Research On Accounting Problems Of Reverse Acquisitions Of Backdoor Listing

Acquisitions and reverse acquisitions in the capital markets around the issues of merging and recombination became the focus. Backdoor listing is an important way for an enterprise entering the capital market. Many real estate companies and media giants successfully get public listing through the backdoor. Meanwhile, the capital market has also attracted a large number of brokers to backdoor listing and more and more industries have been involved. Whether net shell or not, finally a listed company has been controlled by a non-listed company and the later indirectly getting public listed. More and more successful cases of backdoor listing and reverse acquisitions become theoretical research focuses. Particularly, the merge accounting treatment in reverse acquisitions of consideration of different payment, will lead different economic consequences.In this paper, the basic concepts of business combination, reverse acquisition and backdoor listing are introduced firstly. Then the literatures on accounting treatment of reverse acquisition are reviewed. After that, based on China’s current guidelines for standardized accounting treatment principles under reverse acquisition, the acquiree as a business, the original controlling shareholder of the accounting treatment and consolidated processing of the parent company are researched in detail.To solve these problems, a case of Jiangsu Sha Steel Group Co., Ltd. reverse acquiring Gaoxing Zhangtong Co., Ltd. and in-depth and detailed data analysis are provided. Reasons for the differences and impacts by use of principle of equity transactions of accounting treatment under reverse acquisition are pointed out. Finally, this paper recommends that the listed companies disclose the accounting treatment of the former controlling shareholder during reverse acquisition. This paper also recommends introduction of regulatory measurements in backdoor listing and keeping coordinated in the accounting treatment and disclosure of information. According to current regulations and the success case of backdoor, during a long period of future time, many reverse acquisitions will be net shell.