Considerations Regarding the Accounting Treatment for Business Acquisitions

Author:Georgeta PETRE, Ph.D., Alexandra LAZĂR, Ph.D., Monica AVRAM, Ph.D. Student, Elisabeta DUINEA, Ph.D. Student

JEL:M 410

DOI:

Keywords:annual financial statements, business acquisition, fair value, goodwill, negative goodwill

Abstract:
The business acquisitions may generate sometimes the payment of a difference in regard to the business’ fair value. Alternatively, there are situations where the purchase price is lower than the fair value of the acquired business. Both cases appear in the individual annual financial statements. This article regards these financial statements, not those consolidated.\r\nThe entities must establish the appropriate accounting treatment on the base of the nature of difference, respectively positive or negative.\r\nThe accounting regulations applicable to the economic entities request an accounting treatment for goodwill similar to other intangible assets. The same regulations contain an accounting treatment for negative goodwill, similar to the deferred income. Taking into account both differences, their effect appears therefore in profit or loss account.\r\n\r\n\r\n\r\n \r\n

---