The accounting treatment of acquisition-related transactions (particularly the formation transaction) entered into by a portfolio company of a private equity group can often be extremely complicated and involve many different sources of authoritative accounting guidance. McGladrey & Pullen, LLP has prepared the attached Private Equity Group Portfolio Company Accounting Toolkit to help guide readers through the appropriate accounting guidance, as well as provide examples to help with the related accounting and reporting. This toolkit includes flowcharts, and illustrations of their related application, for formation transactions often entered into by private equity group portfolio companies, together with certain technical accounting guidance utilized for transactions discussed throughout the toolkit. Furthermore, the toolkit includes two fact sheets that describe the changes to certain current authoritative guidance relating to business combinations and consolidations that will be effective for annual reporting periods beginning on or after December 15, 2008 (e.g., January 1, 2009 for calendar year-end companies).
As a result of the issuance of FASB Statement No. 141 (revised 2007), Business Combinations, portions of the toolkit have been superseded for transactions completed in 2009 by calendar year-end companies and will be superseded in the near future for companies with other than calendar year-ends. In particular, the following portions of the toolkit should no longer be utilized for transactions occurring in annual reporting periods beginning on or after December 15, 2008:
- Section 2 – Determination of an Acquirer’s Investment Basis in an Acquiree and the Allocation of that Basis in an Acquisition of a Business
- Section 4 – Current Accounting Guidance
- Emerging Issues Task Force Issue No. 88-16, “Basis in Leveraged Buyout Transactions”
- Emerging Issues Task Force Issue No. 90-12, “ Allocating Basis to Individual Assets and Liabilities for Transactions within the Scope of Issue No. 88-16:
- M&P Financial Accounting and Reporting Manual Section 0220, Business Combinations
- M&P Financial Accounting and Reporting Manual Section 0227, Leveraged Buyout Transactions
This toolkit is available in PDF form below. In addition, a printed bound copy of the Private Equity Group Portfolio Company Accounting Toolkit may be requested from your local McGladrey & Pullen audit specialist.
View PDF of Toolkit Here |
