With regard to the merger method of thinking _ net write papers

Net write papers: Abstract: companies are actively seeking to form a complementary strengths with the merger. Business combination methods include merger, the creation of three forms of mergers and holding merger, business combination with the purchase method of accounting treatment, interest binding assay and the new substantive law. the more commonly used is the purchase method and pooling of interest method, both in the domestic business combination exist many drawbacks, in practice, weigh the pros and cons, China is still not completely abolish pooling of interest method, but has long been in constant change, and this part of the business combination made clearer, more reasonable regulations, to cancel pooling of interest method is a trend.

Keywords: mergers, the purchase method, pooling of interest method, international convergence

First, the meaning and significance of a business combination
Merger refers to two or more independent of each other's company union, or a company through the purchase of equity securities, asset, agreement or otherwise obtain another or a few companies control the behavior of modern extend the economic life of enterprise scale, expand business, to obtain economic benefits of a very important way.

Merger of the socio-economic Development have a significant role in promoting business growth is an important means and methods, the combined behavior at the micro and macro level have different economic effects, its economic impact, positive or negative life there is great different, and as such, we need to regulate the conduct of a business combination, to fully play its active role to curb its negative effects.

Second, the accounting treatment of business combinations
Current accounting treatment of business combinations, there are three main methods, namely the purchase method, pooling of interest method and the new substantive law.

First, the purchase method. Purchase method business combination is regarded as an enterprise of another or the behavior of several companies and it requires the purchase of corporate balance sheet items, re-valuation, according to the fair market value after the valuation is reflected in the purchase business accounts or consolidated accounting statements. That the purchase of general assets, the buyer should purchase cost accounting.

Second, the pooling of interest method. Pooling of interest method, also known as equity joint venture law, is the merger as a merger of the companies involved in the combination of owner's equity in a business combination as if these companies on the day before the combination, so participate in the combined company's financial statements are to maintain their original book value.

Third, the new substantive law, the new entity as a business combination law is a completely new business, which requires the combined enterprises will participate in the assets and liabilities are adjusted to fair value, and then merge the appropriate account or preparation of consolidated financial statements.

The purchase method and pooling of interest method is more commonly used in a business combination, but both can not replace the use of accounting methods, because both the enterprise's financial statements and future earnings will have different effects:
First, both the cost of the combined record of different purchase method, be and be business assets and liabilities at fair value reflected in the consolidated balance sheet, cost and the difference between the fair value of net assets are recognized as goodwill and During the sharing of the costs in the future. pooling of interest method, assets and liabilities acquired prior to the merger of the recorded book value.

Second, both income in future accounting periods different purchase method, the merger of the subsequent periods due to inventory turnover, depreciation of fixed assets, purchased goodwill and other intangible assets amortization expense will increase, reported earnings reduced pooling of interest method, depreciation will not be higher based on the period after the merger than the purchase method of accounting earnings is high, it will report the user to feel the growth of enterprises, which often tend to choose business interests combined with method using pooling of interest method is often enable businesses in the market allocation of resources in a good position, but the efficiency of resource allocation is low, it is the additional cost imposed on other businesses.

Third, the quality of accounting information between the two different effects on the accounting to reflect the economic benefits for the purpose of authenticity, fairness is the basic principles of accounting should be one of assets, liabilities, book value reflects the historical cost When the going concern assumption is not established, the combined company in the decision-making process, and is considered more of the fair value of the enterprise, rather than the historical cost of its net assets from the relevance of accounting information, the majority of investors expectations based on the fair value based accounting information. pooling of interest method provided by the individual assets and liabilities, information is incomplete, and it can not reflect the company was not recorded in the assets and liabilities, the purchase accounting rules to improve relevance of the information.

Fourth, the cost of the merger between the two different purchase method, requires an assessment of the fair value of the business to be and, when combined direct costs of the purchase cost pooling of interest method, does not require to be and to assess the net assets of the enterprise, occurs when the direct costs of the merger as a current profit and loss. Thus, the pooling of interest method less expensive than the purchase method, but worth noting is that pooling of interest method and will increase the main users of corporate financial reporting and analysis of the cost.

