Custom ACC 850: Accounting and Tax Implications of Mergers and Acquisitions (Michigan State University)
by Hopkins, Erickson
ISBN: 978-1-61853-582-5 | Copyright 2023
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| Advanced Accounting, 5e (pg. 1.2) | |
| Chapter 1: Accounting for Intercorporate Investments (pg. 1.2) | |
| Hulu (pg. 1.2) | |
| When Should the Equity Method Be Used? (pg. 1.5) | |
| Topic Review 1.1 (pg. 1.7) | |
| Accounting Procedures for an Investment Using the Equity Method (Basics) (pg. 1.7) | |
| Accounting for the Purchase of an Equity Investment (pg. 1.8) | |
| Accounting for the Equity Investment Subsequent to Its Purchase (pg. 1.9) | |
| Accounting for an Investment Using the Equity Method (Advanced Topics) (pg. 1.11) | |
| Accounting for Equity Investments When the Purchase Price Exceeds Book Value (pg. 1.11) | |
| Topic Review 1.3 (pg. 1.15) | |
| Accounting for the Effects on Equity Investments of Intercompany Sales of Inventory (pg. 1.15) | |
| Topic Review 1.4 (pg. 1.16) | |
| Equity Method Accounting When Less Than 100% of the Investee Is Owned (pg. 1.17) | |
| Topic Review 1.5 (pg. 1.19) | |
| Discontinuation of the Equity Method (pg. 1.19) | |
| Accounting for a Change to and from the Equity Method (pg. 1.20) | |
| Chapter Summary (pg. 1.26) | |
| Comprehensive Review (pg. 1.27) | |
| Questions (pg. 1.27) | |
| Multiple Choice (pg. 1.29) | |
| CPA Exam Questions (pg. 1.33) | |
| Data Analytics, Data Visualization, and Excel Activities (pg. 1.33) | |
| Exercises (pg. 1.33) | |
| Problems (pg. 1.38) | |
| CPA Simulations and Practice Exam (pg. 1.41) | |
| Topic Review (pg. 1.41) | |
| Comprehensive Review Solution (pg. 1.43) | |
| Chapter 2: Introduction to Business Combinations and the Consolidation Process (pg. 1.46) | |
| Coca-Cola (pg. 1.46) | |
| Business Combinations and (Non-Business) Asset Acquisitions (pg. 1.49) | |
| Review of (Non-Business) Asset Acquisition Accounting (pg. 1.51) | |
| Types of Business Combinations (pg. 1.54) | |
| Topic Review 2.1 (pg. 1.55) | |
| When Does “Control” Exist? (pg. 1.56) | |
| Topic Review 2.2 (pg. 1.57) | |
| Consolidation on the Date of Acquisition (pg. 1.58) | |
| The Intuition Underlying the Consolidation Process (pg. 1.58) | |
| Acquisition-Date Consolidation (Purchase Price Equals Book Value) (pg. 1.62) | |
| Acquisition-Date Consolidation (Purchase Price Greater Than Book Value) (pg. 1.64) | |
| Topic Review 2.3 (pg. 1.70) | |
| Recognizing and Measuring the Identifiable Assets Acquired and the Liabilities Assumed (pg. 1.70) | |
| Recognition Principle (pg. 1.71) | |
| Measurement Principle and Fair Value Estimation (pg. 1.71) | |
| Topic Review 2.4 (pg. 1.79) | |
| Topic Review 2.5 (pg. 1.80) | |
| Disclosure Example: Disney’s Acquisition Of Twenty-First Century Fox (pg. 1.82) | |
| Chapter Summary (pg. 1.85) | |
| Comprehensive Review (pg. 1.86) | |
| Appendix 2A: Measuring Assets Acquired and Liabilities Assumed (Advanced) (pg. 1.87) | |
| Discontinued Operations-Assets Held for Sale (pg. 1.87) | |
| Preacquisition Contingencies (pg. 1.88) | |
| Topic Review 2.6 (pg. 1.88) | |
| Appendix 2B: Deferred Taxes and Business Combinations (pg. 1.91) | |
| Appendix 2C: Pushdown Accounting (pg. 1.95) | |
| Questions (pg. 1.100) | |
