Shearman & Sterling LLP
Issue link: https://digital.shearman.com/i/1494417
Financial Statement Requirements for Acquisitions (cont.) Significance Tests Financial Statements – The Basic Requirements 30 • Three tests to determine the significance of a target: • Investment Test • Asset Test • Income Test (net income or revenue) • The test that results in the highest significance level is the one that is used to determine the historical financial statements of a target that will be included • For purposes of the tests, the most recent audited financial statements of the target are compared with the acquirer's most recent audited financials, but beware: • Non-coterminous period ends • Non-similar GAAPs or non-similar financial standards (e.g. U.S. GAAP for acquirer and IFRS for target)