Third, the accounting for business combinations in the treatment of thinking
Traditionally, the purchase method and pooling of interest method the coexistence of two accounting treatment of business combinations is the theoretical basis for the existence and rights to purchase a combination of two nature which directly reflects the different nature of the two for the purchase of a business to buy another asset corporate equity, pooling of interest is a business entirely with their own common stock to exchange each other almost all of the common stock, purchase of properties acquired under the square can be clearly identified, and the merger under the pooling of interest is difficult to determine the nature of the acquirer, but because of pooling of interest method can often result in higher combined income, so some companies have an incentive to design the way through the transaction to meet our standards for the use of pooling of interest method, so different companies for the same M & A transactions may have a different approach. Links to free download http://www.hi138.com
Whether domestic or foreign, for the accounting treatment of business combinations, are encouraged to use the purchase method, strictly regulate and limit the application of pooling of interest method. China's market economy started late in the true sense of the business combination is only in recent years occurred in from the existing accounting standards, our country allows enterprises to adopt the merger accounting method is essentially the purchase method.

Under the purchase method and the corporate market there are many problems, the first condition for using the purchase method has been and is the fair value of the enterprise, but at this stage of the swap merger does not have this condition, and there are many problems.

First, China's securities market accounting for absolute control of the non-flow state-owned shares is generally believed that the stock market the outstanding shares of the stock price is pricing in the conversion merger, and the company's non-tradable shares are difficult to measure, for the same Lord and Company out of non-tradable shares is difficult to pricing, and our stock listed companies accounted for the vast majority of non-current position of absolute control of state-owned shares, so the swap merger is difficult to determine the fair value of the sound.

Second, the stock price bubble overestimate assets.'s securities market has developed rapidly, but the stock price on the stock market bubble has always existed in the swap merger, the combined company for a stock market valuation error due to overvalued part, not but a loss of assets, and the purchase method, is part of the consolidated goodwill overvalued, when overvalued to a considerable extent, the goodwill is difficult to reflect the authenticity.

Third, the purchase method in practice, does not have the perfect environment in China's asset evaluation industry only a decade of Development, CPV business, poor quality, poor management of assets evaluation agencies, and thus the results of asset evaluation difficult to ensure the fair sex.

Purchase method is actually present in our country's condition is not very mature, so the actual business, the pooling of interest method has been management's default, but the pooling of interest method in practice, also revealed many problems. The purchase method and equity method in China have applications in a business combination, or whether international accounting standards of China's accounting standards require the consolidation of the business reflected a true and fair, at this point, the purchase method more objective.

China's accounting has been consistent with international accounting, accounting standards of China's main reference <<International Accounting Standards>> and the United Kingdom, United States, Canada and other countries of the criteria, by comparing the actual situation of our country and determined, and China has become more for using the purchase method business combination.

Select the reason for using the purchase method, the first is the purchase method has many advantages compared with the equity method.

First, the purchase method to better reflect the acquirer's investment behavior. Purchase method based on the exchange value of the assets to merge their record company mergers, so the user can obtain information on the acquisition of another entity, the price of buying all of the information, which helps investment After further evaluation of the performance.

Second, the purchase method can improve the comparability of financial reporting information, all of the business combination of the unified approach, so the winner can compare different instances of the financial results of merger, which is due to the sharing of resources to buy assets no matter what way , to obtain the combined assets and liabilities assumed based on the recognition and measurement are the same.

Third, the purchase method can provide more complete financial information to purchase law requires enterprises to obtain the resources and commitment to make a clear disclosure of liabilities, especially for recognition of intangible assets, including goodwill of the information will help users better understanding of the acquirer access to resources and to assess the company's future cash flow and profitability.

In addition, the purchase method business combination also reduced the cost of pooling of interest method of accounting under the high number of profit-driven enterprises to make use of pooling of interest method to meet the standards of the current design of the transaction, it will increase the business combination of monetary and non- the cost of money.

Selection using the purchase method, followed by convergence with international reasons.

On the world scale, many economic powers like the United States, Britain, Japan, and European Union are actively move closer to international accounting standards. With the increasing complexity of corporate economic, regional or global capital markets to accelerate the formation of a large multinational corporation continue to emerge, new forms of organization and economic type of business theory and practice of the accounting requirements of a higher, but also to governments, relevant international organizations recognize that to reduce differences in national accounting standards, to promote convergence of national accounting standards for provide comparable, transparent financial information is essential. the international convergence of accounting standards, foreign enterprises can reduce the cost of international economic matters, is conducive to further promoting the globalization of business and economic Development.

Development of global accounting standards and promoting common international accounting standards convergence, is the world's economic integration and globalization of capital markets, a necessary requirement, but also improve the quality of financial information necessary requirement in the choice of our business combination accounting treatment, it is necessary to accordance with international practice, in order to conform to the needs of global economic integration, but also to comply with China's national conditions, taking into account the domestic basis of accounting and business characteristics, in order to comply with the Development of domestic enterprises. Links to free download http://www. hi138.com