| Multiple Choice (pg. 1.102) | |
| CPA Exam Questions (pg. 1.108) | |
| Data Analytics, Data Visualization, and Excel Activities (pg. 1.108) | |
| Exercises (pg. 1.108) | |
| Problems (pg. 1.114) | |
| CPA Simulations and Practice Exam (pg. 1.120) | |
| Topic Review (pg. 1.120) | |
| Comprehensive Review Solution (pg. 1.123) | |
| Chapter 3: Consolidated Financial Statements Subsequent to the Date of Acquisition (pg. 1.124) | |
| Cummins Inc. (pg. 1.124) | |
| Post-Acquisition Consolidation When the Parent Uses the Equity Method of Investment Bookkeeping (pg. 1.127) | |
| Review of the Equity Method of Pre-Consolidation Bookkeeping (pg. 1.128) | |
| Topic Review 3.1 (pg. 1.130) | |
| The Consolidation Process Subsequent to the Date of Acquisition-Equity Method (pg. 1.131) | |
| Example of Consolidation Subsequent to the Date of Acquisition-Equity Method (pg. 1.132) | |
| Consolidated Financial Statements (pg. 1.138) | |
| Topic Review 3.2 (pg. 1.141) | |
| Post-Acquisition Consolidation When the Parent Uses the Cost Method of Investment Bookkeeping (pg. 1.141) | |
| Cost Method of Pre-Consolidation Bookkeeping (pg. 1.142) | |
| The Consolidation Process Subsequent to the Date of Acquisition-Cost Method (pg. 1.144) | |
| Example of Consolidation Subsequent to the Date of Acquisition-Cost Method (pg. 1.146) | |
| Accounting for Goodwill (pg. 1.149) | |
| Recognition of Goodwill (pg. 1.150) | |
| Amortization of Intangible Assets and Goodwill Impairment Evaluation (pg. 1.150) | |
| Topic Review 3.4 (pg. 1.156) | |
| Accounting for a Bargain Acquisition (pg. 1.157) | |
| Chapter Summary (pg. 1.158) | |
| Comprehensive Review-Equity Method (pg. 1.159) | |
| Comprehensive Review-Cost Method (pg. 1.160) | |
| Appendix 3A: Complete Listing of Required Disclosures (pg. 1.161) | |
| Appendix 3B: Common Control Business Combinations and the Pooling-of-Interests Method (pg. 1.162) | |
| Comparison of Pooling-of-Interests with Acquisition Method (pg. 1.164) | |
| Questions (pg. 1.165) | |
| Multiple Choice (pg. 1.167) | |
| CPA Exam Questions (pg. 1.171) | |
| Data Analytics, Data Visualization, and Excel Activities (pg. 1.171) | |
| Exercises (pg. 1.171) | |
| Problems (pg. 1.177) | |
| CPA Simulations and Practice Exam (pg. 1.190) | |
| Topic Review (pg. 1.190) | |
| Comprehensive Review-Equity Method Solution (pg. 1.192) | |
| Comprehensive Review-Cost Method Solution (pg. 1.193) | |
| Chapter 4: Consolidated Financial Statements and Intercompany Transactions (pg. 1.196) | |
| Exxon Mobil Corporation (pg. 1.196) | |
| Accounting for Intercompany Sales of Inventory-Equity Method (pg. 1.200) | |
| Intuition Behind the Elimination of Intercompany Sales and Deferral of Profit-Equity Method (pg. 1.200) | |
| Intercompany Inventory Transactions and Consolidating Entries-Equity Method (pg. 1.202) | |
| Upstream versus Downstream Transactions for Wholly Owned (i.e., 100%) Subsidiaries-Equity Method (pg. 1.207) | |
| How Much Gross Profit Do We Defer? (pg. 1.207) | |
| Continuous Sales of Inventories (pg. 1.208) | |
| Example of the Continuous Intercompany Sale and Resale of Inventories-Equity Method (pg. 1.208) | |
| Topic Review 4.1 (pg. 1.210) | |
| Accounting for Intercompany Sales of Inventory-Cost Method (pg. 1.211) | |
