Push Down Accounting

You run a company that makes doggie diapers for people who are too lazy to walk their dogs (to be clear, they're for the dogs, not the people). You are looking to expand, so you purchase a company that makes kitty diapers...for people too lazy to empty a litter box. The merger is complete. Time to get the new company's books in line with your accounting procedures...a process that might require some push-down accounting.

The process of push-down accounting involves adjusting the financial statements of the company you just acquired to reflect your firm's accounting basis. So, instead of using the acquired company's historical costs, you're going to update their books for the new reality. Usually, the main result of the process is updating the firm's net assets to their current fair value. Instead of using their historical estimates, you update the numbers to reflect the current value.

Also, the accounting practices at the acquired firm are brought into alignment with yours at the parent company. Dogs and cats living together, as it were.