s stand-alone financial statements based on the “pushdown” of the newly adopted acquirer’s basis.Three resulting scenarios can occur: fair value of consideration transferred (FVCT) equals (fair value of identifiable assets received [FVAR] less fair value of identifiable liabilities assumed [FVLA]); FVCT is greater than (FVAR less FVLA); or FVCT is less than (FVAR less FVLA).ES has assets with a book value of 0 million and liabilities with a book value of .It has eliminated the “80% or greater” ownership requirement, and as a result companies have the option to adopt pushdown accounting at the time of change in control regardless of their percentage of ownership.Third, ASU 2014-17 no longer mandates that companies with percentage of ownership “greater then 95%” adopt pushdown accounting.

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