Test point: Business combination not under common control

1. Accounting principles

(1) Determine the purchaser

Purchase method It is from the perspective of the purchaser. In this transaction, the purchaser obtains the net assets of the purchased party or the control over the net assets. It should confirm the assets acquired and the liabilities it should bear, including those that the purchased party did not originally pay. Recognized assets and liabilities. As far as the purchaser itself is concerned, the measurement of its original assets and liabilities will not be affected by the transaction. The first prerequisite for using the purchase method to account for business combinations is to determine the purchaser. A purchaser is a party that obtains control of another party or parties in a business combination. In a business combination not under common control, the business combination contract, agreement and other relevant factors should generally be considered to determine the purchaser. When judging the purchaser in a business merger, all relevant facts and circumstances should be considered, especially the relative voting rights of the parties participating in the merger after the merger, the composition of the management body and senior management of the merged entity, and the terms of the equity swap. wait. For example, in a merger, if one party acquires more than half of the other party's voting shares, unless there is clear evidence that control cannot be formed, the party that acquires more than half of the other party's voting shares is generally considered to be the purchaser.

(2) Determine the purchase date

The purchase date is the date when the purchaser obtains control over the purchased party, that is, the date when the transfer of control occurs during the business combination transaction. Depending on the method of business merger, in the case of a holding merger, the purchaser should confirm the long-term equity investment in the purchased party formed by the business merger on the purchase date; in the case of a merger by absorption, the purchaser should confirm the merger on the purchase date. Various identifiable assets and liabilities of the purchased party obtained from the transaction.

The basic principle for determining the purchase date is the point at which control is transferred. In practical operations, enterprises should make judgments based on the stipulations of the merger contract or agreement and other relevant influencing factors, and in accordance with the principle of substance over form. When the following conditions are met at the same time, it can generally be considered that the transfer of control has been achieved and the purchase date has been formed. Relevant conditions include:

①The business merger contract or agreement has been approved by internal authorities such as the general meeting of shareholders.

②According to regulations, if the merger matters need to be approved by the relevant national competent authorities, the approval of the relevant departments has been obtained. According to relevant national regulations, corporate mergers and acquisitions need to be approved by relevant national departments. Obtaining relevant approval documents is an important factor in determining the purchase date.

③All parties involved in the merger have completed the necessary transfer procedures of property rights.

④The buyer has paid most of the purchase price (generally more than 50%) and has the ability and plan to pay the remaining amount.

⑤The buyer has actually controlled the financial and operating policies of the purchased party, enjoys corresponding benefits and bears corresponding risks.

If a business merger involves more than one transaction, such as acquiring shares in stages and finally realizing the merger, the company should confirm each individual investment in the invested enterprise on each trading day. "Transaction date" refers to the date when the merging party or purchaser confirms its investment in the investee in its own books and statements. In a business combination achieved in steps, the purchase date refers to the date when the purchaser finally obtains control of the purchased enterprise according to relevant standards.

For example, Company A acquires 30% of the equity of Company B on October 20, 2007 (assuming that it can exert significant influence on the investee). When the risks and rewards related to the acquisition of equity are transferred , Company A should confirm its long-term equity investment in Company B on that day. On the basis of already owning 30% of the equity of Company B, Company A acquired 30% of the equity of Company B on December 8, 2008. When its shareholding ratio reaches 60%, it is assumed that it can control Company B starting from that day. If the Company exercises control, December 8, 2008 will be the transaction date for the second equity purchase. At the same time, because it can exercise control over Company B on that day, it will form the purchase date of the business combination.

(3) Determine the cost of business combination not under the same control

Business combination cost = fair value of cash or non-cash assets paid + fair value of debt issued or assumed + issued The fair value of equity securities + various direct related expenses incurred, etc.

For a business merger achieved step by step through multiple transactions, the business merger cost is the sum of the costs of each single transaction.

The cost of a business combination includes the total amount of the following items paid by the purchaser on the purchase date:

①The fair value of cash and non-cash assets as consideration for the merger. If a non-monetary asset is used as the merger consideration, the merger cost shall be the fair value of the consideration paid. The difference between the fair value and the book value of the non-monetary asset as the merger consideration shall be regarded as the profit or loss from the disposal of the asset.

