Business Restructuring and Acquisition: Accounting Standards and Methods

Corporate Accounting

Executive Summary
The given report emphasizes on various aspects related with the business restructuring of the
company by the way of takeover of another company. Australian Accounting Standard 3, 127,
and 128 deals with the business restructuring of the company. It contains the several aspects
related with the method of acquisition, accounting for parent company and subsidiary or joint
venture Company, and the disclosure requirement by the company in the financial statement.
This study also contains the issues regarding the unrealized profit by the company.

Table of Contents
Introduction......................................................................................................................................4
Part A...............................................................................................................................................4
Part B...............................................................................................................................................6
Part C...............................................................................................................................................8
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

INTRODUCTION
The company can make its business restructuring by way of acquisition of shares or interest in
other company. For the maximization of the profit or requirement of the company, sometimes the
company makes the strategy to make the agreement to the takeover of other company by giving
the value of assets and liabilities. Australia, the Australian Accounting Standard Board prescribes
the method of acquisition and its accounting in the books of accounts for the Acquirer Company
as well as Seller Company. The present study revolves around the method of acquisition,
accounting for the company, intra group transaction, and several disclosure requirements as per
the accounting standard of Australia.
PART A
The present case is related to the acquisition of the other company, named as FAB Ltd by JKY
Ltd. Since there are two methods which can be applied by the company while making the
acquisition strategy. Application of the acquisition strategy depends on several factors. With this
aspect, in this case, one of the directors of JKY Ltd arguing to apply the purchase or acquisition
method as an acquisition strategy. The supportive argument given by the director is that FBC
Ltd, is the listed entity and by acquisition, strategy company can exercise whole control over
another company. On the other hand, another director arguing to use the significant influence as
the best option of acquisition. In this strategy fully control over the FAB Ltd cannot be exercised
by the JKY ltd.
In Australia, the Australian Accounting Standard Board issued Standard, which contains about
the method of business structuring. According to Accounting Standard 3 of Australia, a company