(1) Principles for processing business mergers not under the same control
Business mergers not under the same control are transactions in which one party participating in the merger purchases another party or parties. The basic processing principles are It’s the purchasing method. The purchase method treats a business combination as an act of one company purchasing the net assets of another company, and fair value should be used for accounting treatment.
1. Determine the purchaser
The first prerequisite for using the purchase method to account for business mergers is to determine the purchaser. A purchaser is a party that obtains control of another party or parties in a business combination. In a merger, if one party acquires more than half of the voting shares of the other party, unless there is clear evidence that the shares cannot form control, the party that obtains controlling rights is generally considered to be the purchaser. In some cases, even if one party does not acquire more than half of the voting shares of the other party, it can generally be considered to have obtained control over the other party when the following circumstances exist, such as:
(1) Pass Sign an agreement with other investors and essentially own more than half of the voting rights of the purchased company.
(2) In accordance with the provisions of laws or agreements, etc., have the power to lead the financial and operating decisions of the purchased enterprise.
(3) The right to appoint and remove the majority of members of the board of directors or similar authority of the purchased enterprise.
(4) Have the overwhelming majority of voting rights on the board of directors or similar authority of the company being purchased.
2. Determine the purchase date
The purchase date is the date when the purchaser obtains control of the purchased party. The following conditions should be met on the purchase date:
(1) The business merger contract or agreement has been approved by internal authorities such as the general meeting of shareholders.
(2) If the merger requires approval by the relevant national competent authorities, it has been approved by the relevant authorities.
(3) All parties involved in the merger have completed the necessary transfer procedures of property rights.
(4) The buyer has paid most of the purchase price (generally should exceed 50) and has the ability to pay the remaining amount.
(5) The buyer has actually controlled the financial and operating policies of the purchased party and enjoys corresponding benefits and risks.
It is worth mentioning that the determination of the purchase date is very important in the exam; in practice, the purchase date is generally determined at the end of the month, so that the asset evaluation and consolidation of the purchase date are easier to handle.
3. Determine the cost of business combination
(1) The cost of business combination is the cash or non-cash assets, debts issued or assumed, and equity issued by the buyer for the business combination. The fair value of securities, etc. on the date of purchase, excluding related expenses incurred in business combinations.
(2) Treatment of contingent consideration
In some cases, when the business combination contract or agreement stipulates that depending on the occurrence of future contingencies, the purchaser will issue additional securities, Increase the merger consideration by paying additional cash or other assets, or request the return of previously paid consideration. The purchaser shall regard the contingent consideration agreed in the merger agreement as part of the transfer consideration for the business merger, and include it in the cost of the business merger according to its fair value on the acquisition date. According to the provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", "Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments" and other relevant standards, if the contingent consideration meets the definition of financial liabilities or equity instruments, The purchaser shall recognize the contingent consideration to be paid as a liability or equity; if it meets the definition of an asset and meets the conditions for asset recognition, the purchaser shall pay the recoverable portion of the merger consideration paid that meets the conditions stipulated in the merger agreement. The right is recognized as an asset.
4. Distribution of business combination costs between the identifiable assets and liabilities acquired
(1) The identifiable assets of the acquiree acquired by the purchaser in the business combination and liabilities must 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.
Relevant recognition conditions include:
① Various assets of the acquiree (except intangible assets) acquired in the merger, the future economic benefits brought by them are expected to flow into the enterprise and the fair value can be measured reliably , should be recognized separately as assets.
② Various liabilities of the acquiree (except contingent liabilities) acquired in the merger, if the performance of the relevant obligations is expected to result in the outflow of economic benefits from the enterprise and the fair value can be measured reliably, they should be recognized separately as liabilities .
(2) Intangible assets acquired in a business combination shall be recognized separately if their fair value can be measured reliably.
Intangible assets acquired in business combinations that need to be recognized separately from goodwill are generally rights generated in accordance with contracts or laws (such as trademark rights). Some intangible assets are not generated by contracts or laws (such as trademark rights). Such as proprietary technology), the condition that needs to be recognized separately from goodwill is that it can be distinguished, that is, it can be distinguished from other assets of the purchased enterprise and can be sold, transferred, leased, etc. separately.
