Research On The Economical Consequences Of The Implementation Of The Business Combination Accounting Standards

Business combination is the basic form of capital and market concentration. Different accounting methods in business combination will make the consolidated financial statements reflect different financial situation and operating results, and affect the assets value of combined company and direct economic interests of both sides in the business, and thus affect the interests of other parties and the optimal allocation of social resources, that the choice of accounting methods and policies has its economic consequences. In2006, Ministry of Finance of China issued the Accounting Standard for Business Enterprises NO.20——Business Combinations, provides the Pooling of the Interest Method under the unified control and the Purchase method under non—unified control.This text is divided into seven parts to analyze:The first chapter is introductory section. It mainly introduces the purpose, significances and background of the topic, then describes the innovation of the article and the overall research ideas and measures. The second chapter analysis the basic theory,including Economic Consequences,Theory Contract Theory,Agency theory, Efficient Market Hypothesis. The third chapter expounds the basic theory of business combination, introduces basic concepts of two combination accounting methods. Secondly, the article has a comparison between two methods from the theoretical assumptions application environment, the quality of the accounting information, accountant processing and so on. The Ⅳ chapter analysis the reasons of economic consequences, including market, regulatory environment, executive compensation, debt financing and so on. Then analyzing different economic consequences caused by different merger accounting policies:pooling of interests method or purchase accounting from the part of manager shareholder, creditor, Investor. Chapter Ⅴ use the case of the WEICHAI Power merging and reconstructing Torch Group, analysis the different financial index and rate in the financial statements, then, by analyzing the material different economic consequences which caused by different merger accounting. Chapter Ⅵ takes into account of our current research of mergers and practice situation, evaluates the existing Accounting Standards, and put forward relevant recommendations, to propose reference standard for policies and practices on the business combination. ChapterⅦ are Conclusions and Inadequacies。 Through the introduction of more than seven parts, The main aim are On the basis of research of The economic consequences of the business combination accounting treatment, combine with the promulgated Accounting Standard and elaborate the Rationality of Pooling of interest method, at the same time, put forward relevant recommendations, to propose reference standard.