You work in the accounting department of a company. Your company purchased the XYZ company six months
Question:
You work in the accounting department of a company. Your company purchased the XYZ company six months ago, which recently incurred a 50% decline in revenues due to the lapsing of a key legal patent. Your company had recorded goodwill on the acquisition with reference to the above scenario 1. What are the accounting implications? Explain them. 2. How should the company record the impact of the revenues decline on the acquisition? Explain your rationale. 3. What promulgated accounting literature would you cite in support of your recommendation? Explain your response. 4. Identify the stakeholders that will be impacted by this discussion and if there are any conflicting or competing interest regarding the outcome. 5. Develop a recommended course of action regarding the accounting implications of the above discussion. Be sure to identify the advantages and disadvantages of this impact on the organization’s financial statements
Financial Management for Decision Makers
ISBN: 978-0138011604
2nd Canadian edition
Authors: Peter Atrill, Paul Hurley