Naslov
Accounting for business combinations

Autori
Mijatović, Eva

Izvornik
Ekonomske ideje i praksa (2217-6217) 6 (2012); 81-92

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, stručni

Ključne riječi
mergers; acquisitions; acquisition cost; goodwill; consolidation

Sažetak
Accounting is the last phase in M&A activity. After a successful business combination ; merger or acquisition, it is necessary to prepare consolidated financial statements. In Croatia it is determinate by International Accounting Standards, International Financial Reporting Standards, Croatian Financial Reporting Standards, the Accounting Act, the Corporations Act and the Takeover Act. This paper will present new accounting methods according to audited International Financial Reporting Standard 3 and International Accounting Standard 27. The revised IFRS 3 and IAS 27 introduce many changes in the accounting for business combinations and the financial statements. These changes affect on the amount of goodwill and recognized value of non-controlling stake in the year of acquisition, and also in the years afterward. Under the new IFRS 3, in every business combination company enter, the company have to choose whether to measure non-controlling stake in the combined company or total fair value of net identifiable assets of enterprises obtain to the proportional share. Choice of alternative solutions may result in the recognition of goodwill in relation to 100% of the business (applying the full fair value option and the resulting allocation of goodwill and non-controlling interest) or just the recognition of goodwill acquired percentage shares. According to the revised IFRS 3 and IAS 27, all business combinations are considered acquisitions. Acquired assets and assumed liabilities are taken from the target company accounting by their assumed fair value using the acquisition method of accounting (formerly the purchase method).There is a difference if a business combination was financed by money or it was an acquisition through other forms of property. The last step in applying the purchase method is to determine the amount of goodwill resulting from business combinations. There is a significant difference in treatment of goodwill between International Accounting Standards and Croatian Financial Reporting Standards. Small and medium-sized companies do the bookkeeping according to Croatian Financial Reporting Standards and the large enterprises and entrepreneurs that list securities on stock exchanges use the International Financial Reporting Standards. The process of consolidation is a very complex process, and it will be presented by phases. The process of consolidation of the financial statements is operationally implemented in special consolidation work-notes which will be presented. According to IAS 27, a parent company doesn’t need to make the consolidated financial statements in certain situations. This paper will present situations in which the parent needs and does not need to prepare consolidated financial statements.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA