Use Of A Controlling Stake In The Premium On The Improvement Of The Merger Theory

Since the 21st century, along with the integration of the resources, the enterprisecore-competence creation, the need to achieve scale economy, China's M&A transactionsshows a trend of robust development. A series of M&A transactions in different areas doinfluence and reshape the new pattern of Chinese industries by its unique business way andindustrial influence. On the other hand, the Ministry of Finance and other relevantgovernment departments have introduced and implemented new accounting standards, thesystem of industry to further standardize the accounting treatment of merging process.Overall, these systems and standards are almost based on the three existing mergingtheories (the parent company theory, the entity theory and the modern theory). This articlebegins with the basic theories of the compilation in the consolidated statements. I foundthat the three existing merging theories have a common defect when they are refer to theaccounting treatment of goodwill. This defect has affected the rationality of the wholecompilation in the consolidated statements. Thus, I profound analyze the essentialconstitutions of difference between the merging price and the fair value of the net assetswhich are supposed to be sold.As confirming treatment of the consolidated goodwill in the consolidated financialstatements, premium of control is also focused on the amount of the share transfer. It ledme to suppose that there is something related between the consolidated financial statementstheories and the premium of control theories. Therefore, I elaborate the "premium ofcontrol" theories in the following part. Then I analyzed the characteristics of the premiumof control deeply to enhance the availability of the improved model in the consolidatedfinancial statements theories. Finally, I introduce the following content such as: themeaning of the premium of control, the source of value, influencing factors, measuringmethods. Also I will combine the consolidated financial statements theories and thepremium of control theories by analyzing the essential constitutions of the mergingdifference.