1. Dinnul Alfian Akbar Kepemimpinan. 1-1 Kepemimpinan: Pengantar Dinnul Alfian Akbar

2. Kepemimpinan. 1-2 A business combination occurs when two or more companies join under common control. Kepemimpinan Kepemimpinan Proses pengarahan dan pemberian pengaruh pada kegiatan-kegiatan dari sekelompok anggota yang saling berhubungan tugasnya Kepemimpinan

3. Dinnul Alfian Akbar Kepemimpinan. 1-3 Types of Business Combination AA Company BB Company AA Company (a) Statutory Merger Only one of the combining companies survives and the other loses its separate identify.

4. Dinnul Alfian Akbar Kepemimpinan. 1-4 Types of Business Combination AA Company BB Company (b) Statutory Consolidation CC Company Both the combining companies are dissolved and the assets and liabilities of both companies are transferred to a newly created corporation.

5. Dinnul Alfian Akbar Kepemimpinan. 1-5 Types of Business Combination AA Company BB Company (c) Stock Acquisition AA Company BB Company One company acquires the voting shares of another company and the two companies continue to operate separately.

6. Dinnul Alfian Akbar Kepemimpinan. 1-6 Record as Stock Acquisition and Operate as Subsidiary. No Determining the Type of Business Combination AA Company Invests in BB Company Acquires Net Assets Acquires Stock AcquiredCompanyLiquidated? Yes Record as Statutory Merger or Statutory Consolidation

7. Dinnul Alfian Akbar Kepemimpinan. 1-7 Traditional Business Combination Alternatives AA Company Invests in BB Company Acquired Net Assets Acquired Stock Net Assets Recorded at Book Value Yes Investment Recorded at Book Value Yes Investment Recorded at Fair Value No Net Assets Recorded at Fair Value No Qualify as Pooling? Qualify as Pooling?

8. Dinnul Alfian Akbar Kepemimpinan. 1-8 On January 1, 20X1, Point Corporation purchases all the assets and liabilities of Sharp Company in a statutory merger by issuing to Sharp 10,000 shares of $10 par value common stock. The shares issued have a total market value of $600,000. Point incurs legal and appraisal fees of $40,000 (for a total purchase price of $640,000) in connection with the combination and stock issue costs of $25,000. Fair value of stock issued$600,000 Stock issue costs -25,000 Recorded amount of stock$575,000 Point Corporation Illustration

9. Dinnul Alfian Akbar Kepemimpinan. 1-9 Point Corporation Illustration Assets, Liabilities, and Equities Book Value Fair Value Cash and Receivables$ 45,000 $ 45,000 Inventory65,000 75,000 Land40,000 70,000 Buildings and Equipment400,000 350,000 Accumulated Depreciation(150,000 Patent 80,000 Total Assets$400,000$620,000 Current Liabilities$100,000$110,000 Common Stock ($5 par)100,000 Additional Paid-In Capital50,000 Retained Earnings 150,000 Total Liabilities and Equities$400,000 Fair value of Net Assets$510,000 )

10. Dinnul Alfian Akbar Kepemimpinan. 1-10 Cost of Investment $640,000 Fair value of net identifiable assets $510,000 Total differential $340,000 Excess of cost over fair value of net identifiable assets $130,000 Excess of fair value over book value of net identifiable assets $210,000 Book value of net identifiable assets $300,000 Point Corporation Illustration

11. Dinnul Alfian Akbar Kepemimpinan. 1-11 Point Corporation Illustration The $40,000 of other acquisition costs associated with the combination and the $25,000 of stock issue costs may be recorded in separate temporary “suspense” accounts as incurred: Deferred Merger Costs40,000 Cash40,000 Record costs related to purchase of Sharp Company. Deferred Stock Issue Costs25,000 Cash25,000 Record costs related to issuance of common stock.

12. Dinnul Alfian Akbar Kepemimpinan. 1-12 Cash and Receivables45,000 Inventory75,000 Land70,000 Buildings and Equipment350,000 Patent80,000 Current Liabilities110,000 Common Stock100,000 Additional Paid-In Capital475,000 Deferred Merger Costs40,000 Deferred Stock Issue Costs25,000 Record purchase of Sharp Company. fair value book valuefair value Goodwill 130,000 Point Corporation Illustration

13. Dinnul Alfian Akbar Kepemimpinan. 1-13 Entries Recorded by Acquired Company Investment in Point Stock600,000 Current Liabilities100,000 Accumulated Depreciation150,000 Cash and Receivables45,000 Inventory65,000 Land40,000 Building and Equipment400,000 Gain on Sale of Net Assets300,000 Record transfer of assets to Point Corporation. The fair value of Point Corporation shares is recognized by Sharp at the time of the exchange, and a gain of $300,000 is recorded.

