Research On The Accounting Treatment Method Of Business Combination Under Same Control

Under the environment of acquisition and merger waves spreading in the global, business combinations also pile one after another for better survival and development in China which are closely related with stated enterprises reform. Business combination is not only deemed as the way to activate stated enterprises and adjust the resource allocation but considered as the strategy of the business recombination and extension.Finance Ministry issued new accounting standards on Feb 15, 2006. Enterprise Accounting Standards No.20——Business Combination firstly standardized the accounting treatment of business combination distinguishing under same control and non-same control. We can come to the conclusion that the accounting treatment of business combination under same control is in essence pooling of interest method.This paper tries to discuss the accounting treatment method of business combination under same control. Firstly, there is a short review of the evolution of the accounting treatment method and a deep analysis on the accounting treatment method of business combination under same control. Secondly, there is a comparative comparison between pooling of interest method and acquisition method which is confirmed by absorption merge between CHACLO and Baotou Aluminum. Thirdly, a choice of the two methods about business combination under same control is made according to the economic essence and comparison about accounting information quality between the two methods.The innovation of this paper lies in the question about the fundamental principles of business combinations under same control which use pooling of interest method. It also advocates the acquisition method which is popular in the world at the same time making strict restriction to use pooling of interest method.