Introduction
Cisco System is one of the largest Americanmultinational organization that primarily focuses on the manufacturing, development and selling of the telecommunication equipment, networking hardware and other high tech products and services. Due to the various acquired subsidies, it has specialized in the high tech markets such as Domain security, Internet of Things and Energy Management. In the initial period of the company, it has generated $69 million revenues.
Over the period of time, the company has grown increasingly into the various regions with its dominant leadership in the international market. The company has become popular due to its leadership all across the market segments, it has widely acquired companies and massively leveraged its profit returns through acquisitionstrategies. In 2000, Cisco System has become one of the valuable company all aroundthe worldand its market capitalization was $569 billion. The operations of the Cisco can be divided into four broad categories such as;
All these operations have hugely accounted for the quarter ending period sales of the company. Developing technologies so that the computer network can communicate with another is one of the major concern of the company.
The dissertation outlines the Cisco’s role in setting the current US accounting standards for the goodwill and acquisition. The content includes analysis of the acquisition in the context of the ongoing discussion on the merger accounting.
Arrow Point Communication Acquisition:
Interestingly, after acquiring many firm with the intent to grow in the market and to gain market share, the company has contemplated to acquire ArrowPoint CommunicationCompany, the company is engaged in the provision of the internet content switch which can assist web host in optimizing and tracking the performance of the websites.
Cisco system has proclaimed the acquisition of the company in order to provide better, flexible, feature rich content switching platform to its customers. The solution being provided by ArrowPoint would most likely strengthen the presence of the Cisco company in the emergingmarkets that comprised of the renowned high tech companies primarily responsible to provide high tech and reliable solutions to their customers.
Concerns Raised By Dennis Powell:
Since Financial Accounting Standard Board (FASB) has proposed the Purchase method and dissolving of the Pooling of interest method which involved the acquisition consolidation of the balance sheets of the two companies into one balance sheet based on the book value, while there is no reporting of the goodwill in connection with the acquisition.
Powell had opposed the FASB and had raised various related concerns, he had reported the elimination of the purchase method with the goodwill amortization. The concerns are listed below:
- He had raised the concern about representing the operating results of the combined firms which can be easier in the pooling of interest method rather than purchase method. According to him, the real and economic reality of the equity funded transactions as well as the operating results of the combined companies can get in pooling of interest method.................
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