Estandarización y estructuración

3250.1 Purchase Accounting

a. Pro forma statements that give effect to a business combination using the purchase method of accounting generally require only two pro forma adjustments:

1. The allocation of the purchase price, including adjusting assets and liabilities to fair value and recognizing intangibles, with related changes in depreciation and amortization

expense; and

2. The effects of additional financing necessary to complete the acquisition. However, other related adjustments may be necessary.

b. Contractual terms of the combination such as major new compensation contracts with management would require pro forma adjustment if the new contracts are entered into as part of the acquisition agreement. c. Transaction costs should be recognized in the pro forma statements as

follows:

i. Direct, incremental costs of the specific acquisition which are not

yet reflected in the historical financial statements of either the target or acquirer—No adjustment should be reflected in the pro

forma income statement, but the pro forma balance sheet should reflect an adjustment (as the costs are non‐recurring and directly related to the transaction)

ii. Direct, incremental costs of the specific acquisition which are

reflected in the historical financial statements of either the target or acquirer— An adjustment should remove those costs from the

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iii. Direct, incremental costs related to one or more other acquisitions

that are reflected in the historical financial statements of either the target or acquirer— An adjustment should remove those costs

from the pro forma income statement only if pro forma effect is given to the other acquisition as well (Last updated: 3/31/2010) d. Actions to be taken by management subsequent to a business

combination, as reflected in liabilities recorded in accordance with EITF 95-3, may relate to the planned disposal or termination of revenue producing activities, as well as other business integration activities. It is appropriate to present pro forma adjustments depicting the recurring effects of exiting revenue producing activities. That type of pro forma adjustment is consistent with the requirement to provide pro forma information depicting material dispositions as discussed in Section 3120. Only revenues and costs specifically identifiable with that revenue-producing activity may be included in the pro forma adjustments. Allocations of corporate costs should not be adjusted for the disposition.

NOTE: Even though SFAS 141(R) [ASC 805] will nullify EITF 95-3, it would

still be appropriate to depict the recurring effects of exiting revenue producing activities based upon the guidance in Section 3120.

e. Termination of employees and closing facilities are typical actions taken in connection with business combinations to eliminate costs perceived by management as redundant. The timing and effects of these actions are generally too uncertain to meet the S-X Article 11 criteria for pro forma adjustments. Management’s estimate of how these actions (and other business integration activities not specifically associated with the disposition of a business) are expected to impact the operations and liquidity of the newly combined companies going forward should be discussed in MD&A and in supplemental

information clearly identified as forward-looking information. f. A schedule showing the calculation of the purchase price (including

the value assigned to non-cash portions) should be provided in a note, if not otherwise reasonably apparent.

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NOTE: Under SFAS 141(R) [ASC 805], registrants should use the most recent

stock price at the time of filing for determining the value of stock to be issued in a transaction that has not yet consummated. In addition, the notes to the pro forma balance sheet should include a disclosure of the date at which the stock price was determined and a sensitivity analysis for the range of possible outcomes based upon percentage increases and decreases in the recent stock price. The

appropriate percentages should be reasonable in light of acquirer’s volatility. g. The purchase price should be allocated to specific identifiable tangible

and intangible assets (such as customer lists, contracts acquired, trademarks and patents, in-process research and development) and liabilities. If the allocation is preliminary/provisional, significant liabilities and tangible and intangible assets likely to be recognized should be identified and uncertainties regarding the effects of amortization periods assigned to the assets should be highlighted.

NOTE: No adjustment should be made to the amounts of research and

development expenses historically incurred by the target. (Last updated: 3/31/2010)

h. If the registrant is awaiting additional information that may impact the measurement of a contingency of the acquired company during the allocation period specified by SFAS 141 or SFAS 141(R) [ASC 805], the registrant should disclose prominently that the purchase price allocation is preliminary/provisional. In this circumstance, the registrant should:

1. Describe clearly the nature of the contingency; 2. Discuss the reasons why the allocation is

preliminary/provisional (e.g., identify the information that the registrant has arranged to obtain);

3. Indicate when the allocation is expected to be finalized; and 4. Furnish other available information which will enable a

reader to understand the magnitude of any potential adjustment.

In the absence of such disclosure, investors may assume reasonably that the purchase price allocation is final and that all future revisions of estimated fair values of assets and liabilities acquired will be reflected in income. [SAB Topic 2A.7]

Back to Table of Contents 189 i. If contingent consideration is issuable (see ASC 805-30-20), the

registrant should disclose the terms of the contingent consideration and the potential impact on future earnings.

Contingent consideration classified as an asset or liability is

remeasured to fair value at each reporting date until the contingency is resolved, and these changes in fair value are generally recognized in earnings. Updated pro forma income statements filed with a new or amended registration statement should not reflect any pro forma adjustments to give effect to changes in the fair value of contingent consideration in periods different than those in which such changes were recognized in the acquirer’s post-acquisition financial statements. Pro forma financial information should include transparent disclosure about the contingent consideration arrangement and known changes in fair value. (Last updated: 9/30/2010)

NOTE: Paragraph 3250.1(h) will no longer apply under SFAS 141(R) [ASC

805] because contingent consideration will be recognized at the time of the transaction.

j. The expected useful lives or amortization periods of significant assets acquired in a purchase business combination, including identified intangibles, should be disclosed in a note to the pro forma financial statements.

k. If amortization of purchase adjustments is not straight-line, the effect on operating results for the five years following the acquisition should be disclosed in a note, if material.

l. Either the registrant or its target may expect to dispose of certain operations in order for a merger to gain the approval of one or more U.S. regulatory agencies. Pro forma recognition should be given to the impact of those disposals to the extent they are identifiable at the time the pro formas are prepared. If operations to be disposed of are not identifiable with any reasonable certainty at that time, the notes to the pro forma financial information should disclose any contingencies and the reasonably possible impact on the financial statements. Pro forma financial information giving effect to the disposals should be filed on Form 8-K when the disposals occur if the disposition is significant under Item 2.01 of Form 8-K.

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