When the fair value can be reliably measured, 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 technology, etc.
It should be noted: The "Interpretation No. 5 of Accounting Standards for Business Enterprises" issued on November 5, 2012, how should the purchaser confirm the acquired assets owned by the purchased party in a business merger not under common control? However, there are provisions for intangible assets not recognized in its financial statements:
In a business merger not under the same control, when the purchaser initially recognizes the assets of the purchased party acquired in the business combination, it shall Fully identify and reasonably judge the intangible assets owned by the purchased party but not recognized in its financial statements, and if one of the following conditions is met, they should be recognized as intangible assets:
① Derived from contractual rights or other legal rights;
② Can be separated or divided from the purchased party, and can be used for sale, transfer, license, lease or exchange alone or together with related contracts, assets and liabilities.
An enterprise shall disclose in the notes the fair value of the intangible assets of the acquiree acquired in a business combination not under common control and the method for determining the fair value.
(3) For contingent liabilities that the purchaser may need to bear on behalf of the purchased party during a business merger, if their fair value can be measured reliably, they shall be separately recognized as liabilities acquired in the merger.
The conditions for recognizing contingent liabilities in a business combination are different from the conditions for recognizing liabilities due to contingencies during the normal course of business operations. On the purchase date, related contingencies may cause an outflow of economic benefits. The possibility of the enterprise is still relatively small, but if its fair value can be reasonably determined, it needs to be recognized as a liability acquired in the merger. That is, there are only two conditions for recognizing estimated liabilities instead of three. The missing one is "the performance of this obligation is likely to result in the outflow of economic benefits." This shows that it is more prudent to recognize liabilities during business combinations than on a daily basis.
(4) The assets and liabilities acquired in the business combination shall be measured at their fair value after meeting the recognition conditions.
For the goodwill and deferred income tax items that have been recognized by the acquiree before the business merger, the purchaser should not consider them when allocating the cost of the business merger and confirming the identifiable assets and liabilities acquired in the merger. . Because goodwill is formed from the synergistic effects of previous business combinations and has nothing to do with this merger, goodwill formed from previous business combinations should not be considered.
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 accounting standards for income tax shall be followed. Provides for the recognition of corresponding deferred income tax assets or deferred income tax liabilities. The reason why deferred income tax assets or deferred income tax liabilities are re-recognized is because the deferred income tax assets or liabilities are generated by specific tax payers. Due to this merger, the tax payers may change, so they should be re-recognized.
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 purchaser’s consideration of the cost of business combination and the recognized identifiable net assets The difference in fair value share should be dealt with separately according to the circumstances:
(1) 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 should be recognized as goodwill. Depending on the method of business merger, in the case of a holding merger, the difference refers to the goodwill that should be listed in the consolidated financial statements, that is, the cost of the long-term equity investment and the shareholding ratio calculated according to the shareholding ratio on the purchase date. The difference between the fair value shares of identifiable net assets; in the case of a merger, this difference is the goodwill that the purchaser should recognize in its books and individual financial statements.
Goodwill represents the synergistic effects or combined profitability generated by the assets acquired in the merger that have not been recognized because they do not meet the recognition conditions and the assets of the acquiree.
After goodwill is recognized, amortization is not required during the holding period. Its value should be tested in accordance with the provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment". The measurement is based on the lower amount. For the part where the recoverable amount is lower than the book value, an impairment provision is made. The impairment provision cannot be reversed after being withdrawn.
(2) The part of the cost of business combination that is less than the fair value share of the acquiree's identifiable net assets obtained in the combination shall be included in the current profit and loss of the combination (included in non-operating income as a gain).
In this case, the purchaser must first review the fair value of the assets and liabilities acquired in the merger, the fair value of the non-cash assets or equity securities issued as the consideration for the merger, and if the review The results show that the determination of the fair value of each asset and liability is appropriate, and the difference between the cost of the business combination and the fair value share of the identifiable net assets of the acquiree should be included in the non-operating income of the current period of the merger. , and be explained in the notes to the accounting statements.
