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Simple English definitions for legal terms
acquired surplus
Read a random definition: petty jury
A quick definition of acquired surplus:
Acquired Surplus: When a company purchases another business, it may gain a surplus called acquired surplus. This surplus is the extra money or assets that the purchased business had beyond what it needed to pay its debts and obligations. It becomes part of the purchasing company's net worth.
A more thorough explanation:
Definition: Acquired surplus is the surplus gained by purchasing another business. Surplus refers to the excess of receipts over disbursements, or the net worth of a corporation beyond the par value of its capital stock.
Examples:
- If Company A purchases Company B for $10 million, and Company B has a surplus of $2 million, then Company A's acquired surplus would be $2 million.
- A corporation has $50 million in assets and $40 million in liabilities. The excess of $10 million is the corporation's surplus.
These examples illustrate how acquired surplus is gained through the acquisition of another business, and how surplus is calculated as the excess of assets over liabilities.