Study Guide chapter 1 Business com
Introduction to Business Combinations and the Conceptual Framework
BRIEF OUTLINE
1.1 Introduction 1.8 Determining Price and Method of Payment
1.2 Nature of the Combination 1.9 Alternative Concepts of Consolidated
1.3 Business Combinations Financial Statements
1.4 Business Combinations: Historical Perspective 1.10 FASB’s Conceptual Framework
1.5 Terminology and Types of Combinations 1.11 FASB Codification Project
1.6 Takeover Premiums 1.12 Appendix A: Evaluating Firm Performance
1.7 Avoiding Pitfalls before the Deal 1.13 Appendix B: Researching the FASB Codification INTRODUCTION
This chapter introduces you to a fascinating topic which will occupy a considerable part of your course – Business Combinations. Many new terms will be reviewed, and a little history will help you to get a perspective of the quickly changing role of business combinations in our current business climate. You should take particular note of the terms merger, consolidation, and stock acquisition, as they are defined by accountants. The concept of how businesses determine how much to offer in a business combination is also reviewed, as well as some cautions about the transactions.
CHAPTER OUTLINE
1.1 Introduction
A. Merger activity has slowed in the new century.
1. Is bigger really better? – not everyone agrees.
2. Antitrust laws prohibit mergers that lessen competition.
3. Less competition might, in the long run, decrease benefits to stockholders and consumers. B. Many mergers have not led to the growth that companies hoped for.
1.2 Nature of the Combination A. Definitions 1. Friendly combination: The boards of two companies mutually agree to join together 2. Unfriendly (hostile) combination: A company resists being acquired but the acquiring company still pursues the combination 3. Tender offer: The acquiring company goes directly to the stockholders of the target company B. Defense tactics: Ways the target company can resist a
BRIEF OUTLINE
1.1 Introduction 1.8 Determining Price and Method of Payment
1.2 Nature of the Combination 1.9 Alternative Concepts of Consolidated
1.3 Business Combinations Financial Statements
1.4 Business Combinations: Historical Perspective 1.10 FASB’s Conceptual Framework
1.5 Terminology and Types of Combinations 1.11 FASB Codification Project
1.6 Takeover Premiums 1.12 Appendix A: Evaluating Firm Performance
1.7 Avoiding Pitfalls before the Deal 1.13 Appendix B: Researching the FASB Codification INTRODUCTION
This chapter introduces you to a fascinating topic which will occupy a considerable part of your course – Business Combinations. Many new terms will be reviewed, and a little history will help you to get a perspective of the quickly changing role of business combinations in our current business climate. You should take particular note of the terms merger, consolidation, and stock acquisition, as they are defined by accountants. The concept of how businesses determine how much to offer in a business combination is also reviewed, as well as some cautions about the transactions.
CHAPTER OUTLINE
1.1 Introduction
A. Merger activity has slowed in the new century.
1. Is bigger really better? – not everyone agrees.
2. Antitrust laws prohibit mergers that lessen competition.
3. Less competition might, in the long run, decrease benefits to stockholders and consumers. B. Many mergers have not led to the growth that companies hoped for.
1.2 Nature of the Combination A. Definitions 1. Friendly combination: The boards of two companies mutually agree to join together 2. Unfriendly (hostile) combination: A company resists being acquired but the acquiring company still pursues the combination 3. Tender offer: The acquiring company goes directly to the stockholders of the target company B. Defense tactics: Ways the target company can resist a