Purchase accounting
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Purchase accounting is a method of accounting for a merger in which the merger is handled as a purchase. In this method, the acquiring firm is assumed to have “bought” the acquired company in much the same way it would buy any capital asset.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Purchase accounting. A method of accounting for a merger in which the merger is handled as a purchase. In this method, the acquiring firm is assumed to have “bought” the acquired company in much the same way it would buy any capital asset.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
