| Course | ACC 620 Financial Reporting II |
|---|---|
| Module | Module 8 |
| Paper type | graduate business combination assignment under ASC 805 |
| Length | About 1,010 words, 6 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | MS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 620 Module 8
Acquisition Accounting for the Minnesota Carrier Purchase
[Student Name]
Southern New Hampshire University
ACC 620: Financial Reporting II
Module Eight Assignment
[Instructor Name]
[Date]
The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.
Acquisition Accounting for the Minnesota Carrier Purchase
Introduction
On April 1, 2025, the carrier acquired all of the shares of a family-owned refrigerated carrier based in St. Cloud, Minnesota, with 210 tractors, two owned terminals and a strong dairy and frozen food customer list. The seller's family had run it for three generations. The deal extends the carrier's network west and gives it backhaul freight for lanes that previously ran empty. This assignment applies the acquisition method of ASC 805, introduced by the FASB's revised business combinations standard (Financial Accounting Standards Board, 2007).
Acquirer, Date and Consideration
The carrier is the acquirer: it paid cash and issued a small number of its own shares, its owners hold nearly all of the combined company, and its management runs the combined business. The acquisition date is April 1, when the carrier obtained control and the shares transferred. The price paid is valued as of that day: $58.0 million in cash and 500,000 carrier shares at the April 1 closing price of $41, $20.5 million, for $78.5 million in total. The announcement-date price of $38 is not used; ASC 805-30-30-7 measures equity issued at acquisition-date fair value. There is no contingent consideration.
Identifiable Assets and Liabilities
Each asset and liability is measured at acquisition-date fair value, with limited exceptions such as deferred taxes and leases (Hoyle et al., 2021).
Tractors and trailers were valued at $46.0 million using dealer prices for comparable units adjusted for mileage and condition, a market approach. The two terminals were appraised at $9.0 million. Receivables with contractual amounts of $11.6 million are recorded at fair value, $11.2 million, reflecting expected collections; no separate allowance is carried over.
Three intangibles meet the recognition criteria. Customer relationships, the largest, arise from contracts with dairy cooperatives and frozen food makers and were valued at $16.0 million using the multi-period excess earnings method, projecting cash flows from existing customers over 12 years after charges for the use of other assets. The trade name, recognized because it is legally protected, was valued at $2.4 million by relief from royalty; because the carrier plans to retire it in five years, it has a finite life. A two-year noncompete with the selling family is contractual and was valued at $800,000. The assembled workforce of 230 drivers, valuable as it is, cannot be recognized separately and is part of goodwill.
Liabilities include accounts payable and accrued expenses of $9.5 million, equipment notes of $21.6 million at fair value, and an accident claims reserve of $4.2 million. The target's leases for two leased terminals are measured as if they were new leases at the acquisition date, so each lease brings $5.4 million onto both sides of the balance sheet.
Deferred Taxes
Because the carrier bought shares, the target's tax bases carry over, while its book amounts are stepped up to fair value. ASC 805-740 requires deferred taxes on the differences. Intangibles of $19.2 million have no tax basis, creating a $4.8 million liability at 25 percent, and the equipment step-up of $6 million adds $1.5 million. The target's Minnesota loss carryforwards create a $2.352 million asset, less an $800,000 valuation allowance, as analyzed in Milestone One. The net deferred tax liability is $4.748 million.
Goodwill
Purchase price allocation, in thousands
| Item | Fair value |
|---|---|
| Tractors and trailers | $46,000 |
| Terminals, owned | 9,000 |
| Receivables | 11,200 |
| Customer relationships | 16,000 |
| Trade name | 2,400 |
| Noncompete agreement | 800 |
| Right-of-use assets | 5,400 |
| Accounts payable and accrued expenses | (9,500) |
| Accident claims reserve | (4,200) |
| Equipment notes | (21,600) |
| Lease liabilities | (5,400) |
| Net deferred tax liability | (4,748) |
| Net identifiable assets | $45,352 |
| Consideration transferred | $78,500 |
| Goodwill | $33,148 |
Goodwill of $33.1 million is 42 percent of the price. It represents the workforce, the backhaul synergies on westbound lanes and expected savings from combining dispatch and maintenance. It is not deductible for tax because this was a stock purchase. Goodwill is assigned to the carrier's truckload reporting unit and tested for impairment annually.
Acquisition Costs and the Measurement Period
Legal, valuation and advisory fees of $1.3 million are expensed under ASC 805-10-25-23; they are not part of consideration. Costs to register the 500,000 shares reduce paid-in capital. The customer relationship valuation and the claims reserve are provisional because the valuation firm's final report and a review of open claims were not complete at year end. Under ASC 805-10-25-13, adjustments for facts that existed on April 1 will be recorded against goodwill until the measurement period closes on March 31, 2026; a later change would go to earnings.
Does the Price Make Sense?
