Technical Accounting Reporting

BAR — Technical Accounting & Reporting Exam: CPA — BAR (Business Analysis & Reporting Discipline) Last Updated: June 2026 --- ## Business Combinations — ASC 805 ### Acquisition Method (Required for All Business Combinations) The acquirer must: 1. Identify the acquirer (entity that obtains control) 2. Determine the acquisition date 3. Recognize and measure identifiable assets, liabilities, and noncontrolling interests 4. Recognize and measure goodwill (or a bargain purchase gain) ### Goodwill Calculation `` Goodwill = Consideration Transferred + FV of Noncontrolling Interest + FV of Previously Held Equity Interest − FV of Net Identifiable Assets Acquired `` Bargain purchase: If purchase price < FV of net assets → recognize gain on bargain purchase immediately in income. ### Recognition of Assets and Liabilities All identifiable assets and liabilities measured at fair value on the acquisition date, including: - Customer lists, patents, trademarks (even if not previously recognized by acquiree) - Contingent liabilities (if fair value can be measured reliably) - In-process R&D (recognized as intangible asset, not immediately expensed) > Exam Tip: Acquisition-related costs (legal, advisory fees) are expensed as incurred, not capitalized. Debt issuance costs are capitalized and amortized. --- ## Consolidation — ASC 810 Consolidation required when parent has controlling interest (generally >50% of voting shares) or is the primary beneficiary of a variable interest entity (VIE). ### Consolidation Procedures 1. Combine all assets, liabilities, revenues, and expenses line by line 2. Eliminate intercompany transactions: - Investment in subsidiary vs. subsidiary's equity - Intercompany receivables/payables - Intercompany sales/purchases and profit in inventory ### Noncontrolling Interest (NCI) NCI = portion of subsidiary's equity not owned by parent. Balance sheet: NCI reported in equity section (not mezzanine). Income statement:…