Video: Business Combinations Overview and Objectives

In this lesson, Nick Palazzolo, CPA, delves into the intricacies of business combinations, exploring the scenarios in which one company acquires another and takes on a significant level of ownership. He breaks down the concept of subsidiaries and sheds light on handling various components such as intercompany transactions, goodwill, and other related considerations. With a clear and engaging approach, he sets out the learning objectives, covering basic consolidation concepts like controlling and non-controlling interest, and delves into how to prepare for business combinations through adjustments, eliminations, and journal entries for acquired net assets. Additionally, he guides through correcting errors and making necessary financial statement adjustments to properly reflect measurement period adjustments in business combinations.

"Examprep.ai helped me pass all 4 CPA exams on the first try. I highly recommend. I especially like the feedback and ratings the software provides so I know where to focus my time."

Daniel H., CPA

"I can't recommend ExamPrep.ai enough. Nick's lessons turned concepts I struggled with into strengths. I was able to pass FAR right before other exams expired!"

Andrew K, CPA

"I just want to say thank you for the great lesson videos. I couldn't stay awake through lectures of another course. After watching all your FAR lessons I was finally able to pass!"

Alyssa M., CPA Candidate

Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

Cite this lesson

Link to this page

[[ citeExample ]]

Copy to clipboard

Copy URL to clipboard

Copy HTML to clipboard

Well, we made it to business combinations. And here, you didn't just buy 50%, you bought 50% or more, say 50% or more on car insurance. All right? So business combinations, this is when you are combining, you are acquiring another company. You're dealing with subsidiaries, right?

We're dealing with large percentages of ownership. We've got intercompany transactions. We've got how do you account for this goodwill? All these different items gosh there's just so much. But not too bad, right?

I mean, it's a big hefty with a lot of moving parts, but we will get through it. Let's see what our learning objectives are. So we want to recall basic consolidation concepts and terms such as controlling interest, non-controlling interest, primary beneficiary, variable interest, entity. We'll cover these and kind of dive into what those mean. We want to prepare business combinations, including adjustments, eliminations, and/or non-controlling interests from supporting documentation.

We want to adjust business combinations to correct identified errors. As always, right? Always got errors. We want to adjust them. We want to prepare journal entries to record the identifiable net assets acquired in a business combination, right?

Because you're buying the assets and liabilities, you're buying assets. Liabilities equals net assets. So acquired in a business combination, that results in the recognition of Goodwill and NCI and the recognition of a bargain purchase gain. Lastly, we want to adjust the financial statements to properly reflect measurement period adjustments related to a business combination. So that's what we've got going on here.

Let's dive into the material. Got a lot of great things waiting for you here.

Unlock the full video transcript and subtitles support with a free account!

Get more from this lesson

Create an account Get started free. No credit card required.

Intangibles, R&D and Software Costs, & Business Combinations

Module: 4 Concepts, 42 Videos

Intangibles Overview and Objectives

2:55

Tangible Versus Intangible Assets

1:38

Classification of Intangible Assets

3:30

Valuation of Intangible Assets