Goodwill is a residual, so a large figure can hide valuation errors in the identified assets. Two checks support it. First, the target earned about $7.4 million of EBITDA in the year before the deal, so the $78.5 million price plus $21.6 million of assumed debt is about 13.5 times EBITDA, high for a truckload carrier but consistent with the backhaul savings management modeled. Those savings, about $3.2 million a year from filling empty westbound miles, are synergies available only to this buyer, which is why they show up in goodwill rather than in any identified asset. Second, the customer relationship value implies an annual attrition rate of about 8 percent, in line with the target's own history of losing one or two customers a year. If the valuation had used a lower attrition rate, customer relationships would be higher and goodwill lower, with higher amortization in later years. Because goodwill will be tested for impairment, the synergy estimate effectively becomes a promise the reporting unit must keep.
Disclosures
The notes must describe the acquisition and its reasons, the consideration and its components, the amount booked for each main group of assets and liabilities, the qualitative factors that make up goodwill, provisional amounts and the target's revenue and earnings since April 1. As a public company, the carrier must also present pro forma revenue and earnings as if the deal had closed at the start of 2024. Shalev (2009) found that more complete business combination disclosure is associated with stronger market reactions to the information, which argues for specific rather than boilerplate wording.
References
Financial Accounting Standards Board. (2007). Business combinations (Statement of Financial Accounting Standards No. 141, revised). Author.
Hoyle, J. B., Schaefer, T. F., & Doupnik, T. S. (2021). Advanced accounting (14th ed.). McGraw Hill.
Shalev, R. (2009). The information content of business combination disclosure level. The Accounting Review, 84(1), 239-270. https://doi.org/10.2308/accr.2009.84.1.239
What the ACC 620 Module 8 instructions ask for
The Module Eight assignment in ACC 620 usually describes an acquisition and asks you to account for it under ASC 805. Plan to identify the acquirer, determine the acquisition date, measure the consideration transferred at fair value, recognize and measure identifiable assets acquired and liabilities assumed, and compute goodwill or a bargain purchase gain. Many versions add intangible assets to identify, contingent consideration, acquisition costs, deferred taxes or measurement period adjustments, and some ask for the consolidation entries. Explain how each fair value was estimated and why each intangible meets the contractual-legal or separability criterion, since graders look for those reasons, along with a goodwill figure that ties to the allocation.
How this ACC 620 Module 8 business combinations assignment example is built
The paper records the purchase of a Minnesota carrier for $58 million in cash and 500,000 shares worth $20.5 million at the closing price, $78.5 million in total. Tractors and trailers are valued at $46 million, two owned terminals at $9 million and receivables at $11.2 million against $11.6 million contractual. Intangibles include customer relationships of $16 million, a trade name of $2.4 million and a noncompete of $800,000. Assumed liabilities include $21.6 million of equipment debt, a $4.2 million claims reserve and leases, and a net deferred tax liability of $4.75 million. Goodwill is $33.1 million, and $1.3 million of deal costs is expensed. The paper ends with the measurement period, a check on what the price implies and the required notes.
Where the ACC 620 Module 8 rubric puts the points
Rubrics for the business combinations assignment typically score the steps of the acquisition method, measurement of consideration, identification and measurement of intangibles, treatment of liabilities and deferred taxes, the goodwill computation, acquisition costs and Codification support. Top papers justify each intangible with the recognition criteria, explain the valuation method used for the largest ones, record deferred taxes on fair value step-ups in a stock acquisition and explain what goodwill represents in the deal. Graders also reward discussion of the measurement period and a reasonableness check on the goodwill figure. Common deductions include capitalizing acquisition costs, valuing shares at the announcement date, omitting deferred taxes and recognizing an assembled workforce as an intangible.
ACC 620 Module 8 help: the mistakes that cost points
Business combination papers most often slip on deferred taxes: in a stock acquisition, the target's tax basis carries over, so fair value step-ups create deferred tax liabilities that increase goodwill. A second weak spot is receivables, which are recorded at fair value with no separate allowance at the acquisition date. If your case involves contingent consideration or a noncontrolling interest, each adds a measurement at fair value, and the same allocation structure applies. Build the allocation table before writing; when consideration minus net identifiable assets equals goodwill and every line has a valuation basis, the analysis is sound. Then ask whether the goodwill share of the price is plausible for the industry.
Get ACC 620 Module 8 written to your instructions
Send the ACC 620 Module 8 assignment and the deal data. The paper will apply each step of the acquisition method, allocate the price to identifiable assets and liabilities, compute goodwill and explain the judgments and disclosures with Codification support. Your first sample is free and generally arrives in two days. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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ACC 620 Module 8 questions, answered
Where can I find a free ACC 620 Module 8 Business Combinations sample?
This page includes a full ACC 620 Module 8 assignment allocating the price of a carrier acquisition and computing goodwill under ASC 805.
What are the steps of the acquisition method?
Identify the acquirer, determine the acquisition date, recognize and measure identifiable assets acquired, liabilities assumed and any noncontrolling interest, and recognize goodwill or a bargain purchase gain.
Which acquired intangibles are booked apart from goodwill?
Those that come from a contract or legal right, and those the buyer could sell, license or trade apart from the business.
Are acquisition-related costs capitalized?
No. Under ASC 805, legal, advisory and other acquisition costs hit expense in the period the work is done, while the cost of issuing shares or debt is handled under separate rules.
What is the measurement period?
Up to one year after the acquisition date, during which the acquirer adjusts provisional amounts for new information about facts that existed at the acquisition date, with offsetting changes to goodwill.