Study On The Accounting Method Of Business Combination

Accounting for business combination has been an issue concerned both in the field of accounting theory and practice. Using different approach to measure business combination will lead to different accounting result and even different economic result and may also influence the combination itself. FASB and IASB eliminated the'pooling of interest'method one after another. In the trend of international accounting standard convergence, which made a public appearance in February 2006 applies the way that coexist the purchase method with the pooling of interests method. The rule also made breakthrough in many aspects such as the defines of the same controlling and the different controlling, the applications of fair value and the pooling of interests methods and so on, which not only achieves the trend of international accounting standard convergence but also take our situation into consideration. After the rule was executed on January 2007, we have faced many difficulties which aroused our interests in studying on the accounting method of business combination.Firstly, this paper make a comparative analysis of the difference between the purchase method and pooling of interest method, including the differences of theoretical assumptions, accounting treatments and the different impacts of the merger of the different statements and also use the case to prove the economic influences. Secondly, this paper introduced the related regulations of accounting method of business combination. As the most important parts of this paper, section four analyzed the potential problems of the initial measurement and subsequent measurement of merger goodwill, points out the problems is as followings: the obtain of fair value, the distinguish of internally developed goodwill and merger goodwill. The fifth part is trying to solve the above difficulties pointed out in the fourth part. This paper argues that the difficulties of applying fair value will be improve by the development of research of evaluation technique, the setting up fair value measurement rule, the improvement the fair value measurement report and disclosure and the enhancement of the level of accounting practitioners; secondly, alone with the development of evaluation technique and goodwill accounting, the internal developed goodwill should be calculated. Sixth, analyzed the function of the pooling of interests method in our country and point out the problem either, finally, proposes consummates about the problem of adopting pooling of interests method in our country.