Deloitte FAS 141R-Acquisition Accounting

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Basic model — tax effects of basis differences• Acquirer recognizes and measures each asset acquired andeach liability assumed and any non-controlling interest at itsacquisition datefair value• Record deferred taxes for estimated future tax effects attributableto temporary differences and carryforwards– A temporary difference exists when there is a taxable or deductibledifference between (1) the carrying amount of an asset or liability forfinancial reporting purposes and (2) the tax basis of that asset orliability (must consider the recognition and measurementrequirements for tax positions when determining the tax basis)– The carrying amount for financial reporting purposes is the same,regardless of the form of the business combination– There is a difference in how the tax basis is determined depending onwhether the business combination is taxable or nontaxableCopyright © 2012 <strong>Deloitte</strong> Development LLC. All rights reserved.6
Taxable business combinations• Acquirer “steps up” the target’s historical tax bases in the assetsacquired and liabilities assumed to fair market value• Includes asset acquisitions, stock acquisitions treated as assetacquisitions by election (e.g., §338 elections) and integratedtransactions treated as asset acquisitionsSection 1060allocation classClass IClass IIClass IIIClass IVClass VClass VIClass VIIDescriptionCash and near-cashActively traded property (e.g., publicly traded stock)Mark-to-market assetsInventoryAssets not defined as any other class, including PP&ESec. 197 intangibles, except goodwill and going concernGoodwill and going concern valueCopyright © 2012 <strong>Deloitte</strong> Development LLC. All rights reserved.7
Page 4: Tax status of enterprise being acqu
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 54 and 55: Sample UTB tabular rollforward(Doll
Page 56 and 57:
Supporting process and documentatio
Page 58 and 59:
Copyright © 2012 Deloitte Developm
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Deloitte FAS 141R-Acquisition Accounting

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