Multinational Acquisition of HP Compaq Advanced Accounting Free Essay Example, 1750 words

US GAAP recommends the adoption of purchase method in respect of merger as part of accounting treatment. Generally, there are two kinds of approaches which are used by the acquiring entities in order to acquire another entity that is either to purchase the net assets of the acquired entity or the purchasing of overall equity of the acquired entity. US GAAP permits both kinds of treatment to purchase both kinds of stakes. One exception to that criterion is that if the acquired entity has not commenced its commercial operations as part of its business, the assets and liabilities of that acquired entity will be valued at their fair market values. In such cases, there would not be accounted any recognition for the amount of goodwill. US GAAP allows the consideration to be paid in the form of shares. Those shares are needed to be valued at their market prices between the days in which parties complete the acquisition agreement and the final settlement of the proposed transaction is to be announced to the general public. In order to ascertain the market values of the shares, there is no regulatory or shareholders approval required in respect of the proposed acquisition. We will write a custom essay sample on Multinational Acquisition of HP & Compaq: Advanced Accounting or any topic specifically for you Only $17.96 $11.86/page