POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF ACCOUNTANCY AND MANAGEMENT ACCOUNTING
COURSE TITLE
COURSE CODE
CREDIT UNITS
COURSE PREREQUISITE
COURSE DESCRIPTION
ACCOUNTING FOR BUSINESS COMBINATION
ACCO 30023
3 UNITS
ACCO 30013 – ACCOUNTING FOR SPECIAL TRANSACTIONS
The course “Accounting for Business Combination” is a component of the CPALE Subject Advanced Financial Accounting and Reporting. The course covered the topics from the following standards:
IFRS 3 – Business Combination, IFRS 10 – Consolidated Financial Statements, IAS 27 – Separate Financial Statements, IFRS for Small and Medium-Sized Entities, IFRS 11 – Joint Arrangements, IAS 21 –
Effects of Changes in Foreign Exchange Rates, and IFRS – 9 Financial Instruments (Derivatives and Hedging).
Institutional Learning Outcomes
1. Creative and Critical Thinking
Graduates use their imaginative as well as a rational thinking ability to life
situations in order push boundaries, realize possibilities, and deepen their
interdisciplinary and general understanding of the world.
2. Effective Communication
Graduates are proficient in the four macro skills in communication (reading,
writing, listening, and speaking) and are able to use these skills in solving
problems, making decisions, and articulating thoughts when engaging with
people in various circumstances.
3. Strong Service Orientation
Graduates exemplify the potentialities of an efficient, well-rounded and
responsible professional deeply committed to service excellence.
4. Community Engagement
Graduates take an active role in the promotion and fulfillment of various
advocacies (educational, social and environmental) for the advancement of
community welfare.
5. Adeptness in the Responsible Use of Technology
Graduates demonstrate optimized use of digital learning abilities, including
technical and numerical skills.
6. Passion to Lifelong Learning
Graduates are enabled to perform and function in the society by taking
responsibility in their quest to know more about the world through lifelong
learning.
7. High Level of Leadership and Organizational Skills
Graduates are developed to become the best professionals in their respective
disciplines by manifesting the appropriate skills and leaderships qualities.
8. Sense of Personal and Professional Ethics
Graduates show desirable attitudes and behavior either in their personal and
professional circumstances.
9. Sense of National and Global Responsiveness
Graduates’ deep sense of national compliments the need to live in a global
village where one’s culture and other people culture are respected.
Program Outcomes
Course Outcomes
BSA and BSMA graduates must demonstrate the ability to review, interpret, evaluate
financial data and systems in compliance with established policies, procedures,
guidelines, agreements and/or legislation. They must be able to link data, knowledge and
insight together with different sources and disciplines to make informed decisions.
Upon completion of the course, the students will be able to:
a. Have sound knowledge of the accounting standards
applicable to business combination, consolidated financial
statements, separate financial statements, joint arrangements,
and the effects of changes in foreign exchange rates.
b. Have sound knowledge of the accounting for small and
medium-sized entities standards applicable to business
combination, and joint arrangements.
c. Apply the accounting standards in the presentation and
preparation of financial statements, including the required
disclosures.
d. Apply the skills in systematic problem solving.
e. Present computations and financial statements in good form.
f. Appreciate the importance of appropriate accounting and
reporting for various users of accounting information.
g. Realize the contributions of accounting standards to the
development of a more socially responsible and morally
upright professional accountant.
BSA and BSMA graduates should possess active listening skills and the ability to
effectively communicate one’s point of view, both orally and in writing, at all
organizational levels; be able to explain verbally and/or writing financial, statistical,
administrative matters/policies/procedures/regulatory matters/audit results at a level
appropriate to the audience and must be able to negotiate effectively.
BSA and BSMA graduates should develop an ability to work in groups, possess skills to
participate as member of a team or/and contribute to group effort; be able to teach others
new skills; be able to work to the satisfaction of the clients; negotiate and work with
diversity or work well with men and women from diverse backgrounds.
BSA and BSMA graduates must work with the highest standards of professionalism, to
attain higher level of performance and generally to meet the public interest, he must
conform to the ethical standards of the profession that include: Integrity, objectivity and
independence, professional competence and due care, confidentiality, professional
behavior and moral values.
BSA and BSMA graduates should possess general knowledge in gaining and
understanding of the different cultures in the world and developing an international
objective thus, he must possess competency in English language, adaptability to foreign
business practices, level of trainability and good capabilities in dealing with foreign
partners.
