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Assignment 1: Business Acquisitions Due Week 3 and worth 270
points
Use the Internet or Strayer library to research two (2) publically traded U.S.
companies, and download their financial statements. Assume that you are
the CEO of one of the selected companies. You are responsible for gaining
control over the other company. You have three (3) choices, either of
which you believe that the Board of Directors will support.
• Choice 1: Your company acquires 35% of the voting stock of the target
company.
• Choice 2: Your company acquires 51% of the voting stock of the target
company.
• Choice 3: Your company acquires 100% of the voting stock of the target
company.
Write a four to five (4-5) page paper in which you:
1.Provide a brief background introduction on both the company that you
are working for and the company that you are responsible for
gaining control over.
2.Specify the overall manner in which the acquisition fits into your
company’ strategic direction. Next, identify at least three (3) possible
synergies that could occur as a result of the proposed acquisition.
3.Select two (2) out of the three (3) choices provided in the above
scenario, and analyze the key accounting requirements for each of
the two (2) choices that you selected. Next, suggest one (1) strategy
in which you would prepare the financial statements for your
company after the acquisition under each of the two (2) choices.
4.Select the choice that you consider to be the most advantageous to your
company. Explain to the Board of Directors at least three (3) reasons
why your selected choice is the most advantageous to the company.
5.Assume two (2) years after the acquisition, your Board of Directors wants
to offer the shares back to the public in hopes of making a large
profit. Assume that in each of the two (2) years your company and
the target company have had exactly the same reported net income
as they did in the year of acquisition. Determine the type of value,
(e.g., cost of fair value) that you would use to report the subsidiary’s
net asset in the subsidiary’s financial statements, which the
company will distribute to the public with the public offering. Provide
support for your rationale.
6.Use at least three (3) quality academic resources in this assignment.
Note: Wikipedia and other Websites do not qualify as academic
resources.
Your assignment must follow these formatting requirements:
• Be typed, double spaced, using Times New Roman font (size 12), with
one-inch margins on all sides; citations and references must follow
APA or school-specific format. Check with your professor for any
additional instructions.
• Include a cover page containing the title of the assignment, the student’s
name, the professor’s name, the course title, and the date. The
cover page and the reference page are not included in the required
assignment page length.
The specific course learning outcomes associated with this assignment
are:
• Examine the various methods of accounting for an investment in equity
shares of another company.
• Analyze the accounting requirements for consolidated financial
information on the date of acquisition and subsequent to the date of
acquisition.
• Use technology and information resources to research issues in
advanced accounting.
• Write clearly and concisely about advanced accounting using proper
writing mechanics.
Click here to view the grading rubric.
