push-down accounting

Definition

The practice of adjusting a subsidiary's books to reflect the parent company's purchase price allocation, essentially forcing the acquired company to record the acquisition cost on its own books. It's accounting inception.

Example Usage

After the acquisition, we applied push-down accounting, which meant the subsidiary's balance sheet suddenly showed goodwill it never created itself.

Origin

U.S. GAAP terminology from 1980s, addressing how to account for leveraged buyouts

Fun Fact

Push-down accounting is optional in many cases, creating opportunities for companies to choose whichever method makes their numbers look better—flexibility is wonderful.

Source: GAAP acquisition accounting methodology

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