BU487 Chapter Notes - Chapter 3: Cash Flow Statement, Historical Cost, Equity Method
Document Summary
Business combination: transaction in which acquirer obtains control of 1+ businesses. Business: integrated set of activities and assets that"s capable of being conducted and managed for purpose of providing return in form of dividends, lower costs, or other economic benefits directly to investors, owners, members, or participants. Consists of inputs and processes applied to those inputs that have the ability to create outputs inputs have ability to create outputs. Process: system, standard, protocol, convention, or rule that, when applied to an input, creates outputs (e. g. strategic mgmt. process) Output = inputs + processes applied to inputs. Determining whether a particular set of assets and activities is a business should be based on whether a potential buyer will be able to manage the integrated set as a business. Buying a group of assets that don"t constitute a business is a basket purchase, not a business combination total cost allocated to individual assets in proportion to fair market values.
