We understand the specialized markets in which you operate and provide tailored solutions to meet your unique business needs.
Our comprehensive suite of business services combines industry expertise, market knowledge and professional insights.
MNP is a leading national accounting, tax and business consulting firm in Canada.
Suite 2000, 330 5th Ave. S.W.
MNP careers are Different by Design. As an entrepreneurial firm, we truly believe there are no limits to where your career can go.
The transaction market in Canada has declined over the last few years, but the importance of properly recognizing assets acquired in an acquisition has not. Properly accounting for assets acquired in a merger or acquisition can have significant monetary implications.
An acquirer in an asset or share purchase should always take the time to have a proper purchase price allocation completed. A purchase price allocation divides the purchase price among the tangible and intangible assets and liabilities using fair value. Any residual amount of the purchase price after allocation is recorded as goodwill.
The key concept behind fair value is that the value of an asset or liability is based on what a market participant would pay to acquire the rights to the asset or transfer the liability. This applies whether you use the Canadian Institute of Chartered Accountants (CICA), the Financial Accounting Standards Board (FASB), or the International Financial Reporting Standards (IFRS).
Most companies do not regularly engage in transaction accounting so management is often inexperienced with financial accounting rules and procedures when dealing with transactions.
Potential errors in purchase accounting include:
Each of these errors can have a significant impact in subsequent accounting periods.
To learn more about applying fair value standards, contact Chris Perret, CBV, AACI.
Find an office near me