Convergence and Divergence Regarding Business Combinations

2021 ◽  
pp. 78-91
Author(s):  
Alin Eliodor Tănase ◽  
Traian Ovidiu Calotă ◽  
Gabriela Claudia Oncioiu
Keyword(s):  
Acquisition Cost ◽  
Balance Sheet ◽  
Financial Statements ◽  
Intangible Asset ◽  
Business Combinations ◽  
National Differences ◽  
Investment Cost ◽  
Net Assets ◽  
Convergence And Divergence ◽  
Legal Entities

The presence of several legal entities within the same group entails the existence of as many independent accountants as there are companies. In accordance with IFRS 3 “business combinations,” the result is goodwill that will be recognized as a non-current intangible asset in the consolidated balance sheet, being subjected annually to the impairment test; insofar as the investment cost is lower than the acquisition cost of the net assets, the negative goodwill will be obtained which will be recognized in the form a profit in the consolidated profit and loss account. In addition, national differences in accounting, taxation, and auditing are the sources of the various problems that arise in the process of controlling subsidiaries and consolidating accounts. This chapter aims to study the convergence and divergence regarding business combinations in the joint business as well as to analyze the managerial controversies that are presented in the conversion of the financial statements.

scholarly journals Impacts of Newly Acquired Items Within Business Combinations on the Items of the Financial Statements

2016 ◽  
Vol 64 (1) ◽  
pp. 265-274 ◽  
Author(s):  
Jana Gláserová
Keyword(s):  
Financial Reporting ◽  
Ownership Structure ◽  
Balance Sheet ◽  
Financial Statements ◽  
Point Of View ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Business Combinations ◽  
Financial Reporting Standards ◽  
Time Point

This paper is focused on the operations with the company (business combinations). These are those operations that are associated with the formation or dissolution of companies or reorganization of their ownership structure. They are often referred as equity transactions. In the concept of Czech accounting legislation, these are the purchase, sale, investment (deposit) of firms or their parts, and various forms of transformation of enterprises. There are analyzed the accounting practices of recording of these issues under the Czech accounting legislation and International Financial Reporting Standards. Consequently there are identified newly acquired assets and liabilities arising directly in connection with the business combinations. In the conclusion of this paper there are examined the effects of different reporting of newly acquired items in the context of business combinations according to Czech accounting legislation and in accordance with International Financial Reporting Standards on the significant items of balance sheet and profit and loss statement from the material and time point of view.

Is Negative Goodwill Valued by Investors?

2010 ◽  
Vol 24 (3) ◽  
pp. 333-353 ◽  
Author(s):  
Eugene E. Comiskey ◽  
Jonathan E. Clarke ◽  
Charles W. Mulford
Keyword(s):  
Acquisition Cost ◽  
Fair Value ◽  
Securities Markets ◽  
Compelling Evidence ◽  
Fair Value Accounting ◽  
Accounting Standard ◽  
Business Combinations ◽  
Net Assets

SYNOPSIS: Accountants have historically distanced themselves from the concept of negative goodwill on the premise that bargain purchases should not take place in the presence of efficient securities markets. This position has been a powerful influence on the accounting for negative goodwill for over half a century. However, in line with the expansion of fair value accounting, the latest accounting standard that addresses negative goodwill, SFAS No. 141(R), Business Combinations (FASB 2007), calls for the full recognition of bargain-purchase (negative goodwill) amounts. Rather than allocating some or all negative goodwill against selected acquired assets, as has been done previously, negative goodwill is now to be recognized in the year of the acquisition as a regular item of income or gain. In essence, SFAS No. 141(R) holds that the excess of the fair value of net assets acquired over the acquiring firm’s acquisition cost constitutes the receipt of value to the acquiring firm, and should be recognized as such. While this position may seem plausible, to our knowledge there has been no research that tests whether negative goodwill is valued. Based upon a sample of acquisition transactions involving negative goodwill, our research does not provide compelling evidence that markets value negative goodwill.

scholarly journals Business Combinations of Czech Companies: Empirical Analysis of Their Typology

2018 ◽  
Vol 66 (1) ◽  
pp. 313-323 ◽  
Author(s):  
Jiří Pospíšil ◽  
Hana Vomáčková
Keyword(s):  
Czech Republic ◽  
Ownership Structure ◽  
Balance Sheet ◽  
Financial Statements ◽  
Fair Value ◽  
Descriptive Study ◽  
Business Combinations ◽  
The Czech Republic ◽  
Financial Position ◽  
Statistical Sample

