The acquisition of Ation on a cash basis allows the introduction of various concerns regarding the attributed accounting implications. Ideally, acquisitions fall under IFRS 3, where the protocols of business combinations remain defined. There arises a need to explore the status of the business prior to acquisition. Also, such determinations need to orient the expectations of fair measurements. As a result, the acquisition of Ation needs to explore both the recognition and measurement principles engaged during the determination of the fair value of the two firms. A further reflection of the adopted processes identifies the inability of the process to adhere to the procedures developed by IFRS 3 (Masadeh et al., 2017). Similar concerns manifest in the descriptions of the assets associated with the acquired firm. A reflection of the assets attributed to Ation before its acquisition may involve including a candidate evaluation aligned to their fair value. Arguably, the adoption of such measures would align with the expectation of both the involved firms and the owners. Also, the acquisition proposes the need to explore the industry’s interests from the outcomes attached to the participants’ ambitions.
There arises a need to explore the potential interests that trigger an acquisition. The principal assumptions include the need to expand operations and eliminate competition. However, the concern of competition as an attribute of acquisition seems to focus on other players as the acquired firms are usually perceived as market strugglers. A further examination of the implication of acquisition to the market proposes the integration of concerns along perspectives such as market tilt as the market remains undisputable in relation to the expectations of the involved players. Concerns such as the need to acquire spaces in strategic locations may advise the acquisition of businesses (Zéman & Bárczi, 2017). Other concerns from the competition perspective include the need to highlight performance while exploring the potential benefits accompanying the acquisition decision. A further review of the expectations of acquisitions points to the anticipated market impact as the elemental indicator of an eventual decision. In the case of Amalgam, the acquisition of Ation proposes the integration of an expansion mindset in the characterization of the shared operations and revenue generation measures.
The concern of the owner would reflect on the attainment of reliable options in the characterization of the new acquisition. In essence, the reflections of Mrs. C would focus on ensuring the value of the venture and the experienced expenses remain captured in the accounting ambitions of the firm. A further focus on the expectations of such ambitions points to the expectations of the participants to incline their demands to the ambitions of Amalgam as a single investment unit. A further reflection of the anticipated performance prospects allows the evaluation of the eventual performance of the venture in alignment with the expectations of the owner. In essence, the implication of IFRS 3 towards the attainment of such ambitions remains undisputed (Janowicz, 2017). Other perspectives attributed to IFRS 3 include the provision of a bearing in characterizing the expected outcome regarding the new acquisition. In essence, the IFRS 3 would assist Mrs. C in comprehending the implication of the acquisition along perspectives such as the interests of the venture to the business and the areas of correlation. Acquiring ventures in a similar industry would suggest the need to expand operations in response to the measures of the immediate market.
The case of Ation acquisition offers pertinent lessons to parties such as investors, lenders, and creditors in relation to the interests attributed to the transaction. Among the existing concern is the desire to examine the interests of the involved parties in examining the ambitions of the involved parties. In the case of Ation, there exist interests aligned from a two-party perspective. In such a case, the implication of the acquirer revolves around the impact gained from the operations of the acquired firm. In essence, the implications of the need to acquire property may allow the redirection of the expectations as defined by IFRS 3. In the current case, the implications of the acquisition remain guided by the shared interests and the subsequent expectations of the participants. An ideal measure that allows the mitigation of such concerns includes the integration of perspectives that define the market expectations from the element of impact (Sacer et al., 2016). Changes in the business operation models warrant the need to carefully outline the existing asset and liabilities records prior to the activation of the acquisition.
Janowicz, M. (2017). Business combinations under common control in International Financial Reporting Standards–is authoritative accounting guidance needed? Zeszyty Teoretyczne Rachunkowości, (93), 97-112.
Masadeh, W., Mansour, E., & AL Salamat, W. (2017). Changes in IFRS 3 Accounting for Business Combinations: A Feedback and Effects Analysis. Global Journal of Business Research, 11(1), 61-70.
Sacer, I. M., Malis, S. S., & Pavic, I. (2016). The Impact of Accounting Estimates on Financial Position and Business Performance–Case of Non-Current Intangible and Tangible Assets. Procedia Economics and Finance, 39, 399-411.
Zéman, Z., & Bárczi, J. (2017). The Theory Of International And National Accounting And Its Practical Usefulness To Business Executives And Investors. Acta Carolus Robertus, 7(1064-2017-3081), 219.
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Amalgam Case Study
How would you advise Mr J when he is developing an accounting policy for the acquisition of Ation in Amalgam’s consolidated financial statements?
Hint: What are the economics of the acquisition of Ation by Amalgam? (see also IASB meeting December 2007 Agenda Paper 5C)4.
Some discussion questions:
- Reasons for business combinations under common control
- Viewed from the perspective of the primary user group
- Viewed from the perspective of the controlling shareholder (Mrs C)
- Relevant information for investors, lenders and other creditors that faithfully represents the economics of the transaction
- I ATTACHED ALL THE BACKGROUND INFORMATION AND CASE DETAILS. COULD YOU PLEASE READ (you only need to read the parts pertaining to the acquisition of the company “Ation” and the section labelled “Reorganization” in the first document; the other documents are a broad scope of relevant information you may need) AND CITE ANY APPLICABLE ACCOUNTING STANDARDS THAT WOULD APPLY? (There are also suggested accounting articles in the attached documents to cite from) Thank you!!
Amalgam Case IAS 8 Hierarchy Case Study
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