Allocation Of Merger Costs Between Identifiable Assets And Liabilities

In the merger of enterprises under non identical control, through merger and consolidation pactions, the buyer, whether acquiring the control right of the buyer's production or business decision or obtaining all the net assets of the buyer, obtains the control right of the buyer's net assets in essence. Depending on the combination method and the merger of the controlling party, the purchaser should confirm the long-term equity investment to the buyer in his individual financial statements.

The long-term equity investment represents the share of the buyer's assets and liabilities acquired by the purchaser in the merger, which is embodied in the value of the assets and liabilities that should be shown in the consolidated financial statements.

Liabilities and so on are directly embodied in purchasers' accounts and assets and liabilities in individual financial statements.

1. the purchasers' identifiable assets and liabilities acquired by the purchaser in the enterprise merger shall be recognized as assets and liabilities of the enterprise (or assets and liabilities in the consolidated financial statements), and the conditions for confirmation of assets and liabilities should be met on the day of purchase.

The conditions for confirmation include: (1) all assets acquired by the purchaser (except for intangible assets) in the merger, which are expected to flow into the enterprise and the fair value can be reliably measured, should be regarded as assets alone.

(2) all liabilities (including contingent liabilities) acquired by the purchaser in the merger, which fulfill the relevant obligations, are expected to cause economic benefits to flow out of the enterprise and the fair value can be reliably measured.

Two

The intangible assets obtained should be recognized separately when the fair value can be measured reliably.

The intangible assets that need to be identified separately from goodwill are generally the rights arising from contracts or laws, and some intangible assets which are not produced in contracts or legal provisions. The conditions that need to be identified separately from goodwill are the ability to distinguish them, that is, they can be differentiated from other assets of the purchased enterprise and can be sold separately, pferred, rented, etc.

When fair value can be measured reliably, it should be distinguished from

Individually recognized intangible assets generally include trademarks, copyrights, and related rights, such as licensing agreements, concession, distribution rights, patent technology, proprietary technology, and trade secrets.

3., when the buyer is likely to need to bear the contingent liability of the buyer when he is in the merger, he should confirm the liability of the buyer in the case of fair value.

4. assets and liabilities acquired in an enterprise merger shall be measured at its fair value after meeting the recognition conditions.

For the goodwill and deferred income tax items that have already been confirmed by the Purchaser before the merger, the purchaser should not take into account when obtaining the identifiable assets and liabilities when the cost of the enterprise merger is allocated and confirmed.

After determining the fair value of the identifiable assets and liabilities that should be recognized in the merger according to the regulations, the tax base and the book value are different from those of the book value, and the corresponding deferred income tax assets or deferred tax liabilities should be recognized according to the provisions of the income tax accounting standards.