Accounting Treatment Of Business Combinations

As corporate mergers have become bigger, stronger, rational allocation of resources and basic means of restructuring, it set off a worldwide wave of mergers and acquisitions, it is in this context, in order to implement the industrial structure adjustment, improve resource allocation and enhance national competitiveness, China's rising corporate merger boom. The accounting treatment of business combinations has been the focus of debate at home and abroad.China's Ministry of Finance February 15, 2006 release of the new accounting standards in the "Accounting Standards for Enterprises No. 20 - Business Combinations" Accounting for business combinations under common control method is divided into mergers and business combinations under common control , business combination under common control with using the equity method, a business combination under common control using the purchase method, and this is the first time in the form of guidelines to regulate the business combination.In 2001, the United States abandoned the equity method, while the International Accounting Standards in 2004, also abolished the use of pooling of interest method, so in the international arena, abandoned on the pooling of interest method has become the mainstream, and shift the equity method of formally incorporated into the corporate guidelines provides the surface, it seems China has adopted a global economy, the trend of internationalization of accounting inconsistencies, so, this article analyzes the international accounting treatment of business combinations on the evolution and the interest method and the purchase method of analysis compared with China's specific conditions and circumstances of the equity method in the rationality of the existence of in-depth analysis, and points out the equity method in China a number of shortcomings in the implementation process, as well as for some suggestions of these deficiencies Finally, the accounting treatment of business combinations in the future development were discussed.