This paper is a descriptive study which analyses company transformations - a subset of M&A - which took place in the Czech Republic in 2013. Based on the statistical sample containing detail data of 115 transformations, we analysed important aspects of company transformations (M&A) such as ownership structure of the participating companies, deployment of the effective date, acquisition date, balance-sheet date, date of registration and transformation project date, utilization of available forms of company transformations, utilization of financial statements for transformation purposes and incidence of fair-value revaluation. The results of the research shows, that majority of company transformations are in fact corporate holdings reorganisations rather than business combinations as defined by IFRS 3 and it also suggests that the rules for accounting for these transactions are in fact misused for distribution of earnings (even unrealized earnings) through the corporate holdings. We have also identified cases of severe distortion of faithful representation of successor’s company financial position, most often as a result of retrospective company transformations, where the effective day of the merger was put before the date of acquisition of the majority on target’s equity.

scholarly journals ANALISIS PENERAPAN AKUNTANSI SYARIAH BERDASARKAN PSAK 102 PADA PEMBIAYAAN MURABAHAH DI BMT SE-KABUPATEN PATI

2017 ◽  
Vol 4 (1) ◽  
pp. 114
Author(s):  
Muzayyidatul Habibah ◽  
Alfu Nikmah
Keyword(s):  
Data Collection ◽  
Acquisition Cost ◽  
Balance Sheet ◽  
Field Research ◽  
Financial Statements ◽  
Qualitative Approach ◽  
Financial Reports ◽  
Loss Reserve ◽  
General Journal

<p><em>This study aimed to analyze the recognition and measurement, presentation and disclosure of murabaha transaction in accordance with SFAS 102 at BMT Pati regency. It was field research with qualitative approach. Methods of data collection were  interviews  and  documentation.  The  results  of  this study indicated that there is BMT recognizing inventories which should not be done because the practice is murabahah not purchase-based murabaha transactions. BMT has been preparing financial statements Balance Sheet, but the value of the loss reserve accounts Murabahah cannot be seen. In profit/ loss reports, costs of murabaha receivables impairment losses cannot be seen because it is not recognized/recorded in the general journal. BMT has revealed matters related to murabaha transactions, including the acquisition cost of murabaha asset; booking appointment in murabaha based on the order as an obligation or not, while the non-commercial financial reports have been prepared for internal purposes of BMT.</em></p>

scholarly journals PENERAPAN PSAK 70 ASET DAN LIABILITAS PENGAMPUNAN PAJAK PADA LAPORAN KEUANGAN

2020 ◽  
Vol 4 (1) ◽  
pp. 83-92
Author(s):  
Bayu Sarjono
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Financial Accounting ◽  
The Other ◽  
Tax Amnesty ◽  
Net Assets ◽  
The Difference ◽  
Retained Earnings

ABSTRACT   The objective of the research to analyze taxpayers who have received tax amnesty and accounting treatment of the tax amnesty assets and liabilities in the financial statements. Tax amnesty assets and liabilities are presented separately from the other assets and liabilities in the financial statements.  The PSAK 70 is also applicable by non-publicily accountable entities that choose to adopt the SAK ETAP (Standar entity without accountability public).    The implementation of PSAK 70 by PT. Z related to the recognition, measurement, presentation, and disclosures in accordance with SAK (financial accounting standar). The difference of tax amnesty assets and liabilities is PT. Z recognizes in addition to the retained earnings in the balance sheet. As we know PSAK 70 paragraph 12 which reads concerning net assets that should have from tax amnesty must be recognized in equity as additional paid in capital. That is what makes the difference between accounting and tax presentation   Keywords : tax amnesty, tax amnesty assets and liabilities, retained earning, additional paid in capital

ANALISIS LAPORAN KEUANGAN UNTUK MENILAI KINERJA KEUANGAN PT. ASTRA AGRO LESTARI Tbk

2019 ◽  
Vol 5 (2) ◽  
pp. 75-88
Author(s):  
M. Shobihin ◽  
Sayekti Suindyah Dwiningwarni ◽  
Supriadi Supriadi
Keyword(s):  
Financial Performance ◽  
Good Condition ◽  
Balance Sheet ◽  
Financial Statements ◽  
Ratio Analysis ◽  
Business Decisions ◽  
Financial Ratio ◽  
Financial Ratio Analysis ◽  
Income Statement ◽  
Quantitative Descriptive

The financial statements serve as a benchmark in assessing the financial performance of the company as the basis for making business decisions. The motivation in conducting this research is to support previous research to see the development condition of one of the oil palm plantation companies. The purpose of this study is to assess the financial performance by using financial ratio analysis and horizontal analysis. The method used in this research is Quantitative Descriptive with analysis design using Term series Analysis. The result of the research based on financial ratio analysis shows the liquidity ratio and solvency ratio in good condition, while the activity ratio and profitability ratio are not good because it is below the industry average of similar companies. Based on horizontal analysis, financial performance fluctuated and influenced internal and external factors such as operational performance and the average price of world palm oil. The limitations of this study are using only two analytical tools and financial statements analyzed only the balance sheet and income statement.