In the case of a merger by absorption, the difference between the above-mentioned business merger costs and the fair value share of the identifiable net assets of the acquiree obtained in the merger shall be included in the individual income statement of the purchaser in the current period of merger; in the case of holding In the case of merger, the above differences shall be reflected in the consolidated income statement of the purchaser for the current period of merger and shall not affect the individual income statement of the purchaser. Because long-term equity investments are accounted for using the cost method in individual statements, the difference between the initial investment cost and the fair value share of identifiable net assets acquired is not adjusted, and non-operating income is not reflected in individual statements.
6. The temporary determination of business combination costs or the fair value of relevant identifiable assets and liabilities (understanding)
For business combinations not under common control, if on the acquisition date or merger At the end of the current period, if the cost of the business combination cannot be reasonably determined due to various factors or the fair value of the relevant identifiable assets and liabilities obtained in the merger, at the end of the current period of the merger, the purchaser shall proceed with the business combination transaction or event based on the temporarily determined value. accounting. If further information is subsequently obtained indicating that the fair value of the relevant assets and liabilities is different from the temporarily determined value, the following situations shall be dealt with respectively:
(1) Adjustment of the relevant value within 12 months after the purchase date
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In the case where the business combination is treated with a provisionally determined value at the end of the current period of the combination, further information obtained within 12 months from the date of purchase indicates that the original provisionally determined business combination cost or acquired Any adjustments to the temporary values ??of assets and liabilities should be deemed to have occurred on the date of purchase, that is, retrospective adjustments should be made. At the same time, relevant adjustments should also be made to the comparative statement information provided based on the temporary values.
7. Preparation of consolidated financial statements on the acquisition date
If a parent-subsidiary relationship is formed in a business combination not under common control, the purchaser shall generally prepare a consolidated balance sheet on the acquisition date. Reflects the economic resources that it can control from the date of purchase.
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 should be included in the current profit and loss of the merger. Since there is no need to prepare a consolidated income statement on the acquisition 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.
(2) Holding merger not under the same control
In the case of holding merger not under the same control, the accounting treatment issues involved by the purchaser mainly include two aspects: 1. It is the determination of the initial investment cost of the purchased party's long-term equity investment due to the business merger on the purchase date, and the treatment of the difference between this cost and the book value of the relevant assets paid as merger consideration (i.e. consolidation); second, the purchase date Preparation of consolidated financial statements (i.e. consolidation).
(3) Mergers by absorption not under the same control
For mergers by absorption not under the same control, the purchaser shall, on the purchase date, all assets acquired in the merger that meet the recognition conditions , liabilities, shall be recognized as the assets and liabilities of the enterprise according to their fair value; the difference between the fair value of the relevant non-monetary assets on the purchase date and their book value as the consideration for the merger shall be included in the profit statement of the current period as the profit or loss from the disposal of the assets. ; The difference between the determined cost of the business combination and the fair value of the identifiable net assets of the acquired party shall be recognized as goodwill or included in the income statement as the profit or loss of the current period of the business combination, depending on the circumstances. The specific treatment principle is similar to that of a holding merger not under the same control. The difference is that in a merger by absorption not under the same control, the identifiable assets and liabilities acquired in the merger are listed as items in individual statements. Goodwill is also shown as an asset in the buyer's books and individual financial statements.
(4) Business merger achieved in steps through multiple transactions
If the business merger is achieved in steps through multiple transactions, the enterprise shall, when each single transaction occurs, The investment in the invested unit should be confirmed. After an investment enterprise holds part of the equity of the invested unit, it controls the invested unit by increasing the shareholding ratio, etc., the purchaser should distinguish between individual statements and consolidated statements and process them step by step:
1 .Individual statements
In individual financial statements, the sum of the book value of the equity investment in the purchased party held before the purchase date and the new investment cost on the purchase date shall be used as the initial investment cost of the investment; If the equity of the purchased party held before the purchase date involves other comprehensive income, the other comprehensive income related to it (for example, changes in the fair value of available-for-sale financial assets shall be included in the capital reserve part) when disposing of the investment. Included in current investment income.
2. Consolidated statements
In the consolidated financial statements, the purchaser’s equity in the purchased party held before the purchase date shall be based on the fair value of the equity on the purchase date. Re-measure and handle it in accordance with the following principles:
(1) The purchaser’s equity in the purchased party held before the purchase date shall be re-measured according to the fair value of the equity on the purchase date. The fair value shall be equal to its book value. The difference in value is included in the current investment income.