BSA and BSMA graduates should not only be conversant with IT concepts for business
systems but sound knowledge on internal control in computer-based systems,
development standards and practices for business systems, management of the adoption,
implementation and use of IT, evaluation of computer business systems, and managing
the security information.
BSA and BSMA graduates should possess broad base of knowledge concerning macroenvironmental, economic and industry issues, business process structures, functions and
practices. It includes knowledge in areas such as economics, quantitative models and
business statistics, organizational behavior, international business, ethics and corporate
governance.
Course Plan
Week
1
Topic
Orientation on course syllabus;
grading system; class management
policies; required textbook and other
instructional materials, and
references.
Learning Outcomes
•
Make the students at ease and eager to learn.
Relate ACCO 30013 to ACCO 30023; relate of ACCO
30023 to higher level accounting subjects
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•
1-3
4-6
Business Combination
Consolidation: Date of Acquisition
At the end of the lesson, the student will be able to:
•
Define and describe business combination;
•
Understand the IFRS 3 (Revised) – Business
Combination;
•
Know the application and scope of IFRS 3;
•
Identify the methods of accounting for business
combination;
•
Understand the application of acquisition method;
•
Know and apply the principles of business
combination achieved in stages;
•
Identify the different measurement and recognition
criteria subsequent to initial recognition;
•
Prepare the statement of financial position
immediately after the combination; and
•
Journalized the required entries in the books of the
companies.
•
•
At the end of the lesson, the student will be able to:
•
Define and describe consolidation;
•
Understand the objective IFRS 10 – Consolidated
Financial Statements;
•
Know the application and scope of IFRS 10;
•
Define control and assess control as defined in
IFRS 10;
•
Identify the steps and procedure of consolidation;
•
Understand the application of IFRS 10;
•
Prepare and journalized the working paper
elimination entries;
•
Compute and prepare the consolidated balances;
•
Prepare the statement of financial position
immediately after the combination; and
•
Understand the disclosure requirements for
consolidated financial statements.
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•
•
•
•
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Methodology
Presentation
of
the
grading system; class
management
policies
and the rest of the
syllabus.
Clarification
of
expectations
Lecture and discussion
Illustration/Diagram
(different
forms
of
business combination)
Financial
Statements
presentation
Case Analysis
Problem solving
Answer and analyze the
theoretical questions
Students to read the
financial
statement
disclosure
regarding
business combination of
a PSE listed company.
Resources
Approved course syllabus to be
distributed to the students
Lecture and discussion
Illustration/Diagram
(Control analysis)
Financial
Statements
presentation
Case Analysis
Problem solving
Answer and analyze the
theoretical questions
Students to present the
sample
financial
statement of a parent
and its subsidiary (a PSE
listed company).
•
•
•
•
•
Assessment
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IFRS 3:
Business
Combination
(Revised) effective July 1,
2009.
•
•
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IAS 27:
Separate
Financial
Statements (as amended)
effective January 1, 2013.
International
Accounting
Standards Board IFRS 10:
Consolidated
Financial
Statements effective January
1, 2013.
•
•
•
•
•
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Quiz regarding the topic
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Case Presentation
Quiz regarding the topic
7-8
9
10-11
12
Consolidation: Subsequent to Date of
Acquisition
Consolidation: Intercompany Profit
Special Topics in Business Combination
and Consolidation
At the end of the lesson, the student will be able to:
•
Understand and apply the cost method in
accounting for investment in subsidiary;
•
Prepare the working paper elimination entries
subsequent to the date of acquisition;
•
Identify and adjust the impact of dividend income
in the consolidated net income;
•
Identify and adjust the impact of fair value
adjustment on the net assets of subsidiary in the
consolidated net income;
•
Compute and allocate the impairment of goodwill;
•
Compute the consolidated net income;
•
Compute the consolidated net income attributable
to controlling and non-controlling interest;
•
Compute the non-controlling interest in the net
assets of subsidiary; and
•
Prepare the consolidated financial statements
subsequent to the date of acquisition.
•
•
•
•
•
•
•
Lecture and discussion
Illustration/Diagram
(Control analysis)
Financial
Statements
presentation
Case Analysis
Problem solving
Answer and analyze the
theoretical questions
Students to present the
sample
financial
statement of a parent
and its subsidiary (a PSE
listed company).
