Research On Finance And Accounting In Business Combinations

Since China adopted reform and opening policies, business combinations and reorganizations have become more and more popular. A business combination is a complex process of ownership transaction, concerning many factors: laws, taxes, finances, anti-monopoly etc., among which financial dealing is an essential question that will affect the real price of a business combination and adoption of appraisal methods, even affect the price of annexed companies. However, the choice of accounting methods will affect financial indexes of companies, even affect distribution of profits between combined companies.By now, our country has not put out the specific accounting standard "business combination". According to published "Temporary regulations of accounting dealings on business annexation", "Temporary regulations on consolidated accounting statements" etc., the accounting method for business combination adopted in our country is the purchase method. With the innovation of ways of business combination, especially for emergence of stock-exchange combination, those regulations gradually cannot satisfy the demands on economy development.This dissertation gives a introduction and research on related financial problems in business combination (such as financial analysis, cost analysis, value appraisal and risk analysis etc), based on the research on definition, theories and financial signification of business combination, this dissertation generally introduces and analyses the two accounting methods for business combinations: purchase method and pooling of interests method.With a concrete case and based on the views of domestic experts on accounting methods for business combination, the author analyses the application of pooling of interests method in our country. He puts forward his own proposal as follows:(1)Our country should permit the applying the pooling of interests method when purchasing method is encouraged to be applied for Chinese firms;(2)Our country should put out the specific accounting standard " business combination" as soon as possible to satisfy the demand in regulating the financial and accounting practices in business combination s, such as the conditions of application and concrete applying procedures for both accounting methods should be put forward;(3)The purchase method and pooling of interests method should be used separately to ensure the comparision on accounting information;(4)The concrete proposals are given for the contents of accounting information on business combination and the decision on the date of business combination in this dissertation.