Abstract: The accounting for business combinations is a very important area, therefore it needs a high quality accounting standard that could be used for both domestic and cross-border financial reporting. IASB issued in January 2008 the revised IFRS 3. 电路原理课程设计电路仿真
Business Combinations, which aims to help both users and preparers of the consolidated financial statements by improving the relevance, reliability and comparability of the information reported by companies around the world. This article aims to highlight few significant changes in the accounting treatment of business combinations that have arisen from the revised IFRS 3, focusing on the accounting principles surrounding the recognition and measurement of the identifiable net assets of the acquiree and any non-controlling interest in the acquiree and on the implications for calculating and measuring goodwill.
Keywords: control, acquisition method, fair value, non-controlling interest, goodwill
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Business combinations are an important feature of the capital markets. Therefore it is necessary to establish principles and requirements in order to improve financial reporting and investor/analyst communications. Adoption of International Financial Reporting Standards (IFRS), and particularly referring to business combination, has had a significant impact on the accounting rules governing mergers and acquisitions.
In 2006, more than 13.000 mergers and acquisition(M&A)transactions took place worldwide. Almost 50% of the transactions, reflecting a combined value of 1,03 trillion Euros, were accounted for using US Generally Accepted Accounting Principles (GAAP), and most of the remainder, reflecting combined value of 1,26 trillion Euros, were accounted for using IFRS or accounting frameworks converging to IFRS. (IASB - Project Summary 2008)
When it comes to assess how the activities of the acquirer and its acquired business will combine, both investors and their advisers confront with many difficulties.In cross-border M&A, comparing financial statements becomes more difficult when acquirers are accounting for acquisitions in different ways, no matter those differences are a consequence of differences between US GAAP and IFRS or because IFRS or US GAAP are not being applied on a consistent basis. Nowadays, as a result of the first major joint project between the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB, the US standard-setter), aiming at taking a broader view at business combination accounting and at unifying the accounting treatment at a worldwide level, the accounting requirements in IFRS and US GAAP are substantially the same. (IASB - Press Release 2008)2405