(2) The sum of the fair value of the purchased party’s equity held before the purchase date on the purchase date and the fair value of the consideration paid for the newly purchased equity on the purchase date is the amount in the consolidated financial statements. Combined costs.
(3) Based on the merger cost calculated as above, compare the share of the fair value of the identifiable net assets of the purchased party on the purchase date, and determine the goodwill that should be recognized on the purchase date, or should be included in the current period The amount of profit or loss.
(4) If the purchaser’s equity in the purchased party held before the purchase date involves other comprehensive income, the related other comprehensive income shall be converted into investment income for the current period on the purchase date.
(5) Treatment of reverse purchases
1. Concept of reverse purchases
Business mergers not under common control, in exchange for the issuance of equity securities It is carried out in the form of equity, and usually the party that issues the equity securities is the purchaser. However, in some business mergers, the party that issues equity securities is controlled by the other party participating in the merger because of its production and operation decisions after the merger. Although the party that issues equity securities is the legal parent company, it is the accounting parent company. This type of business combination is often called a "reverse purchase".
2. Accounting treatment of reverse purchase
(1) Determination of business combination costs
In reverse purchase, the legal subsidiary (purchaser) )'s business combination cost refers to the number of equity securities and the number of equity securities it should issue to the shareholders of the legal parent company (the purchased party) if it issues equity securities to obtain the equity ratio of the reporting entity after the merger. The result of fair value measurement. If there is a public quotation for the buyer's equity securities on the purchase date, the public quotation should usually be used as its fair value; if there is no reliable public quotation for the buyer's equity securities on the purchase date, the fair value of the buyer's equity securities and the purchased price should be referenced. The fair value of the equity securities that should be issued is determined based on whichever of the two fair values ??of the party has more obvious evidence to support it.
(2) Preparation of consolidated financial statements
After the reverse purchase, the legal parent company shall prepare consolidated financial statements in accordance with the following principles:
①Merger In the financial statements, legally the assets and liabilities of the subsidiary should be recognized and measured at their pre-merger book values. Because the ultimate parent company is the legal original parent company of the subsidiary and belongs to the same enterprise group, the book value should be used in the consolidated statements.
② The retained earnings and other equity balances in the consolidated financial statements should reflect the legally retained earnings and other equity balances of the subsidiary before the merger.
③The amount of equity instruments in the consolidated financial statements should reflect the legal par value of the shares issued before the merger of the subsidiary and the amount of newly issued equity instruments assumed in the process of determining the cost of the business combination. . However, the equity structure in the consolidated financial statements should reflect the legal equity structure of the parent company, that is, the number and types of equity securities issued by the legal parent company.
④ When the legally identifiable assets and liabilities of the parent company are incorporated into the consolidated financial statements, they should be consolidated at their fair values ??determined on the acquisition date. The share of the fair value of the identifiable net assets of the parent company (the purchased party) is reflected as goodwill, and the share that is less than the fair value of the legally identifiable net assets of the parent company (the purchased party) obtained in the merger is recognized as the profit and loss for the current period of the merger. Because legally the parent company has entered a new enterprise group, fair value should be used in the consolidated statements.
⑤ The comparative information of the consolidated financial statements should be the comparative information of the legal subsidiary (i.e. the previous consolidated financial statements of the legal subsidiary).
⑥If the relevant shareholders of the legal subsidiary do not convert their shares into shares of the legal parent company during the merger process, the equity shares enjoyed by these shareholders shall be included in the consolidated financial statements. Presentation of minority interests. Because some shareholders of the legal subsidiary have not converted their shares into equity of the legal parent company, their share of equity is still limited to the legal subsidiary, and this part of the minority shareholders' equity reflects the minority shareholders. Calculate the legal share of the book value of the subsidiary's pre-merger net assets based on the shareholding ratio. In addition, for all shareholders of the legal parent company, although they are considered to be the purchased parties in the merger, they enjoy the net assets and profits and losses of the reporting entity formed by the merger and should not be listed as minority shareholders' interests.
