Research On Accounting Treatment Of Enterprise Cross-Border Mergers And Acquisitions

As China’s foreign exchange reserves become the first place in the world, and RMB stably appreciate, and the need for integration of global economy, all of these provide powerful protection for Chinese enterprises to foreign expansion.To this end, Chinese enterprises actively take the developing strategy of "going out", and China sets off a wave of the cross-border mergers and acquisitions in the world. However, the cross-border mergers and acquisitions of Chinese enterprises started lately, so compared with the developed European countries Chinese enterprises are still somewhat weak in a number of key steps. Accounting treatment is an essential part of the cross-border mergers and acquisitions, and it involves in wide range of issues. At the same time, because of the different legal systems and accounting standards in different countries the cross-border mergers and acquisitions will be more complicated. How to make strategic decisions and make accounting treatment in the cross-border mergers and acquisitions of Chinese enterprises will have a significant impact on the success of mergers and acquisitions.The core of the problem of accounting treatment in the mergers and acquisitions is the choice of accounting methods. Equity method and purchase method will produce different economic consequences. While in the cross-border mergers and acquisitions, international accounting standards have been defined only using the purchase method, but it can be still use the two methods in Chinese accounting standards, which is inseparable with the economy and financial environment in our country. This article will explore the selection of accounting methods, the method of asset valuation, the choice of means of payment and accounting treatment of goodwill and other issues in the cross-border mergers and acquisitions.This article firstly combines the domestic and foreign scholars on the accounting treatment of the using of the mergers and acquisitions, and combining with the economic consequences of equity method and purchase method, the abolition of equity method and earnings manipulation and other aspects to make literature review. Then the article makes theoretical review from the definition and process of the cross-border mergers and acquisitions, to the accounting treatment and other aspects. Which focuses on comparing the using characteristics, economic consequences and accounting consequences of the purchase method and the equity method. Then this article makes an example of American Cliffs Natural Resources’s acquisition of Canadian Consolidated Thompson Iron Mines. The purpose is to show how to select the accounting treatment in the practice in the mergers and acquisitions, the contrast of the accounting standards if the two countries, the method of the asset valuation, the payment and the accounting treatment and confirmation of the goodwill and other several aspects. By exploring these problems the article make some feasible suggestions for Chinese enterprises through the cross-border mergers and acquisitions, including the strategies of mergers and acquisitions, the suggestions of avoiding the profit manipulation when using of the purchase method, the suggestions of improving the evaluation of assets, the suggestions of the payment in the cross-border mergers and acquisitions of Chinese companies and the suggestions of the accounting treatment of the goodwill. All in all, this article has a certain significance of deepening the understanding and awareness of the accounting treatment in the cross-border mergers and acquisitions.