Module V· Purchase Accounting & Goodwill - BasicsIntermediate
Question

How does line-by-line consolidation work in the combined balance sheet?

Answer

Line-by-line consolidation adds the buyer's and target's assets and liabilities together, then applies acquisition accounting. The buyer eliminates its investment in the target, removes the target's historical equity, records fair-value step-ups, deferred taxes, and new goodwill. If less than 100% is acquired, non-controlling interest is recorded for the minority share.