


Hardcover
Published: 24th June 2004
ISBN: 9780071429696
Number Of Pages: 288
As each new accounting question or scandal hits Wall Street, investment professionals too often find themselves asking, "What happened?" "Accounting for M&A, Equity, and Credit Analysts" answers the most common accounting questions, all in an easy-to-follow format designed to provide investment professionals with real-world, hands-on knowledge of key accounting treatments, models, and practices. Written by well-known M&A expert James E. Morris, this versatile accounting desk reference bridges the gap between what is taught in business school and what is needed in the real world.
Preface | p. xi |
Introduction | p. xiii |
List of Abbreviations | p. xv |
Equity Method of Accounting for Investments | p. 1 |
Introduction | p. 1 |
Description of the Equity Method | p. 1 |
Tax Considerations When Using the Equity Method | p. 5 |
Accounting under the Equity Method--Excess of Cost over Equity Purchased | p. 8 |
Accounting under the Equity Method--Intercompany Transactions | p. 10 |
Guidance for Applying the Equity Method | p. 12 |
SEC Staff Views Concerning the Equity Method | p. 17 |
When to Use the Equity Method--Summary | p. 17 |
Accounting for Cash Flows from Equity Method Investments | p. 18 |
Modeling the Equity Method of Accounting in Projection Models | p. 19 |
Chapter Summary | p. 22 |
Minority Interests | p. 25 |
Introduction | p. 25 |
Minority Interests | p. 25 |
Overview of Accounting for Minority Interests | p. 26 |
Treatment of Minority Interests for Enterprise Valuation | p. 31 |
Forecasting Minority Interests | p. 32 |
Treatment of Minority Interests in M&A Transactions | p. 32 |
Modeling Minority Interests | p. 35 |
Chapter Summary | p. 36 |
Deferred Income Taxes and Income Tax Reporting | p. 39 |
Introduction | p. 39 |
Basic Principles of Tax Reporting | p. 39 |
The First Principle | p. 40 |
The Second Principle | p. 40 |
The Third Principle | p. 50 |
The Fourth Principle | p. 50 |
Treatment of Deferred Income Tax Items in M&A Transactions | p. 52 |
Modeling Income Taxes in Projection Models | p. 54 |
Calculating the Provision for Taxes--Detailed Calculation | p. 57 |
Chapter Summary | p. 59 |
Deciphering the Deferred Tax Footnote | p. 61 |
Introduction | p. 61 |
Financial Statement Disclosure for Income Taxes | p. 61 |
Reconstructing Deferred Taxes on the Financial Statements | p. 68 |
Problems with Ratio Analysis | p. 73 |
Valuation of Deferred Tax Items | p. 74 |
Chapter Summary | p. 74 |
Estimating the Tax Basis of a Firm's Assets | p. 77 |
Introduction | p. 77 |
Factors Affecting Differences Between Asset's Book and Tax Bases | p. 78 |
Depreciation (or Amortization) Using Different Schedules | p. 78 |
Recognizing Asset Impairments | p. 84 |
Transaction Fair Value Adjustments | p. 86 |
Asset Sales or Deemed Asset Sales | p. 87 |
Estimating the Tax Bases of Target Company's Assets--Known Balance Sheet | p. 87 |
Estimating the Tax Bases of Target Company's Assets--Unknown Balance Sheet | p. 91 |
Chapter Summary | p. 93 |
Pension and Other Postretirement Benefits | p. 95 |
Introduction | p. 95 |
Pension versus Other Postretirement Benefit Plans | p. 96 |
Types of Pension Plans | p. 96 |
Economic Objectives of Pension Plans | p. 97 |
How Pension Plans Work | p. 98 |
Net Periodic Pension Cost | p. 101 |
Minimum Pension Liability | p. 112 |
Pension Benefits Summary | p. 112 |
Other Postretirement Benefit Plans | p. 113 |
Net Periodic Postretirement Benefit Cost | p. 114 |
Effects of Business Combinations | p. 116 |
Chapter Summary | p. 118 |
Deciphering the Pension Footnote | p. 119 |
Introduction | p. 119 |
Pension Benefit Disclosure Requirements | p. 120 |
Benefit Obligation Reconciliation | p. 120 |
Plan Fair Value Reconciliation | p. 126 |
