Chapter 3 Business Combinations Introduction In the previous chapter‚ we pointed out that a corporation can obtain a subsidiary either by establishing a new corporation (a parent-founded subsidiary) or by buying an existing corporation (through a business combination). We also demonstrated the preparation of consolidated financial statements for a parent-founded subsidiary. When a subsidiary is purchased in a business combination‚ the consolidation process becomes significantly more
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Business Combinations Assignment 1 Brenda Roper Professor Robert Neely ACC 401 July 24‚ 2013 Page 1 The business combination method I selected is the acquisition method. Business combinations have implemented the newly created accounting treatment called the “acquisition method.” The major changes in the acquisition method involve variations to fair value measurement‚ goodwill recognition‚ and non-controlling interests. Under this method‚ the parent company reported the net
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Case Analysis: Minit-Lube Discussion Questions Directions: Read the case and then answer each question in short paragraph form. A substantial market exists for automobile tune-ups‚ oil changes‚ and lubrication service for more than 250 million vehicles on U.S. roads. Some of this demand is filled by full-service auto dealerships‚ some by Walmart and Firestone‚ and some by other tire/service dealers. However‚ Minit-Lube‚ Mobil-Lube‚ Jiffy-Lube and others have also developed strategies to accommodate
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Minit Lube Mission as clearly stated on the case is to provide tune-ups‚ oil changes and lubrication service (Heizer & Render). In other words‚ preventive vehicles maintenance and interior cleaning to cars owned by individuals hopefully for less price‚ but with equal quality service provided by other mayor competitors. Minit-Lube provides a competitive advantage in comparison to other businesses because they offer maintenance to cars‚ but with de advantage of better prices and faster services than
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Business Combinations Advanced Accounting 01/24/2014 Business Combinations The primary goal of a business combination is business expansion. A business combination‚ or when “operations of two or more companies are brought under common control” (Jeter & Cheney‚ 2012)‚ can allow companies to expand. There are two types of expansion: internal expansion‚ which focuses on research and development to increase the success of the company‚ and external expansion‚ which focuses on increasing the success
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Minit-Lube case Summary The following are some observations‚ conclusions and recommendations we made. - Company’s value proposition is Operational excellence - All ten operations decisions has to support chose value proposition and provide competitive advantage - Minit-lube provides fast and quality customer service at low cost by utilizing resources in an efficient way Analysis Mission of Minit-Lube is to provide fast and superior quality customer service with no additional cost to customer
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Chapter 1 BUSINESS COMBINATIONS Answers to Questions 1 A business combination is a union of business entities in which two or more previously separate and independent companies are brought under the control of a single management team. FASB Statement No. 141R describes three situations that establish the control necessary for a business combination‚ namely‚ when one or more corporations become subsidiaries‚ when one company transfers its net assets to another‚ and when each combining company
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Covered Combination The covered combination‚ also known as the covered strangle‚ is a limited profit‚ unlimited risk strategy in options trading that involves selling equal number of out-of-the-money calls and puts of the same underlying security‚ strike price and expiration date while owning the underlying stock. Covered Combination Construction Long 100 Shares Sell 1 OTM Call Sell 1 OTM Put Limited Profit Potential Maximum gain for the covered combination is achieved when the underlying
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BUSINESS COMBINATIONS Multiple Choice Questions 1. Which of the following is a reason why a company would expand through a combination‚ rather than by building new facilities? a. A combination might provide cost advantages. b. A combination might provide fewer operating delays. c. A combination might provide easier access to intangible assets. d. All of the above are possible reasons that a company might choose a combination. 2. A business combination in which a new corporation
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Business Combination Amendments November 29‚ 2008 Introduction There have recently been a number of significant accounting changes due to FASB and the International Accounting Standards Board (IASB) making modifications for the accounting treatment of business combinations in SFAS 141(R) and IFRS 3. Business combinations have implemented the newly created accounting treatment called the “acquisition method.” It will replace of the current “purchase method” strategy effective January
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