MIDTERM DEPARTMENTAL EXAMINATION
At the end of the lesson, the student will be able to:
•
Lecture and discussion
•
Understand the nature of intercompany sales
•
Illustration/Diagram
between parent and subsidiary;
(Control analysis)
•
Differentiate downstream sale and upstream sale;
•
Financial
Statements
•
Compute the unrealized profit in ending
presentation
inventory;
•
Case Analysis
•
Compute the realized profit in beginning
•
Problem solving
inventory;
•
Answer and analyze the
•
Compute unrealized gain or loss on the sale of
theoretical questions
fixed between parent and subsidiary;
•
Students to present the
•
Compute the consolidated net income;
sample
financial
•
Compute the consolidated net income attributable
statement of a parent
to controlling and non-controlling interest;
and its subsidiary (a PSE
•
Compute the non-controlling interest in the net
listed company).
assets of subsidiary; and
•
Prepare the consolidated financial statements
subsequent to the date of acquisition.
At the end of the lesson, the student will be able to:
•
Understand the concept and scope IFRS for SMEs;
•
Understand and Apply the provision of Section 19
of IFRS for SMEs;
•
Identify the difference of accounting for business
combination under IFRS for SMEs and IFRS 3;
•
•
•
•
Lecture and discussion
Illustration/Diagram
(Control analysis)
Financial
Statements
presentation
Case Analysis
•
•
•
•
•
•
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IFRS 10:
Consolidated
Financial
Statements effective January
1, 2013.
•
•
•
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Case Presentation
•
Quiz regarding the topic
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IFRS 10:
Consolidated
Financial
Statements effective January
1, 2013.
•
•
•
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Case Presentation
•
Quiz regarding the topic
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IFRS 3:
Business
Combination
•
•
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Case Presentation
•
•
•
•
•
•
•
13-14
15-16
Joint Arrangements
Effects of Changes in Foreign Exchange
Rates
Understand the concept of reverse acquisition;
Apply the accounting treatment of reverse
acquisition;
Differentiate the equity method and cost method of
accounting for investment in subsidiary;
Journalized the elimination entries under the equity
method of accounting;
Compute the consolidated balances under the
equity method; and
Prepare the consolidated financial statements
subsequent to the date of acquisition under the
equity method.
At the end of the lesson, the student will be able to:
•
Define and describe Joint Arrangements
•
Identify the types of Joint Arrangements
•
Differentiate Joint Operation from Joint Venture;
•
Identify and Apply the accounting for Joint
Arrangements;
•
Journalized the transactions in the books of parties
to Joint Arrangements;
•
Apply the IFRS for SMEs for Joint Arrangements;
•
Prepare the financial statements; and
•
Identify and incorporate the required disclosures
At the end of the lesson, the student will be able to:
•
Understand the provisions of IAS 21;
•
Apply the accounting for the effects of changes in
foreign exchange rates;
•
Understand the nature of foreign currency
transactions;
•
Understand the nature of foreign operations;
•
Identify and apply the basic steps in translating
foreign currency amounts into functional currency;
•
Identify and apply the basic steps in translating
foreign currency amounts from functional currency
to presentation currency;
•
Differentiate current rate method and temporal
method;
•
Understand and apply the concepts of forward
contract and a firm commitment;
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•
•
•
•
•
•
•
•
•
•
Problem solving
Answer and analyze the
theoretical questions
Students to present the
sample
financial
statement of a parent
and its subsidiary (a PSE
listed company).
•
Lecture and discussion
Illustration/Diagram
(Control analysis)
Financial
Statements
presentation
Case Analysis
Problem solving
Answer and analyze the
theoretical questions
Students to present the
sample
financial
statement of a parent
and its subsidiary (a PSE
listed company).
•
Lecture and discussion
Illustration/Diagram
(Control analysis)
Financial
Statements
presentation
Case Analysis
Problem solving
Answer and analyze the
•
theoretical questions
•
•
Students to present the
sample
financial
statement of a
parent
and its subsidiary (a PSE
listed company).
•
•
•
•
(Revised) effective July 1,
2009.
International
Accounting
Standards Board IFRS for
Small and Medium-Sized
Entities (SMEs)
Section 19 of IFRS for SMEs
•
Quiz regarding the topic
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IFRS 11:
Joint Arrangements effective
January 1, 2013.