The above accounting treatment principles for reverse purchases only apply to the preparation of consolidated financial statements. The legal parent company's determination of the legal subsidiary's long-term equity investment cost formed in the merger shall comply with the relevant provisions of the "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment".
(3) Calculation of earnings per share
In the period when the reverse purchase occurs, the weighted average number of outstanding ordinary shares used to calculate earnings per share is:
① From the beginning of the current period to the date of purchase, the number of outstanding common shares should be assumed to be the number of common shares issued by the legal parent company to the legal subsidiary shareholders in the merger.
②The number of common shares outstanding from the date of purchase to the end of the period is the number of common shares actually issued by the legal parent company.
③If comparative consolidated financial statements are provided to the outside world after the reverse purchase, the basic earnings per share in the consolidated financial statements of the previous period shall be legally attributed to the ordinary shareholders of the subsidiary in each comparative statement period. The net profit or loss is determined by dividing the number of common shares issued by the legal parent company to the legal subsidiary shareholders in the reverse purchase.
The above assumes that the legal number of shares of common stock issued by the subsidiary has not changed during the comparison period and from the beginning of the period in which the reverse purchase occurred to the purchase date. If the number of shares of common stock legally issued by a subsidiary changes during this period, adjustments should be made with appropriate consideration of the impact when calculating earnings per share.
3. Accounting treatment for indirect listing when an unlisted company purchases the equity of a listed company
The unlisted company obtains control of the listed company in consideration of its investments in subsidiaries and other assets. The rights constitute a reverse purchase, and the listed company shall distinguish the following situations when preparing consolidated statements:
(1) When the transaction occurs, the listed company does not hold any assets or liabilities or holds cash or trading financial assets. For assets or liabilities that do not constitute a business (i.e., shell companies), when a listed company prepares consolidated statements, the purchase of the enterprise shall be handled in accordance with the principles of equity transactions, and goodwill shall not be recognized or included in the current profits and losses.
(2) When the transaction occurs, if the listed company retains a business consisting of assets and liabilities, for a business merger not involving enterprises under common control, the cost of the business combination shall be equal to the fair value of the identifiable net assets of the listed company acquired. The difference in shares should be recognized as goodwill or included in the current profit and loss. See Example 11 for specific processing.
(6) Treatment of the purchase of minority interests in subsidiaries
After the enterprise obtains control over the subsidiary and forms a business merger, it acquires from the minority shareholders of the subsidiary the shares owned by the minority shareholders. For all or part of the minority stake in the subsidiary, after such transactions or events occur, the individual financial statements and consolidated financial statements of the parent company shall be processed separately according to the following principles:
1. From the parent company From the perspective of the company's individual financial statements, its newly acquired long-term equity investment from the minority shareholders of its subsidiaries shall be in accordance with the provisions of Article 4 of "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment" (i.e. the fair value of assets paid or equity securities issued). value) to determine its entry value.
2. In the consolidated financial statements, the assets and liabilities of the subsidiary should be reflected in the amount calculated continuously starting from the acquisition date (or merger date).
The difference between the parent company’s newly acquired long-term equity investment and the share of the subsidiary’s identifiable net assets calculated continuously from the date of purchase (or merger date) calculated based on the new shareholding ratio shall be Adjust the capital reserve (capital premium or equity premium) in the consolidated financial statements. If the balance of the capital reserve (capital premium or equity premium) is insufficient for offset, the retained earnings will be adjusted.
(7) Disposal of part of the investment in the subsidiary without losing control
After the enterprise holds the investment in the subsidiary, if it sells part of the equity of the subsidiary, but If the investor still retains control over the invested unit after the sale, and the invested unit is still its subsidiary, the equity sale transaction should be handled separately from the individual financial statements and consolidated financial statements of the parent company:
1. From the perspective of the parent company's individual financial statements, it should be regarded as the disposal of long-term equity investments, and the relevant disposal profits and losses should be recognized, that is, the difference between the price or fair value of the consideration obtained from selling the equity and the book value of the investment disposed should be calculated as investment income or investment losses. Enter the individual income statement of the parent company in the current period when the investment is disposed of.
