Summary Of Phoenix And Thunderbird Merger

Although professor X, investor VC, and UND all had common ownership in Darwin and Thunderbird before the merger, none of them were identical owners and controlled the companies indeed before the merger. Hence, Phoenix should account for its acquisition of 100 percent of equity interests in Darwin and Thunderbird as a business combination.

For the reasons noted above, since Professor X controlled Phoenix before the merger but did not control the combined entity after the merger, this merger is substantive and is not under common control. Additionally, the shareholder ownership percentages of Professor X, investor VC, and UND were not similar before the merger or after the merger. Therefore, Phoenix should not account for its acquisition of

After the merger, the largest minority shareholder was Professor X who had 43.1% ownership. As I mentioned in first question, Professor X only controlled Phoenix before the merger. After the merger, Professor X did not control the new combined entity. Similarly, investor VC held 23.7% ownership after the merger, but did not control any companies before or after the merger. ASC 805-10-55-12(b) is not able to prove that Phoenix is the accounting

After the merger, Phoenix, Darwin, and Thunderbird all did not have the significant voting right to elect or appoint or to remove a majority of the members of the governing body of the combined entity. ASC 805-10-55-12(c) is not able to indicate the accounting acquirer.

“As noted above, Darwin, Thunderbird, and Phoenix had common investors and thus, had many common members of their boards of directors and some common members of senior management” (Case 15-10 Who’s in Charge?). ASC 805-10-55-12(d) is not applicable because the senior management of the combined entity were directly from Darwin, Thunderbird, and Phoenix.

According to the case, “At the time of the Merger, each company was deemed to be of equal of value, $5.3 million. However, no valuation assessment was performed to independently verify that.” Since Phoenix, Darwin, and Thunderbird agreed that all respective companies had same equal value and did not perform valuation assessment, the entity that paid a premium was unknown. Thus, ASC 805-10-55-12(e) is not clear whether Phoenix, Thunderbird, or Darwin is the accounting acquirer.

For the reasons noted above, ASC 805-10-55-12 does not provide strong evidence of the accounting acquirer. However, there are some useful indicators in ASC