Business Combination and Consolidated Financial Statements

Corporate Accounting 1
Corporate Accounting

Corporate Accounting 2
Executive summary:
This report emphasis on major three agendas of business combination. These
agendas are discussed further with their consequences and their impact on the
business combination. Business combination in classified as merger and acquisition
that takes place between two companies that have interest in the business of each
other. Merger is the process in which the books are being combined of the two
companies. Acquisition is the process where the pooling of interest of the two
companies takes place as they have the chance as in to whether to consolidate the
books or to make separate books of accounts. If the companies get consolidated
then they need to make consolidated financial statements at the end of the financial
year. The transactions between the companies which get polled up together will be
in the nature of consolidated transaction and transaction between the companies are
to be treated as same. The companies have the liability to present true and fair
financial statements at the year end.

Corporate Accounting 3
Contents
Executive summary:.....................................................................................................2
Introduction:..................................................................................................................4
Part A............................................................................................................................5
Part B............................................................................................................................6
Part C............................................................................................................................7
Conclusion:...................................................................................................................9
References:................................................................................................................10

Corporate Accounting 4
Introduction:
This report focuses on business combination, its scope and its effects on the holding
and subsidiaries books of accounts. Business combination is all about a mutual
agreement between two companies to join hands together to either become one
company or to work together for some common purpose. Business combination can
alternatively be called as merger or acquisition. Merger and acquisition can be done
in two ways that is by purchase/ acquisition and by taking substantial interest in the
other company. The companies that get merged will have transactions between
them that need to be accounted in the books of accounts of the holding company as
they make consolidated financial statements. All the transactions need to be properly
accounted for to get to know the true and fair position of the company’s financial
position. The consolidated financial statements have different treatments for different
transaction that need to be correctly present in the books of accounts with proper
disclosure for the same.