14. Dinnul Alfian Akbar Kepemimpinan. 1-14 Entries Recorded by Acquired Company Common Stock100,000 Additional Paid-In Capital50,000 Retained Earnings150,000 Gain on Sale of Net Assets300,000 Investment in Point Stock600,000 Record distribution of Point Corporation stock. The distribution of Point Corporation stock is recorded.

15. Dinnul Alfian Akbar Kepemimpinan. 1-15 Recording Goodwill Because expenditures for “self-developed” goodwill often are not distinguishable from current operating costs, such expenditures are required to be expensed as incurred.

16. Dinnul Alfian Akbar Kepemimpinan. 1-16 Recording Goodwill However, when goodwill is purchased in connection with a business combination, the amount is viewed as objectively determinable and is capitalized.

17. Dinnul Alfian Akbar Kepemimpinan. 1-17 Recording Goodwill In a purchase-type business combination, the cost of goodwill purchased is measured as the excess of the total purchase price over the fair value of the net identifiable assets acquired.

18. Dinnul Alfian Akbar Kepemimpinan. 1-18 Cost of investment $460,000 Fair value of net identifiable assets $510,000 Total differential $160,000 Excess of fair value of net identifiable assets over cost $50,000 Book value of net identifiable assets $300,000 Negative Goodwill Excess of fair value over book value of net identifiable assets $210,000

19. Dinnul Alfian Akbar Kepemimpinan. 1-19 Combination Effected through Purchase of Stock Point Corporation exchanges 10,000 shares of its stock with a total market value of $600,000 for all the shares of Sharp Company in a purchase transaction and incurs and records merger costs of $40,000 and stock issue costs of $25,000. Investment in Sharp Stock640,000 Common Stock100,000 Additional Paid-In Capital475,000 Deferred Merger Costs40,000 Deferred Stock Issue Costs25,000 Record purchase of Sharp Company Stock.

20. Dinnul Alfian Akbar Kepemimpinan. 1-20 1. The name and a brief description of the acquired company. 2.A statement that purchase treatment has been used. 3.Information on the total cost incurred in making the purchase. 4.The portion of the year for which operating results of the acquired company have been included. 5. Information on any contingent payments or commitments and their accounting treatment. 1. The name and a brief description of the acquired company. 2.A statement that purchase treatment has been used. 3.Information on the total cost incurred in making the purchase. 4.The portion of the year for which operating results of the acquired company have been included. 5. Information on any contingent payments or commitments and their accounting treatment. Disclosure Requirements

21. Dinnul Alfian Akbar Kepemimpinan. 1-21 Operating results as if the acquisition had been made at the start of the period. When comparative financial statements are presented, operating results for the preceding period as if the acquisition had occurred at the start of that period. Operating results as if the acquisition had been made at the start of the period. When comparative financial statements are presented, operating results for the preceding period as if the acquisition had occurred at the start of that period. Pro Forma Financial Statements As a minimum, supplemental information should be provided to show… As a minimum, supplemental information should be provided to show…

22. Dinnul Alfian Akbar Kepemimpinan. 1-22 The FASB has decided to eliminate pooling of interest as an acceptable method for accounting for business combinations. However, an examination of this method is warranted because the effects of past poolings will affect financial statements for many years in the future. Pooling of Interest

23. Dinnul Alfian Akbar Kepemimpinan. 1-23 Pooling of Interest (Point’s Books) On January 1, 20X1, in a statutory merger accounted for as a pooling of interests, Point Corporation issued 10,000 shares of its $10 par common stock in exchange for all the assets and liabilities of Sharp Company. Cash and Receivables45,000 Inventory65,000 Land40,000 Buildings and Equipment400,000 Accumulated Depreciation150,000 Current Liabilities100,000 Common Stock (Point Corporation)100,000 Additional Paid-In Capital50,000 Retained Earnings150,000 Record pooling-type merger with Sharp. Recorded at book value

24. Dinnul Alfian Akbar Kepemimpinan. 1-24 Pooling of Interest (Sharp’s Books) Investment in Point Stock300,000 Current Liabilities100,000 Accumulated Depreciation150,000 Cash and Receivables45,000 Inventory65,000 Land40,000 Buildings and Equipment400,000 Record transfer of assets to Point Corporation. On January 1, 20X1, in a statutory merger accounted for as a pooling of interests, Point Corporation issued 10,000 shares of its $10 par common stock in exchange for all the assets and liabilities of Sharp Company.

