Living with a purchase price allocation after year one
Subsequent measurement of a purchase price allocation is underestimated: the entries carry for years, and each one has to be justified again.
Topic
Intercompany
Matching balances between group companies, the eliminations that follow, and the transactions that never match on the first pass.
Intercompany is where a group close usually stalls. Both sides recorded something real in their own books; at group level neither happened. Agreeing which side is right — and when the two sides used different amounts, periods or rates — is the work.
These posts cover the ordinary cases and the awkward ones: sub-leases, ESOPs granted to a subsidiary’s employees, and automating a reconciliation that people do by eye today.
One of several topics, each gathering the posts on one change.
4 posts on this
What makes intercompany reconciliation hard to automate
Intercompany reconciliation is the step most groups do by hand. What actually blocks automation, and what it takes to get past each one.
Unusual intercompany transactions: sub-leases and ESOPs
Two intercompany transactions that do not eliminate the way the others do, and what each one leaves behind in the consolidated numbers.
Intercompany transactions in a group that keeps acquiring
Elimination entries are a key adjustment to consolidated statements, and an acquisitive group changes which ones are needed every year.