The CPA FAR Exam is now asking questions about Pushdown Accounting. 

i75 FAR has you prepared! 

Watch this video from i75 FAR and you will see what the exam expects you to know. 

•Pushdown accounting occurs when a company that has been acquired adjusts its own separate financial statements to reflect the acquirer’s purchase price allocation (PPA). 

•Pushdown accounting is optional! If selected, the acquiree “pushes down” the parent’s basis (fair values) onto its own books. 

•The acquiree replaces its old carrying amounts with the parent’s new fair value for acquired assets, liabilities. The subsidiary also records goodwill directly on its own books even though it did not pay anything.  

•Pushdown accounting is allowed when a change-in-control occurs (the acquirer obtains >50% ownership). 

•The acquired company prepares its own separate financial statements.   

•Subsidiary revalues “identifiable” assets and liabilities using fair value, not carrying amount. Same fair values the parent used in its purchase price allocation. 

•Pushdown accounting is optional, not required. However, once elected, the choice is irrevocable. 

•If pushdown is elected by the subsidiary, Retained Earnings of the subsidiary is usually eliminated and replaced with an account called: 

•Additional Paid-In Capital (APIC) – Pushdown. 

•On the “consolidated financial statements” all the subsidiary equity accounts are eliminated, but in the subsidiary’s separate books (if pushdown is used) retained earnings gets eliminated and replaced with APIC-Pushdown.