国际学院毕业论文英文格式规范(4)

(2) Treatment for the expenses incurred during the business combination under no common control. The direct relevant expenses incurred for the combination should be measured as the cost of business combination under no common control. The fees and commissions of the bonds issued or other debts assumed for the business combination should be recognized as the initial measurement of bonds or other debts. The fees and commissions incurred for the issuance of equity securities should be deducted from the premiums of the equity security. If the premium is not sufficient for deduction, the fees and commissions should be charged against the retained earnings.

(3) Treatment for the difference between the combining party’s interest in the fair value of identifiable assets and liabilities acquired and the cost of business combination under no common control. There are different ways for accounting treatment under three situations:

a)The combining party’s interest in the fair value of identifiable assets and liabilities acquired

equals the cost of business combination under no common control.

The difference between the fair value and the book value of the assets paid, debts assumed and equity securities issued should be recorded as current profits or losses.

b)The combining party’s interest in the fair value of identifiable assets and liabilities acquired

is higher than the cost of business combination under no common control.

For mergers under no common control, the excess of the cost of business combination over the combining party’s interest in the fair value of identifiable assets and liabilities acquired should be recorded as goodwill. For acquisitions under no common control, the excess of the cost of business combination over the combining party’s interest in the fair value of

11

江西财经大学普通本科毕业论文

identifiable assets and liabilities acquired should not be recorded as goodwill. The difference under M&A between the fair value and the book value of the assets paid, debts assumed and equity securities issued should be recorded as current profits or losses.

c)The combining party’s interest in the fair value of identifiable assets and liabilities acquired

is less than the cost of business combination under no common control.

For mergers and acquisitions under no common control, the excess of the combining party’s interest in the fair value of identifiable assets and liabilities acquired over the cost of business combination should be recorded as current profits or losses. The difference under M&A between the fair value and the book value of the assets paid, debts assumed and equity securities issued should be recorded as current profits or losses.

3.2.3Comparison of two types of business combination

Before we apply the accounting treatment for income tax of M&A, it’s essential for us to distinguish the type of business combination. Because there’re two key elements for us to decide whether the differences are deductible temporary differences or taxable temporary differences, they are the tax base and carrying amount of assets and liabilities. Furthermore, only we identify the type of business combination can we expect to determine the right carrying amount of assets and liabilities. In other words, judging the type of business combination properly could help us find the correct accounting standards for accounting treatment. And we could find the differences between rules of tax law and accounting standards. Then we could apply the right accounting treatment for income tax of M&A. In order to identify the type of business combination properly, we should make a comparison of different types of business combination so as to discover the distinctions of accounting treatment for different types of business combination. By comparing five major aspects, we could properly determine the type of business combination. Five aspects of two types of business combination could be clearly viewed by using the following chart:

12

江西财经大学普通本科毕业论文

13

江西财经大学普通本科毕业论文

4 Accounting treatment for income tax of M&A

4.1 Mergers under common control

According to both “IAS 12 Income Taxes (revised 2000)”and “Accounting Standards for Enterprises No. 18 - Income Tax”, accounting for income tax should adopt the balance sheet liability method. By adopting balance sheet liability method for accounting treatment for income tax, the difference between tax base and book value of the assets and liabilities should be regarded as temporary differences. As mentioned above, the accounting standards state that the cost of mergers under common control should be measured by the book value of assets and liabilities; any expenses incurred for mergers under common control should be recorded as the current profits or losses.“The notification of the income tax problem of the business combination and division transactions by the State Administration of Taxation” (No.119［2000］of State Administration of Taxation ) states:

1. If the non-equity payment is no higher than 20%, the transaction is classified as tax-free merger; the tax base of the assets and liabilities is based on the book value of combined party. Therefore, when the non-equity payment of the purchase price paid by combining party is no higher than 20%, the carrying amount and tax base of assets and liabilities are the same, no adjustment is needed.

2. If the non-equity payment is higher than 20%, the transaction is classified as taxable merger; the tax base of the assets and liabilities is based on the fair value of the assets and liabilities plus the direct relevant expenses, thus temporary differences appear. The adjustments of tax should be divided into two aspects, including fair value and direct relevant expenses:

(1) When the carrying amount of assets is …… 此处隐藏：4169字，全部文档内容请下载后查看。喜欢就下载吧 ……