Chapter 10: Intercorporate Investments and Business Combinations

In this section

• Accounting Treatments: Cost, Equity, and Acquisition Methods
  Accounting Treatments: Cost, Equity, and Acquisition Methods (CFA Level 1): Cost Method, Key Concepts, and Common Pitfalls. Key definitions, formulas, and exam tips.
• Consolidation, Noncontrolling Interests, and Goodwill Implications
  Consolidation, Noncontrolling Interests, and Goodwill Implications (CFA Level 1): Consolidation Concept Under the Acquisition Method, Key Steps in Consolidation, and Noncontrolling Interests (NCI). Key definitions, formulas, and exam tips.
• Joint Ventures and Proportionate Consolidation
  Joint Ventures and Proportionate Consolidation (CFA Level 1): Key Concepts and Definitions and Why the Methods Matter. Key definitions, formulas, and exam tips.
• Effects on Financial Statements and Ratios
  Effects on Financial Statements and Ratios (CFA Level 1): Cost Method: Minimal Influence, Minimal Transparency, Potential Distortions, and Equity Method: Reflecting a Share of Actual Performance. Key definitions, formulas, and exam tips.
• Step Acquisitions and Partial Disposals
  Step Acquisitions and Partial Disposals (CFA Level 1): Key Concepts of Step Acquisitions, Remeasurement to Fair Value, and Goodwill Calculation and Noncontrolling Interests. Key definitions, formulas, and exam tips.
• Pushdown Accounting and Reverse Acquisitions
  Pushdown Accounting and Reverse Acquisitions (CFA Level 1): Informal Look at Pushdown Accounting, Key Points to Remember, and Reverse Acquisitions: Flipping the Script. Key definitions, formulas, and exam tips.
• Contingent Consideration in Business Combinations
  Contingent Consideration in Business Combinations (CFA Level 1): Why Contingent Consideration Exists, Initial Recognition: The Fair Value Approach, and Fair Value Measurement Techniques. Key definitions, formulas, and exam tips.
• Accounting for Bargain Purchases
  Accounting for Bargain Purchases (CFA Level 1): Distinguishing Features of Bargain Purchases, Step-by-Step Accounting Treatment, and Reassess the Fair Value of Assets and Liabilities. Key definitions, formulas, and exam tips.
• IFRS 10, IFRS 11, IFRS 12 Alignment with US GAAP
  IFRS 10, IFRS 11, IFRS 12 Alignment with US GAAP (CFA Level 1): IFRS 10: Consolidated Financial Statements vs. US GAAP, Single Consolidation Model in IFRS 10, and Multiple Approaches in US GAAP. Key definitions, formulas, and exam tips.
• Illustrative Goodwill Calculation and Full vs. Partial Goodwill Methods
  Illustrative Goodwill Calculation and Full vs. Partial Goodwill Methods (CFA Level 1): parent acquires 75% of a subsidiary for and Under IFRS, if a parent chooses the partial. Key definitions, formulas, and exam tips.