2. In the consolidated financial statements, since the parent company can still exercise control over the invested unit after selling part of its equity, the invested unit should be included in the consolidated financial statements of the parent company. In the consolidated financial statements, the difference between the price (or the fair value of the consideration) obtained from the disposal of the long-term equity investment and the net assets of the subsidiary corresponding to the disposal of the long-term equity investment shall be included in the owner's equity (capital reserve - capital premium or equity premium) ), if the balance of capital reserve (capital premium or equity premium) is insufficient for offset, the retained earnings shall be adjusted.
(8) Disposal of part of the investment in subsidiaries when multiple transactions result in loss of control
Disposal of part of investment in subsidiaries when multiple transactions result in loss of control, Divided into two situations:
1. Under normal circumstances, if control is not lost during disposal, it should be handled according to the above (7); when the disposal of investment results in a transfer of control over the invested unit, If it has significant influence or implements the same control with other investors, it shall be processed separately in individual statements and consolidated statements:
① Processing in individual statements
In the individual statements of investment enterprises, it is processed in two steps
a. The difference between the book value of the long-term equity investment in the disposal part and the price received from the disposal of the equity is included in the current profit and loss (investment income).
b. The remaining long-term equity investment should be adjusted retrospectively
When adjusting retrospectively, the cost of the remaining long-term equity investment should be compared with the amount that should be enjoyed when calculating the original investment based on the remaining shareholding ratio. The share of the fair value of the investee's identifiable net assets is part of the goodwill reflected in the investment pricing, and the book value of the long-term equity investment will not be adjusted; if the investment cost is less than the share of the fair value of the investee's identifiable net assets, the share of the fair value of the investee's identifiable net assets will not be adjusted. When adjusting the cost of long-term equity investment, the retained earnings should be adjusted.
For the share of the net profits and losses realized by the investee between the time when the investment was originally obtained and the period when the investment was converted to equity method accounting, on the one hand, the book value of the long-term equity investment should be adjusted, and at the same time, the book value of the long-term equity investment should be adjusted. The share of the net profits and losses (deducting cash dividends and profits that have been distributed and announced) realized by the invested unit from the beginning of the current period when the investment is disposed of (deducting cash dividends and profits that have been distributed) is adjusted to the retained earnings. The share of the net profit and loss of the invested unit shall be adjusted to the current profit and loss; the share of the change in the owner's equity of the investee due to other reasons shall be included in the "capital reserve - other capital reserve" while adjusting the book value of the long-term equity investment. product".
② Treatment in consolidated statements
In consolidated financial statements, the remaining equity should be remeasured according to its fair value on the date of disposal (that is, the date of loss of control) . The difference between the sum of the consideration obtained for disposing of the equity and the fair value of the remaining equity, minus the share of the original subsidiary's net assets calculated continuously from the date of purchase based on the original shareholding ratio, shall be included in the current period when control is lost. Investment income; if there is relevant goodwill, goodwill should also be deducted. Other comprehensive income related to the equity investment in the original subsidiary shall be converted into investment income for the current period when control is lost. The parent company shall disclose in the notes to the consolidated financial statements the fair value of the remaining equity after disposal on the date of loss of control, and the amount of related gains or losses arising from remeasurement at fair value.
2. According to the "Interpretation No. 5 of Accounting Standards for Business Enterprises", under special circumstances, if the various transactions involving the disposal of equity investments in subsidiaries until the loss of control belong to a package transaction, they should be based on the principle of substance over form. principle (that is, legally speaking, control has not been lost, but has been lost in essence), each transaction should be accounted for as a transaction that disposes of a subsidiary and loses control; however, each disposal price before the loss of control The difference between the share of the subsidiary's net assets corresponding to the disposal of the investment shall be recognized as other comprehensive income in the consolidated financial statements, and shall be transferred to the profits and losses of the current period when control is lost.
(9) Accounting treatment of the purchased party
In a business combination not under common control, if the purchased party continues to operate after the business combination, if the purchaser obtains the acquired For a party's 100 equity interests, the purchased party can adjust the accounts according to the fair value of the relevant assets and liabilities determined in the merger. In other cases, the purchased party should not change the book value of the assets and liabilities due to the business merger.
In practice, if the book value of the assets and liabilities of the purchased party is adjusted to fair value, the subsequent tax treatment will become very complicated. Therefore, under normal circumstances, the purchased party does not adjust to fair value.