| Example of the Continuous Intercompany Sale and Resale of Inventories-Cost Method (pg. 1.213) | |
| Topic Review 4.2 (pg. 1.215) | |
| Accounting for the Intercompany Sales of Noncurrent Assets Between the Investor and the Investee(s)- (pg. 1.216) | |
| Accounting for the Intercompany Sale of Non-Depreciable Assets-Equity Method (pg. 1.216) | |
| Accounting for the Intercompany Sale of Depreciable Assets-Equity Method (pg. 1.223) | |
| Accounting for the Intercompany Sales of Noncurrent Assets Between the Investor and the Investee(s)- (pg. 1.233) | |
| Accounting for the Intercompany Sale of Non-Depreciable Assets-Cost Method (pg. 1.233) | |
| Accounting for the Intercompany Sale of Depreciable Assets-Cost Method (pg. 1.237) | |
| Topic Review 4.4 (pg. 1.241) | |
| Chapter Summary (pg. 1.242) | |
| Comprehensive Review-Equity Method (pg. 1.243) | |
| Comprehensive Review-Cost Method (pg. 1.244) | |
| Appendix 4A: Consolidation When the Parent Uses the Partial Equity Method to Account for Its Equity (pg. 1.245) | |
| Questions (pg. 1.247) | |
| Multiple Choice (pg. 1.248) | |
| CPA Exam Questions (pg. 1.252) | |
| Data Analytics, Data Visualization, and Excel Activities (pg. 1.252) | |
| Exercises (pg. 1.253) | |
| Problems (pg. 1.256) | |
| CPA Simulations and Practice Exam (pg. 1.275) | |
| Topic Review (pg. 1.275) | |
| Comprehensive Review-Equity Method Solution (pg. 1.279) | |
| Comprehensive Review-Cost Method Solution (pg. 1.283) | |
| Taxes and Business Strategy (pg. 2.11-1) | |
| Chapter 11: Introduction to Mergers, Acquisitions, and Divestitures (pg. 2.11-1) | |
| 11.1 Overview of Issues (pg. 2.11-2) | |
| Reasons for Mergers, Acquisitions, and Divestitures (pg. 2.11-2) | |
| Types of Mergers, Acquisitions, and Divestitures (pg. 2.11-2) | |
| 11.2 Major Tax Issues Associated with Mergers, Acquisitions, and Divestitures (pg. 2.11-3) | |
| Shareholder Tax Liabilities (pg. 2.11-3) | |
| Effect on Tax Attributes (pg. 2.11-4) | |
| Target Corporate-Level Tax Effect of the Merger, Acquisition, or Divestiture (pg. 2.11-5) | |
| Change in the Tax Basis of the Target or Divested Subsidiary Assets (pg. 2.11-5) | |
| Effect of Leverage on Mergers and Acquisitions (pg. 2.11-5) | |
| 11.3 Nontax Issues in Mergers, Acquisitions, and Divestitures (pg. 2.11-6) | |
| 11.4 Five Basic Methods to Acquire a Freestanding C Corporation (pg. 2.11-6) | |
| 11.5 Four Methods to Divest a Subsidiary or Line of Business (pg. 2.11-7) | |
| 11.6 Tax Deductibility of Goodwill and Other Intangible Assets Under Section 197 (pg. 2.11-8) | |
| Summary of Key Points (pg. 2.11-9) | |
| Questions (pg. 2.11-9) | |
| References and Additional Readings (pg. 2.11-10) | |
| Chapter 12: Taxable Acquisitions of Freestanding C Corporations (pg. 2.12-1) | |
| 12.1 Tax Consequences of Alternative Forms of Corporate Acquisitions (pg. 2.12-2) | |
| Case 1: Taxable Asset Acquisition Without a Complete Liquidation of the Target (pg. 2.12-2) | |
| Case 2: Sale of the Target Firm’s Assets Followed by a Liquidation (pg. 2.12-5) | |
| Case 3: Purchase of the Target’s Stock Followed by a Section 338 Election (pg. 2.12-6) | |
| Case 4: Purchase of the Target’s Stock Without a Section 338 Election (pg. 2.12-8) | |
| Tax Consequences (pg. 2.12-8) | |
| Nontax Consequences (pg. 2.12-8) | |
