AccountingCode 9706
Business acquisition and merger
What this topic asks you to be able to do
- the purpose behind, and the character of, combining different kinds of businesses into one new business entity
- how to write the journal entries, and post them to the right ledger accounts, that record: two or more sole trader businesses merging into a partnership or a limited company; a sole trader's business merging with an existing partnership to create a new partnership; a limited company acquiring a sole trader's business or a partnership
- how to work out the amount of goodwill when one entity takes over another business
- how to draw up, after the acquisition or merger, the newly formed business entity's statements of profit or loss as well as its statements of financial position, for example where the limited company has acquired the partnership
- what is gained and what is lost through the acquisition or merger
- draw on what you understand about business acquisition and merger to evaluate relevant information and reach well-informed business decisions