②The fair value of debts incurred or assumed due to business mergers. The fair value of each liability assumed due to a business combination shall be the present value of future cash flows calculated based on the applicable interest rate. Future losses or other costs that are expected to occur due to a business combination are not liabilities borne by the purchaser to obtain control of the purchased party and do not constitute business combination costs.

③When the business combination contract or agreement provides for adjustments to the merger costs based on the occurrence of future contingencies, if it is judged that the relevant adjustments are likely to occur and can be measured reliably on the purchase date, the relevant adjustments should be made The adjustment amount is included in the cost of business combination. For example, the business combination contract stipulates that if the purchased party achieves a certain level of profit in a specific period in the future, the purchaser needs to pay additional consideration on the basis of the business combination consideration already paid. It is likely that the standards stipulated in the contract will be met, and the amount that needs to be paid according to the contract or agreement should be included in the cost of business combination.

After the enterprise estimates the adjustment amount of the business combination costs that may need to be paid on the purchase date and includes it into the business combination costs, if the events involving the adjustment costs do not actually occur or occur in the future, the original estimate needs to be calculated. The adjustment amount is adjusted to the amount included in the cost of business combination, or the relevant adjustment amount is not included in the cost of business combination on the acquisition date due to the low possibility of future events and the unreliable measurement of the amount. In the future period, due to the merger contract or agreement If the agreed events are likely to occur, the amount can be measured reliably, and the relevant recognition conditions are met, the business combination cost should be adjusted accordingly.

Thinking about the problem: Company A signed an agreement with Company B’s original investor A on June 1, 2007. Company A exchanged new patented technology for the equity of Company B held by Company A. On July 1, 2007 ( The fair value of Company B's identifiable net assets on the date of purchase is 100 million yuan, and Company A obtains 80% of Company B's voting capital. The book cost of the intangible assets invested by Company A is 80 million yuan, the accumulated amortization is 10 million yuan, the fair value is 100 million yuan, and the business tax rate is 5%. The business combination contract or agreement stipulates that if the net profit of the purchased party exceeds 4 million yuan for two consecutive years, the purchaser will need to pay an additional consideration of 3 million yuan. On the purchase date, it is expected that the profit level of the purchased party will likely reach the level stipulated in the contract. standard. Assume that Company A, Company B and Company A have no related party relationship. Then the merger cost of Company A is ( ) million yuan.

Analysis of merger cost = 10 000 + 300 = 10 300 (10,000 yuan)

④ Treatment of relevant expenses incurred by the purchaser for the business merger

Non-common control All directly related expenses incurred during the business combination shall be included in the cost of the business combination. However, the following two situations are excepted:

First, for a business merger through the issuance of bonds, commissions, handling fees, etc. related to the issuance of bonds should be directly included in the initial measurement amount of the liability.

Second, if equity securities are issued as merger consideration, the commissions and handling fees related to the issuance of equity securities shall be deducted from the issuance income of the equity securities issued. If the premium or premium amount is insufficient for deduction, the surplus reserve and undistributed profits shall be offset.

(4) Distribution of business combination costs between the identifiable assets and liabilities acquired

In a business combination not under common control, the purchaser obtains a net benefit from the purchased party The control over assets, depending on the method of merger, should be recognized in the consolidated financial statements or individual financial statements respectively for each identifiable asset and liability obtained in the merger.

① The identifiable assets and liabilities of the purchased party acquired by the purchaser in the business combination shall be recognized as the assets and liabilities of the enterprise (or assets and liabilities in the consolidated financial statements). On the purchase date, the recognition conditions for assets and liabilities must be met.

② Recognition of intangible assets obtained in business combination. The intangible assets acquired by the purchaser in a business combination shall comply with the definition of intangible assets in the "Accounting Standards for Business Enterprises No. 6 - Intangible Assets" and their fair value on the purchase date can be measured reliably. According to the provisions of the intangible assets standards, non-monetary assets that have no physical form must meet the definition of intangible assets. The key is to see whether they meet the identifiability standard, that is, whether they can be separated or divided from the enterprise, and can be separated or related to each other. Contracts, assets or liabilities together for sale, transfer, licensing, lease or exchange; or shall derive from contractual or other legal rights, whether or not such rights may be transferred or severed from the enterprise or other rights and obligations. When fair value can be measured reliably, intangible assets that should be recognized separately from goodwill generally include: trademarks, copyrights and related license agreements, franchises, distribution rights and other similar rights, patented technologies, proprietary technologies, etc.

