In short
A step acquisition is a business combination achieved in stages, where the acquirer already held an equity interest in the acquiree before obtaining control.
Key takeaways
- On obtaining control, the previously held interest is remeasured to fair value, with any gain or loss in earnings.
- That fair value is included in the goodwill calculation.
- Buying more shares after control is obtained is an equity transaction with no gain or loss.
Where it's tested
BAR: Business Combinations (Advanced) — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
In a step acquisition, an investor holding a 15% equity interest acquires an additional 60%, obtaining control. The previously held interest should be: