2 business combination

创造管理新知 培养高素质全球化工商管理人才
2.Accounting for Business combination
• Evolution of accounting method • What method for business combination in China? • Opinion No.16 • Pooling and purchase • 2001 FASB statement 141, 142 • Eliminate pooling • 2007,141: acquisition method • IFRS
创造管理新知 培养高素质全球化工商管理人才
Acquisition method(new) p8
• 1. FASR No. 141r,requires that all assets and liabilities be recorded at fair value regardless of the percentage interest purchased by the acquiring company • 2. The acquisition also eliminated the discounting fixed assets and intangible assets to value than fair value • 3. Bargain purchase occurs when the price paid for a company is less than the sum of the fair value of the net assets
创造管理新知 培养高素质全球化工商管理人才
Determine the acquisition date p9
• Acquired the control • Payment: by transferring the assets, issuing stock, assuming the liabilities • Legal closing date • May occur after the acquisition date • Critical: used to establish the fair value of the acquired company, for accounts of the acquired company p9
• Consideration paid • Example p 15chanpter 1 examples-评估.ppt
创造管理新知 培养高素质全球化工商管理人才
Accounts valuation p14 Cash Marketable investment Inventory Land Buildings Equipment Customer list
method Book value Level-1 Level-1 Level-2 Level-2 Level-1 Level-3
Fair value 40000 66000 110000 72000 288000 145000 125000
Current liabilities Bonds payable Premium on bonds payable Warranty liability
创造管理新知 培养高素质全球化工商管理人才
Valuation of identifiable assets and liabilities
• • • • • • • • • • • • • Level 1 p10 Level 2 Level 3 p11-14 Current assets Existing liabilities Property ,plant and equipment Assets that are going to sold Lessee, assets Lessor, assets Intangible assets, not recorded R&D
创造管理新知 培养高素质全球化工商管理人才
• • • • •
Contingent liabilities Liabilities associated with restructuring Employee benefit plan Deferred taxes Example valuation
创造管理新知 培养高素质全球化工商管理人才
Defense tactics for takeover
• Friendly and unfriendly combination • Negotiate with the boards of directors • Tender offer（要约收购） • Defense tactics:（防御措施）: p7 • Poison pill(毒丸) • Greenmail(绿邮包): purchase of any shares held by the would be acquiring company at a price substantially in excess of their fair value • White knight(白袍骑士): encouraging a third firm more acceptable to the target • Selling the crown jewel(出售皇冠) • Leverage buyout(杠杆购买)
创造管理新知 培养高素质全球化工商管理人才
Identify the acquirer p9
• Acquiring company: In an assets acquisition, the company transferring cash or other assets/or assuming liabilities • Acquiring company: In a stock acquisition, in most case, the company transferring cash or other assets for controlling interest in the voting common stock of the acquiree • Acquiring company: accomplished by exchanging voting common stock, most often, issuing company,…… in some case • 1. Voting rights • 2. Large minority interest • 3. Governing body of combined entity • 4. The term of exchange
Accounts Cash Marketable investment Inventory Land Buildings Equipment Customer list Goodwill Current liabilities Bonds payable Premium on bonds payable Warranty liability Common stock Paid –in capital in excess to par Debit 40000 66000 110000 72000 288000 145000 125000 95000 25000 100000 4000 12000 40000 760000 Credit
Book value Level-2 Level-2 Level-3
25000 100000 4000 12000
创造管理新知 培养高素质全球化工商管理人才
Acquisition: valuation and record p14-16
• Issues 40000 shares of its $1 par value, with market price of $20, for Johnson Company, pays related acquisition costs of $35000, record
创造管理新知 培养高素质全球化工商管理人才
3.Applying the acquisition method IFR 3.pptx
• • • • 1.Identify the acquirer p9 IFR 3.pptx 2.determine the acquisition date 3.measure the fair value of the acquiree 4.record the assets acquired and liabilities assumed
创造管理新知 培养高素质全球化工商管理人才
4.Valuation of identifiable assets and liabilities
• The fair value of the acquiree as an entity is assumed to be the price paid by the acquirer. P9 • Measurement period • 1. the price includes the estimated value contigent consideration ( target sales or income performance) • 2. the costs of accomplishing the acquisition. Not included in the price, expensed • Record: the fair value of all identifiable assets and liabilities
创造管理新知 培养高素质全球化工商管理人才
1. Business combination
• • • • • • • • Business combination Merger, acquisition, take over 1.legal form Statutory merger（吸收合并） Statutory consolidation (新设，或创立合并） ? 2. Economic advantage of combination ? 3. Defense tactics for takeover
• • • • • •
Identify the acquirer Determine the acquisition date Measure the fair value of the acquiree Record the acquiree’s assets and liabilities assumed Fair valuee assigned to net assets Fair value of acquiree less fair value assigned to net assets
创造管理新知 培养高素质全球化工商管理人才
我国、FASB和IASB关于企业合并及合并报表的 会计准则
• • • • • • • 具体会计准则20 —企业合并 具体会计准则33 —合并财务报表 美国会计准则(141,142/2001) 国际财务报告准则(2010修订) 美国FASB与IASB合作（2007年12月） 国际会计准则和美国会计准则的借鉴和采纳 Investment in equity.ppt
创造管理新知 培养高素质全球化工商管理人才
Chapter 2 Business combination
Business combination Applying the acquisition method Valuation of identifiable assets and liabilities Taxes issues and Required disclosure Goodwill and goodwill impairment