Employer Securities Included in Plan Assets | p. 129 |
Net Periodic Benefit Cost Disclosure | p. 130 |
Funded Status and Unrecognized Items | p. 130 |
Rate Disclosures | p. 130 |
Health Care Disclosures | p. 132 |
Chapter Summary | p. 133 |
Analyzing the Firm's Pension Cash Flows | p. 135 |
Introduction | p. 135 |
Estimating Future Funding Cash Flows | p. 136 |
Employer Company's Plan Assets and Liabilities in an Acquisition | p. 142 |
Plan Liquidation Values | p. 143 |
Chapter Summary | p. 144 |
Employee Stock Options | p. 145 |
Introduction | p. 145 |
The Intrinsic Valuation Method | p. 145 |
The Fair Value Method | p. 147 |
Evaluating the Firm's Inputs to the Option-Pricing Model | p. 148 |
Tax Effects of Employee Stock Options | p. 150 |
Calculation of Diluted Earnings per Share for Companies Expensing Stock Options | p. 150 |
Accounting for Target Stock Options Rolled Over in a Purchase Acquisition | p. 153 |
Projecting Earnings Per Share (EPS) for Option-Intensive Firms | p. 155 |
Chapter Summary | p. 156 |
Restructuring Charges | p. 157 |
Introduction | p. 157 |
FASB's New Changes to Financial Accounting for Restructuring Charges | p. 158 |
Restructuring Charges--U.S. GAAP | p. 158 |
Restructuring Charges--International Accounting Standards | p. 168 |
Disclosure of Restructuring Charges | p. 169 |
Restructuring Liabilities in Business Combinations | p. 169 |
Chapter Summary | p. 170 |
Discontinued Operations | p. 173 |
Introduction | p. 173 |
How Results of Discontinued Operations Impact Earnings from Continuing Operations | p. 173 |
Sources of Classification Bias | p. 175 |
Criteria for Classifying Items as Discontinued Operations | p. 176 |
The Operations Being Discontinued--Component of a Business | p. 176 |
Disposal Criteria | p. 177 |
International Accounting Treatment of Discontinued Operations | p. 179 |
Chapter Summary | p. 180 |
Net Operating Loss Deductions | p. 183 |
Introduction | p. 183 |
Net Operating Loss Deductions | p. 183 |
Other Tax Considerations Relating to NOLs | p. 186 |
M&A Considerations Relating to NOLs | p. 186 |
NOL Effects on Financial (GAAP) Reporting | p. 187 |
Valuation Considerations | p. 189 |
Modeling NOL Carrybacks and Carryforwards | p. 190 |
Chapter Summary | p. 195 |
Purchase Accounting for Business Combinations | p. 197 |
Introduction | p. 197 |
Purchase Accounting Basics | p. 198 |
Calculating Target Company's Net Identifiable Assets | p. 200 |
The Net Identifiable Assets Calculation | p. 209 |
Calculating the Purchase Price | p. 209 |
Transaction Fees | p. 210 |
Fair Value of the Consideration Given | p. 213 |
Calculating Goodwill | p. 215 |
Negative Goodwill | p. 216 |
Amortization of Goodwill | p. 219 |
Accretion and Dilution of Earnings | p. 222 |
Pro Forma Presentation (as If Combined) | p. 229 |
Statements of Cash Flows Following Business Combinations | p. 230 |
Limitations on the Use of Target Company's Net Operating Loss (NOL) Carryforwards | p. 230 |
Effects on Minority Interests in Business Combination Transactions | p. 231 |
Chapter Summary | p. 233 |
Deemed Asset Sales under IRC Sections 338(h)(10) or 338(g) | p. 237 |
Introduction | p. 237 |
Overview of the Section 338(h)(10) Election | p. 237 |
Benefits of Section 338(h)(10) Sales | p. 239 |
Determining the Sale Price for a Section 338(h)(10) Election | p. 242 |
Modeling Section 338(h)(10) Transactions | p. 247 |
Chapter Summary | p. 250 |
Glossary | p. 253 |
Endnotes | p. 259 |
Index | p. 265 |
Table of Contents provided by Ingram. All Rights Reserved. |
ISBN: 9780071429696
ISBN-10: 0071429697
Audience:
General
Format:
Hardcover
Language:
English
Number Of Pages: 288
Published: 24th June 2004
Publisher: McGraw-Hill Education - Europe
Country of Publication: US
Dimensions (cm): 24.5 x 20.0
x 2.0
Weight (kg): 0.75
Edition Number: 1