25. Dinnul Alfian Akbar Kepemimpinan. 1-25 Pooling of Interest (Sharp’s Books) The distribution of Point Corporation shares and the liquidation of Sharp are recorded on Sharp’s books. Common Stock100,000 Additional Paid-In Capital50,000 Retained Earnings150,000 Investment in Point Stock300,000 Record distribution of Point Corporation stock.

26. Dinnul Alfian Akbar Kepemimpinan. 1-26 Differences in Total Par Value Combined Stockholders’ Equity Capital stock Additional paid-in capital Retained earnings Case 1 $400,000 $80,000 $370,000 The like stockholders’ equity accounts of the combining companies are summed without adjustment when the total par values of the shares exchanged are equal.

27. Dinnul Alfian Akbar Kepemimpinan. 1-27 Net Assets of Sharp Company300,000 Common Stock100,000 Additional Paid-In Capital50,000 Retained Earnings150,000 Differences in Total Par Value Case 1

28. Dinnul Alfian Akbar Kepemimpinan. 1-28 Differences in Total Par Value Combined Stockholders’ Equity Capital stock Additional paid-in capital Retained earnings Case 2 $380,000 $100,000 $370,000 When the total par value of the shares issued is less than the par value of the shares replaced, the difference is reflected as an increase in additional paid-in capital.

29. Dinnul Alfian Akbar Kepemimpinan. 1-29 Net Assets of Sharp Company300,000 Common Stock80,000 Additional Paid-In Capital70,000 Retained Earnings150,000 Differences in Total Par Value Case 2

30. Dinnul Alfian Akbar Kepemimpinan. 1-30 Differences in Total Par Value Combined Stockholders’ Equity Capital stock Additional paid-in capital Retained earnings Case 3 $440,000 $40,000 $370,000 When the total par value of the shares issued is greater than the par value of the shares acquired, the difference is reflected as a reduction in additional paid-in capital.

31. Dinnul Alfian Akbar Kepemimpinan. 1-31 Net Assets of Sharp Company300,000 Common Stock140,000 Additional Paid-In Capital10,000 Retained Earnings150,000 Differences in Total Par Value Case 3

32. Dinnul Alfian Akbar Kepemimpinan. 1-32 Differences in Total Par Value Combined Stockholders’ Equity Capital stock Retained earnings Case 4 $510,000 $340,000

33. Dinnul Alfian Akbar Kepemimpinan. 1-33 Differences in Total Par Value Combined Stockholders’ Equity Capital stock Retained earnings Case 4 $510,000 $340,000 When Point issues 21,000 shares, the $210,000 par value of the shares issued exceeds the $100,000 par value of Sharp’s shares retired by enough to eliminate the combined additional paid-in capital and part of the combined retained earnings. Par value of Point’s shares issued$210,000 Par value of Sharp’s shares replaced(100,000 Increase in total par value$110,000 Additional paid-in capital of Sharp(50,000 Additional paid-in capital of Point(30,000 Reduction in combined retained earnings$ 30,000 ) ) )

34. Dinnul Alfian Akbar Kepemimpinan. 1-34 Net Assets of Sharp Company300,000 Additional Paid-In Capital30,000 Common Stock210,000 Retained Earnings120,000 Differences in Total Par Value Case 4

35. Dinnul Alfian Akbar Kepemimpinan. 1-35 Disclosure Requirements--Pooling 1.The name and a brief description of the acquired company. 2.A statement that pooling treatment has been used. 3.Description and number of shares issued in the exchange. 4.For the separate companies, revenue, extraordinary items, net income, changes in stockholders’ equity, and the amount and handling of intercompany transactions for the portion of the current period before the date of the combination. MoreMore

36. Dinnul Alfian Akbar Kepemimpinan. 1-36 Disclosure Requirements--Pooling 5.A description of any adjustments of net assets or income related to changes in accounting procedures. 6.A description of the impact of a change in the fiscal period of a combining company. 7.A reconciliation of revenue and income previously reported by the stock-issuing company with the restated amounts reported for those periods for the combined company.

37. Dinnul Alfian Akbar Kepemimpinan. 1-37 Chapter One The End

38. Dinnul Alfian Akbar Kepemimpinan. 1-38