<<I agree with your interpretation of the purchase price MIKL paid. Fair value often means excluding intangibles.>>
On a statutory basis, in business combinations "fair market value of net assets" as of the day of the combination is simply "fair market value of total assets" (or what we would call just plain, old ordinary market value or appraised value of total assets).....minus "fair market value of total liabilities" (again, appraised or market value).
Intangibles as a general rule ARE included in the fair value calculation. However, intangible items such as deferred taxes and prior goodwill on the books of a company like Papetti's would NOT be treated in the fair value calculation of assets and hence, would be swept into the goodwill category at the time of combination.
<<Often the 10Q or 10K will show what last year's results would have looked like if the acquisition had been included then. The adjustment enables you to figure out what the annual sales were of the acquisition, and what they were making as well.>>
jeffrey, in a "purchase" transaction which is the accounting method used for the combination of MIKL with Papetti's, the combining of figures prior to the date of combination is actually not required. As such, most companies don't bother to give you this information for prior periods on their financial statements.
You may, however, be confusing your recollection of financial statements spelling out business combination numbers prior to the date of the transaction with situations when a company changes its "method of consolidation" in another company (ie, increases ownership over the 50% level; changes from equity method of accounting to full consolidation method). I would think it therefore safe to assume that the MIKL numbers used in statements this year referring to the period prior to the Feb '97 acquisition do NOT include any Papetti numbers. |