| 12.2 Comparison of Taxable Acquisition Structures (pg. 2.12-9) | |
| Analysis of Acquiring Firm Indifference Price (pg. 2.12-13) | |
| Summary of Key Points (pg. 2.12-15) | |
| Questions (pg. 2.12-15) | |
| Tax-Planning Problems (pg. 2.12-16) | |
| References and Additional Readings (pg. 2.12-17) | |
| Chapter 14: Tax-Free Acquisitions of Freestanding C Corporations (pg. 2.14-1) | |
| 14.1 Basic Types of Tax-Free Reorganizations (pg. 2.14-2) | |
| General Requirements for Tax-Free Treatment under Section 368 (pg. 2.14-2) | |
| 14.2 Section 368 “A” Reorganization: Statutory Merger (pg. 2.14-2) | |
| Requirements to Qualify for Tax-Free Treatment under Section 368(a)(1)(A) (pg. 2.14-4) | |
| Tax Consequences of a Section 368 “A” (pg. 2.14-4) | |
| Nontax Issues Associated with the Section 368 “A” Structure (pg. 2.14-6) | |
| Triangular Mergers (pg. 2.14-6) | |
| 14.3 Section 368 “B” Reorganization: Stock-For-Stock Acquisition (pg. 2.14-7) | |
| Requirements to Qualify for Tax-Free Treatment under Section 368(a)(1)(B) (pg. 2.14-8) | |
| Tax Consequences of a Section 368 “B” (pg. 2.14-8) | |
| Nontax Issues Associated with the Section 368 “B” Structure (pg. 2.14-9) | |
| 14.4 Section 368 “C” Reorganization: Stock-For-Assets Acquisition (pg. 2.14-9) | |
| Requirements to Qualify for Tax-Free Treatment Under Section 368(a)(1)(C) (pg. 2.14-9) | |
| Tax Consequences of a Section 368 “C” (pg. 2.14-10) | |
| 14.5 Tax-Free Reorganizations Under Section 351 (pg. 2.14-11) | |
| Requirements for Tax-Free Treatment under Section 351 (pg. 2.14-11) | |
| Tax Consequences of a Section 351 Merger (pg. 2.14-11) | |
| Comparison of Tax-Free Acquisition Structures (pg. 2.14-13) | |
| 14.6 Limitations on Target Firm Tax Attributes (pg. 2.14-14) | |
| How Much Are the Target Firm’s NOLs Worth? (pg. 2.14-16) | |
| General Limitations on a Firm’s NOLs and NOL Poison Pills (pg. 2.14-17) | |
| 14.7 Comparison of Taxable and Tax-Free Acquisitions of Freestanding C Corporations (pg. 2.14-17) | |
| Summary of Key Points (pg. 2.14-19) | |
| Questions (pg. 2.14-19) | |
| Tax-Planning Problems (pg. 2.14-20) | |
| References and Additional Readings (pg. 2.14-22) | |
| Chapter 15: Tax Planning for Divestitures (pg. 2.15-1) | |
| 15.1 Subsidiary Sales (pg. 2.15-2) | |
| Tax-Free Subsidiary Sales (pg. 2.15-3) | |
| Taxable Subsidiary Sales (pg. 2.15-4) | |
| Comparison of Taxable Acquisition Structures (pg. 2.15-8) | |
| Additional Complexities: Subsidiary Sale (pg. 2.15-12) | |
| Difference between Subsidiary Sales and Sales of Freestanding C Corporations (pg. 2.15-13) | |
| Valuation Effects (pg. 2.15-14) | |
| 15.2 Tax-Free Divestiture Methods (pg. 2.15-17) | |
| Equity Carve-Outs (pg. 2.15-17) | |
| Tax-Free Spin-Offs (pg. 2.15-18) | |
| Factors That Influence Divestiture Method Choice (pg. 2.15-19) | |
| Summary of Key Points (pg. 2.15-20) | |
| Questions (pg. 2.15-21) | |
| Tax-Planning Problems (pg. 2.15-21) | |
| References and Additional Readings (pg. 2.15-22) | |
Patrick E. Hopkins
Patrick E. Hopkins, is a professor and Deloitte Foundation Accounting Faculty Fellow at Indiana University’s Kelley School of Business. Professor Hopkins received his B.S. and M.Acc. from the University of Florida and his Ph.D. from the University of Texas at Austin.
