Valuation and Accounting for Business Combinations: Goodwill, Offering Price, and Acquisition Analysis

Study of valuation techniques in mergers and acquisitions.

Olivia Smith

Contributor

4.5

5 months ago

Preview (3 of 9 Pages)

100%

Purchase to unlock

Loading page image...

Valuation and Accounting for Business Combinations: Goodwill, OfferingPrice, and Acquisition AnalysisUsing the provided calculations and steps for the determination of goodwill and acquisitionvalues, analyze the process of determining a reasonable offering price for the target company in abusiness combination. In your response, explain how the different methods of calculatinggoodwill, including the use of normal rate of return, excess earnings, and the discounted rate ofreturn, influence the offering price. Additionally, discuss the differences between goodwill andbargain purchases and their implications in the context of an acquisition.Word count requirement: 1000-1200 words

Loading page image...

Step 1(a)Reasonable offering price for C Company is calculated as follows:Step 1: Normal rate of return on net assets on similar firm is 15%.Step 2: Normal earning using the rate of return is calculated as follows:Step 3: Expected future earnings of the target company is calculated as follows:Step 4: Excess earnings is calculated as follows:

Preview Mode

This document has 9 pages. Sign in to access the full document!

Report

Study Now!

XY-Copilot AI

Unlimited Access

Secure Payment

Instant Access

24/7 Support

Document Chat

Document Details

Subject

Accounting

Related Documents

View all

Class Notes

Accounting

what really is accounting?

5.0

Class Notes

Master Managerial Accounting Techniques

Honors Managerial Accounting course led by Dr. Michael Newman, focusing on cost analysis, ethics, communication, and real-world application through interactive discussions, case studies, and presentations.

Class Notes

Controlling and Reporting of Real Assets

Overview of asset impairment recognition in accounting: when an asset’s value declines due to damage, market loss, or legal issues, a journal entry records the loss to reflect the asset’s reduced value. Key for reporting real assets like PPE.

Solved Assignments