In this presentation, we will expand on the logistics of internal expansion, get ready to act, because it’s time to account with advanced financial accounting. We’re going to take a look now at the steps of the internal expansion. So note we have the two categories of expansion, the internal expansion and the external expansion, internal expansion with a company growing, we’re imagining the company growing, they can either grow internally make it another sub subsidiary, possibly, that would be owned by the parent company creating a parent subsidiary relationship internally, or has some kind of external expansion where we have two separate entities that are going to be together in some way, shape or form. So here, we’re talking about the internal expansion. So we have one company that is then thinking about expanding how are they going to put that expansion together? We’re thinking about the setting up then in this case of another legal entity such as a subsidiary, what steps for that? Well, first, you’re going to have a sub sub subsidiary B. created. So you get the parent company is going to be creating the subsidiary, then we have assets and liabilities are transferred to the new entity. So we’re imagining we have one company that wants to expand possibly have another division or another location that they will be expanding into. They make this subsidiary so they another legal entity created, we typically will think of another corporation that is owned by the prior Corporation, parent subsidiary relationship, the assets and liabilities that are going to be controlled or be part of that new segment are going to be transferred from the parent company now to the subsidiary company. And the key point here is that it’s going to be transferred at book value. And you might be thinking after looking at the external expansion, where you have two separate entities that are coming together and the need for us to then use the basically the acquisition method treat it basically like a sale happening.
Posts with the impairment tag
Acquisition Accounting Goodwill
In this presentation, we’re going to continue on with our discussion of acquisition accounting, this time focusing in on the concept of goodwill. Get ready, because it’s time to account with advanced financial accounting. First question is, what is goodwill. So it’s an intangible factors that allow a business to earn above average profits. So the way you might want to think about that is the first thing about a business that isn’t being purchased and sold. If you just got one business that started from scratch, they just started doing business, they started earning revenue, then you can look at their financial statements, they got the they got the balance sheet, assets minus liabilities is the book value of the company, and then the income statement, which is their performance. Now, if you were to say, Hey, is this company worth more than their equity than their assets minus the liabilities than their net assets? In other words, if it is, then you’re saying hey, there must be some intangible factor that’s not really on the balance sheet that would explain the reason why the you know the value of them because most likely through Profit generation, after the the perceived ability, the likely ability to earn profit in the future is greater than just what’s on the balance sheet assets minus liabilities. So you would think then that many companies, if a company is doing well, then there’s going to be some kind of intangible factor there. That’s not basically on the balance sheet that basically explains why the company is doing better than then just the value of the company being assets minus liabilities. So in other words, if we were to purchase the company, you would think that you would purchase it for their assets minus the liabilities, that’s what they consist of, that’s breaking them down to their parts.