WEEK-3
Financial Reporting of Business Combinations
Prior to beginning work on this assignment, review Chapter 15 of the textbook. For this assignment, completed recently by public companies for you to use.
Obtain the fiscal year-end financial statements for the two acquisitions, and review the disclosures and accounting of the acquisitions.
In your paper, address the following for both transactions:
- Identify the accounting method used to record the transaction.
- Determine if the financial statements comply with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS).
- Identify the accounting method used to record the transaction.
- Determine if there are any reported contingent assets or liabilities, or if there is any contingent consideration, from the acquisition.
- Explain the amount of goodwill recorded for the transaction.
- Determine the amount of goodwill that will be amortized in the future (if any) and predict the amount of amortization that be reported in future years.
- Determine how many months of financial results are included in the fiscal year operating results (e.g., revenues, expenses, earnings, and cash flow) for the fiscal year in which the acquisition was completed.
- Compute the following statistics for each company with no adjustments to earnings for the two most recent fiscal years:
- Operating income margin
- Net profit margin
- Free cash flow
- Return on Assets
- Return on Equity
- Debt-equity ratio
- Determine adjustments to earnings-based incorporating the full year results of the acquired company for the two most recent years.
- Recalculate the following statistics for each company based the two years of adjusted earnings:
- Operating income margin
- Net profit margin
- Free cash flow
- Return on Assets
- Return on Equity
- Debt-equity ratio
- Compare and contrast the impact of the acquisitions on each company’s financial statements and ratios.
- Justify your comments using your adjusted earnings and ratios from #9 and #10.
The Financial Reporting of Business Combinations paper
- Must be three to five double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in APA Style (Links to an external site.) resource. Within these three to five pages, provide data tables and calculations. These tables and calculations should be approximately 40% to 50% of the total work product.
- Must include a separate title page with the following:
- Title of paper
- Student’s name
- Course name and number
- Instructor’s name
- Date submitted
