Research On The Accounting Treatment Of Reverse Purchase

Reverse purchase is a special form of enterprise merger.Its particularity lies in the difference between the parent company and subsidiary in the legal sense and the buyer and the purchaser identified in the accounting.When accounting for reverse purchase,the parent-subsidiary relationship in the legal sense should be adjusted to the relationship between buyer and purchaser from the perspective of accounting.Due to the complexity of the accounting process and the abstraction of the calculation logic of the merger cost,the problem of the accounting treatment of reverse purchase has attracted much attention.After defining reverse purchase in CAS 20,our country issued finance and accounting Letter [2008]60 and finance and accounting document [2009]17 successively to provide guidance for reverse purchase accounting processing.However,with the emergence of new reverse purchase models in the capital market,the regulation of reverse purchase in the existing accounting standards shows its limitations.On the basis of the existing research results,combined with a large number of reverse purchase examples in our capital market and the provisions of our accounting standards regarding reverse purchase,focusing on the differences and deviations of implementing the relevant provisions in the practice,adopting normative research paradigm,this thesis analyzes the existing problems such as the judgment of reverse purchase,the identification of business,the determination of merger cost,the use of the principle of equity transaction and the recognition of goodwill and put forward my suggestions.Through the research,this thesis draws some conclusions.First,substance over form should be taken as one of principles of judging reverse purchase,which can avoid reverse purchase being misjudged as an ordinary enterprise merger under different control;In order to comply with the trend that standard reverse purchase becomes less and less common,the range of payment methods should be expanded to include reverse purchase in other payment methods into the definition of reverse purchase;for Getting Listed by Purchasing Shell,"one size fits all" has its drawbacks,analysing whether it’s reverse purchase combined with the specific situation can reflect the economic essence of the transaction.Secondly,for the definition of business,the division of the three cases in the Accounting Department Letter[2009]116 is crossed.Deleting the case Ⅲ in the Accounting Department Letter [2009]116can avoid differences in practice;when judging non-business,combining with the subsequent arrangement of assets swapped out and taking whether the assets are detached from the merged entity as the criterion are beneficial to the application of the principle of equity transaction.Thirdly,considering non-share consideration can ensure the accuracy of the merger cost of non-standard reverse purchase.In addition,non-business reverse purchase should not be treated as equity transaction because it does not conform to the characteristics and criteria of equity transaction.It is more theoretical and understandable to use the provisions of non-business forward purchase.Finally,by improving the calculation rules of merger cost and separately confirming resource of shell,the recognition of goodwill can reflect its essence and enterprises can choose the principle of equity transaction and reverse purchase method according to the actual situation.