③Recognition of contingent liabilities arising from business combinations. In order to reflect as much as possible the potential obligations that the purchaser may assume due to the business combination, as for the contingent liabilities that the purchaser may need to bear on behalf of the purchased party during the business combination, on the purchase date, there may be related contingencies that cause economic benefits to flow out of the company. The possibility is relatively small, but if its fair value can be reasonably determined, it needs to be recognized as a liability acquired in the merger.

④ For the goodwill and deferred income tax items that have been recognized by the acquiree before the business merger, the purchaser should not allocate the business merger costs and confirm the identifiable assets and liabilities acquired in the merger. consider. After the fair value of each identifiable asset and liability that should be recognized in the merger is determined in accordance with the regulations, if the tax base is different from the book value and a temporary difference is formed, the corresponding deferred income tax shall be recognized in accordance with the provisions of the income tax accounting standards. assets or deferred tax liabilities.

In a business combination not under common control, the acquirer’s recognition of the identifiable assets and liabilities of the acquiree acquired in the merger is not limited to the assets and liabilities recognized by the acquiree before the merger. , may also include the assets and liabilities of the acquired party that have not been recognized in its balance sheet before the business merger. Such assets and liabilities may not be recognized as the assets and liabilities of the acquired party before the business merger because they do not meet the recognition conditions. However, after a business merger occurs, it needs to be recognized as identifiable assets and liabilities acquired in the merger because it meets the relevant recognition conditions. For example, if the acquired party has unmade up losses before the business merger, and the related deferred income tax assets are not recognized because it cannot obtain sufficient taxable income to offset the losses before the business merger, if it can be offset according to the tax law, If the taxable income realized by the purchaser in the future period is deducted and the purchaser is expected to obtain sufficient taxable income in the future period, the relevant deferred income tax assets shall be recognized as identifiable assets acquired in the merger.

(5) Treatment of the difference between the cost of business combination and the fair value share of the identifiable net assets of the acquiree obtained in the merger

The difference between the fair value share of the acquirer's identifiable net assets shall be dealt with separately according to the circumstances:

① The difference between the cost of business combination and the fair value share of the acquiree's identifiable net assets obtained in the merger shall be recognized as Goodwill. Depending on the method of business combination, in the case of a holding merger, the difference refers to the goodwill that should be listed in the consolidated financial statements; in the case of a merger by absorption, the difference is the goodwill that should be recognized by the purchaser in its books and individual financial statements.

After goodwill is recognized, amortization is not required during the holding period. The enterprise shall conduct an impairment test on it in accordance with the provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment". For the recoverable amount For the part lower than the book value, impairment provisions should be made.

② The difference between the cost of business combination and the fair value share of the identifiable net assets of the acquiree obtained in the merger shall be included in the current profit and loss of the merger. In the case of a holding merger, the above difference should be reflected in the consolidated income statement for the current period of merger. In the case of a merger by absorption, the difference between the cost of the above-mentioned business combination and the fair value of the identifiable net assets of the acquiree acquired during the merger shall be included in the individual income statement of the purchaser in the current period of the merger

(6) Purchase Preparation of daily consolidated financial statements

In a holding merger not under common control, the purchaser should generally prepare a consolidated balance sheet on the purchase date to reflect the economic resources it can control starting from the purchase date. In the consolidated balance sheet, the identifiable assets and liabilities of the acquiree acquired in the merger should be measured at their fair value on the acquisition date. The cost of long-term equity investment is greater than the fair value of the identifiable net assets of the acquiree acquired in the merger. The difference in value share is reflected as goodwill in the consolidated financial statements; the difference between the cost of long-term equity investment and the fair value share of the identifiable net assets of the acquiree obtained in the merger shall be included in the current profit and loss of the merger according to the standards for business mergers. Since there is no need to prepare a consolidated income statement on the purchase date, the difference is reflected in the consolidated balance sheet, and the surplus reserve and undistributed profits of the consolidated balance sheet should be adjusted.