Deloitte FAS 141R-Acquisition Accounting

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Example 8 — contingent consideration (cont.)Scenario 3 — settle at $40 less than initial amount: DR CRContingent consideration liability $ 50Income $ 40Cash $ 10• Settlement for an amount less than the initial amount is recorded as income forbook purposes and as a decrease in the stock for tax purposes• A favorable permanent difference may arise if (1) target is a domesticcorporation; (2) stock basis difference can be eliminated in a tax-free manner(e.g., liquidation) and (3) Acquirer intends to realize stock basis difference [ASC740-30-25-7 exception to DTL applicable to domestic sub]• Other exceptions might apply to a foreign target companyCopyright © 2012 <strong>Deloitte</strong> Development LLC. All rights reserved.48
Example 9 — contingent considerationFacts (Taxable Business Combination)• Acquirer purchases Target’s assets for $200 plus a contingent payment with afair value of $50• Tax rate is 40%Day 1 accounting DR CRAssets $ 200Goodwill $ 50Cash $ 200Contingent consideration liability $ 50• At acquisition date, no temporary differences considered to exist in Target’sassets since payment of the contingent consideration (“expected”) results inadditional amortizable/depreciable tax basis in goodwillCopyright © 2012 <strong>Deloitte</strong> Development LLC. All rights reserved.49
Page 4: Tax status of enterprise being acqu
Page 7 and 8: Taxable business combinations• Ac
Page 9 and 10: Financial Reporting for TaxesStep 2
Page 11 and 12: Example 1 — taxable asset purchas
Page 14 and 15: Application to specific basis diffe
Page 16 and 17: Goodwill (cont.)Tax Accounting for
Page 18 and 19: In-process R&DFinancial Reporting
Page 20 and 21: Deferred revenueFinancial Reporting
Page 22 and 23: Accrued compensationFinancial Repor
Page 24 and 25: Uncertain tax positions — general
Page 28 and 29: Valuation allowances — section 38
Page 30 and 31: Example 4 — indemnification and U
Page 34 and 35: Transaction costs — pre-acquisiti
Page 36 and 37: Example 5 — transaction costs (co
Page 38 and 39: Example 6 — transaction costsFact
Page 42 and 43: Example 7 — measurement period ad
Page 44 and 45: Example 7 — measurement period ad
Page 46 and 47: Example 8 — contingent considerat
Page 50 and 51: Example 9 — contingent considerat
Page 54 and 55: Sample UTB tabular rollforward(Doll
Page 56 and 57: Supporting process and documentatio
Page 58 and 59: Copyright © 2012 Deloitte Developm
Page 60: About DeloitteDeloitte refers to on

Deloitte FAS 141R-Acquisition Accounting

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