Prior to entering the accounting doctoral program, Professor Hopkins served as a senior consultant with the Emerging Business Services practice of Deloitte, Haskins and Sells in Miami, Florida. Professor Hopkins has been at IU since 1995, where he teaches undergraduate and graduate courses on financial reporting for mergers, acquisitions and changes in corporate structure. He also served as a Visiting Professor at Stanford University’s Graduate School of Business, where he taught courses on global financial reporting and on accounting for mergers, acquisitions and changes in corporate structure. During his career, Professor Hopkins won each of the top teaching awards in the Kelley School of Business, including the Trustees Teaching Award, the Schuyler F. Otteson Award, and the Sauvain Award. He also teaches in international and online executive MBA programs at Indiana University, and in the doctoral program at HHL University in Leipzig, Germany. Professor Hopkins is also a widely respected research scholar in the area of financial reporting, and investor and analyst judgment and decision making. His work has appeared in top accounting journals, including The Accounting Review, the Journal of Accounting Research, Contemporary Accounting Research, and Accounting Organizations and Society, and has been discussed in business press publications, including Barron’s, CFO, and The Deal. He is the past winner of the American Accounting Association’s Financial Accounting and Reporting Section Best Research Paper Award, the Indiana University Outstanding Junior Faculty Award, and Kelley School of Business Outstanding Research Award.
Merle Erickson
Merle Erickson is Professor of Accounting at the Booth School of Business at the University of Chicago.
Professor Erickson has taught “Taxes and Business Strategy” in the Booth MBA program for more than twenty years. Erickson earned a bachelor's degree in accounting from Rockhurst College in 1987, an MBA in 1989 from Arizona State University, and a PhD in accounting from the University of Arizona in 1996. He joined the Chicago Booth faculty in 1996.
He has published numerous articles in a variety of top academic journals (e.g., Journal of Accounting Research, The Accounting Review, Journal of Accounting and Economics,). He has been given several awards from the American Taxation Association for his research and teaching. He has received the Outstanding Manuscript Award (twice) as well as an award for teaching innovation. He also has been named one of BusinessWeek's Outstanding Faculty at the University of Chicago. He is the author/editor of the casebook, Cases in Tax Strategy. In addition to teaching graduate students at Chicago Booth, Erickson has taught courses to Morgan Stanley, Merrill Lynch, General Electric Capital Corporation, Baker McKenzie, Andersen Consulting, Accenture, CareerBuilder, and the IMCA (Investment Management Consultants Association) among others. From 2005-2011, he served as a co-editor of the Journal of Accounting Research.
Over the course of his career, Erickson has consulted on complex GAAP and tax accounting issues (e.g., debt versus equity, FIN 48 and ASC 740 related issues, intercompany accounting and consolidation, employee stock option accounting) in a variety of contexts (e.g., bankruptcy, mergers and acquisitions, inversions, structured finance, investment planning, cross border and intercompany financing, tax sharing agreements, and various types of tax advantaged transactions). His clients have included, among others, the U.S. Department of Justice, the Internal Revenue Service, Fortune 500 companies in various industries, international financial institutions including investment banks, law firms, accounting firms, and individual taxpayers.
In addition to his scholarly activities, Erickson is an avid fisherman. He received the Angler Award from the Billfish Foundation in 2003 for releasing the most striped marlin worldwide that year.
| Advanced Accounting, 5e (Hopkins, Halsey) | |
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Errata Last Updated: Dec 11 2023 |
Here are corrections to the text identified after the book's printing. |
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Errata Last Updated: Dec 11 2023 |
Here are corrections to the text identified after the book's printing. |
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| Taxes and Business Strategy, 6e (Erickson, Hanlon, Maydew, Shevlin) | |
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Errata Last Updated: Nov 5 2021 |
Corrections to identified errors in the text. |
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