International
Accounting
Standards Board IFRS for
Small and Medium-Sized
Entities (SMEs)
Section 15 of IFRS for SMEs
•
•
•
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Case Presentation
•
Quiz regarding the topic
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IAS 21:
Effects of Changes in Foreign
Exchange Rates effective
January 1, 2005.
•
•
•
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Case Presentation
•
Quiz regarding the topic
•
•
17
Accounting
Hedging
for
Derivatives
and
Prepare the financial statements; and
Identify and incorporate the required disclosures.
At the end of the lesson, the student will be able to:
•
Define and identify derivative instruments and its
characteristics;
•
Understand the recognition and measurement of
derivatives;
•
Distinguished the types of derivatives – Forwards,
Futures, and Options;
•
Define hedging activities;
•
Identify and understand the hedging of foreign
currency exposures;
•
Differentiate hedges that require and does not
require hedge accounting;
•
Understand the concepts of fair value hedge – hedge
of a firm commitment (purchase or sale
transactions);
•
Understand the concepts of cash flow hedge – hedge
of a firm commitment (purchase or sale
transactions);
•
Understand the concepts of cash flow hedge – hedge
of a forecasted transaction (purchase or sale
transactions);
•
Understand the concepts of cash flow hedge – hedge
of a net investment in foreign operations; and
•
Identify and incorporate the required disclosures.
18
•
•
•
•
•
•
•
Lecture and discussion
Illustration/Diagram
(Control analysis)
Financial
Statements
presentation
Case Analysis
Problem solving
Answer and analyze the
•
theoretical questions
•
Students to present the
sample
financial
statement of a
•
Accounting for Business
Combination by Jonald P.
Binaluyo
International
Accounting
Standards Board IAS 21:
Effects of Changes in Foreign
Exchange Rates effective
January 1, 2005.
IFRS
9:
Financial
Instruments
effective
January 1, 2018.
parent
and its subsidiary (a PSE
listed company).
FINAL DEPARTMENTAL EXAMINATION
Suggested Readings and References
• Binaluyo, Jonald P. Accounting for Business Combination, 2022 Edition
• Instructional Materials in Accounting for Business Combination
Course Grading System
ONLINE MODE OF LEARNING
Class Standing
Quizzes
Assignments and other activities
Departmental examination
Total
70%
50%
20%
Final Grade = (1st Grading Period + 2nd Grading Period)
2
30%
100%
•
•
•
Oral Recitation
Presentation by students of
their answers to assigned
exercises and problems
Case Presentation
•
Quiz regarding the topic
CORRESPONDENCE MODE OF LEARNING
Result from Online Final Departmental Examination
Result from the activities in the modules
Total
60%
40%
100%
Classroom Policy
The allowed number of absences for students enrolled in ACCO 30023 with once-a-week meeting is four (4). Request for excused absences or waiver of absences must be presented upon reporting back to class. Special
examinations will be allowed only in special cases, such as prolonged illness. It is the responsibility of the student to monitor his/her own tardy incidents and absences that might accumulate leading to a grade of
“FA,” (Failed due to Absences). It is also his/her responsibility to consult with the teacher, chair or dean should his/her case be of special nature.
All BSA and BSMA students are expected to be academically honest. Cheating, lying and other forms of immoral and unethical behavior will not be tolerated. Any student found guilty of cheating in examinations
will (at a minimum) receive a grade of 5.0 in the said test.
Consultation Time
Subject to the availability of the subject teacher, student may approach the subject teacher for queries about his/her grade as well as other academic requirements for the subject.
Prepared by:
Enhanced by:
Reviewed by:
(Sgd.)
Jonald P. Binaluyo, MBA, CPA
Faculty Member
(Sgd.)
Dr. Gloria A. Rante, CPA
Faculty Member
(Sgd.)
Noel A. Bergonia, MBA, CPA
Chairperson, Department of Accountancy
(Sgd.)
Elsa R. Ruado, CPA
Faculty Member
(Sgd.)
Marietta M. Doquenia, MBA, CPA
Chairperson, Department of Management Accounting
(Sgd.)
Ma. Delia M. Liz, MBA, CPA
Faculty Member
(Sgd.)
Reynan C. Murtos, MBA, CPA
Faculty Member
Recommending Approval:
(Sgd.)
Dr. Julieta G. Fonte, CPA
Dean, College of Accountancy and Finance
Approved by:
(Sgd.)
Dr. Emanuel C. De Guzman
Vice President for Academic Affairs
Revised September 2021