Rating Agency Adjustments to GAAP Financial Statements and Their Effect on Ratings and Credit Spreads

2014 ◽  
Vol 90 (2) ◽  
pp. 641-674 ◽  
Author(s):  
Pepa Kraft
Keyword(s):  
Default Risk ◽  
Credit Rating ◽  
Credit Ratings ◽  
Balance Sheet ◽  
Financial Statements ◽  
Financial Statement ◽  
Credit Spread ◽  
Credit Spreads ◽  
Term Structures ◽  
Interest Expense

ABSTRACT I examine a dataset of both quantitative (hard) adjustments to firms' reported U.S. GAAP financial statement numbers and qualitative (soft) adjustments to firms' credit ratings that Moody's develops and uses in its credit rating process. I first document differences between firms' reported and Moody's adjusted numbers that are both large and frequent across firms. For example, primarily because of upward adjustments to interest expense and debt attributable to firms' off-balance sheet debt, on average, adjusted coverage (cash flow-to-debt) ratios are 27 percent (8 percent) lower and adjusted leverage ratios are 70 percent higher than the corresponding U.S. GAAP ratios. I then find that Moody's hard and soft rating adjustments are associated with significantly higher credit spreads and flatter credit spread term structures. Overall, the results indicate that Moody's quantitative adjustments to financial statement numbers and qualitative adjustments to credit ratings enable it to better capture default risk, consistent with it effectively processing both hard and soft information.

GASB No. 34's Governmental Financial Reporting Model: Evidence on Its Information Relevance

2007 ◽  
Vol 82 (1) ◽  
pp. 205-240 ◽  
Author(s):  
Elizabeth Plummer ◽  
Paul D. Hutchison ◽  
Terry K. Patton
Keyword(s):  
School Districts ◽  
Financial Reporting ◽  
Default Risk ◽  
Balance Sheet ◽  
Cash Flows ◽  
Working Capital ◽  
Information Relevance ◽  
Net Assets ◽  
Accrual Basis ◽  
The Government

This study uses a sample of 530 Texas school districts to investigate the information relevance of governmental financial statements published under Governmental Accounting Standards Board Statement No. 34 (GASB No. 34). Specifically, we examine whether the new government-wide statements provide information relevant for assessing a government's default risk, and if this information is incremental to that provided by the governmental funds statements. GASB No. 34 requires governments to publish governmental funds statements prepared on a modified accrual basis, and government-wide statements prepared on an accrual basis. We find that GASB No. 34's Statement of Net Assets (similar to a corporation's balance sheet) provides information relevant for assessing default risk, and this information is incremental to that provided by the governmental funds statements. However, GASB No. 34's Statement of Activities (similar to a corporation's income statement) does not provide information relevant for assessing default risk. The accrual “earnings” measure is not more informative than the modified-accrual “earnings” measure. A government's modified accrual earnings measure can be thought of as a type of measure of changes in working capital. Therefore, our results are consistent with research on corporate entities that attributes the superiority of earnings over cash flows primarily to working capital accruals and not long-term accruals. For our sample of school districts, evidence suggests that total net assets from the government-wide Statement of Net Assets, along with a measure of modified-accrual “earnings” from the governmental funds statement, provide the best information for explaining default risk.

EVALUATION OF THE ABSOLUTE RESULTS OF THE LEADING COMPANIES OF THE OIL AND GAS COMPLEX: PROBLEMS AND PROSPECTS

2021 ◽  
Vol 3 (11) ◽  
pp. 6-12
Author(s):  
Lyudmila V. Goloshchapova ◽  
◽  
Elena V. Maltseva ◽  
Keyword(s):  
Oil And Gas ◽  
Balance Sheet ◽  
Oil And Gas Industry ◽  
Financial Statements ◽  
The State ◽  
Gas Industry ◽  
Factors Affecting ◽  
Complex Problems ◽  
The Absolute ◽  
Statistical Indicators

The study is devoted to the analysis of the balance sheet profit of the leading companies in the oil and gas industry. The types of profits were considered, as well as the dynamics of the changes in indicators affecting their formation were analyzed. In addition, the article considers the composition and struc-ture of the balance sheet profit, factors affecting its size. Based on the financial statements of the companies, an idea of the state of profit in the companies «Rosneft», «Lukoil», «Gazprom» and «Tatneft» has been com-piled. The paper analyzes quantitative statistical indicators that reflect the results achieved from 2016–2020.

scholarly journals Twenty-one years without monetary correction in Brazil: impacts on the comparability of the accounting information of siderurgical and metallurgical companies

2018 ◽  
Vol 29 (78) ◽  
pp. 355-374
Author(s):  
Wellington Rodrigues Silva Souza ◽  
Marcos Peters ◽  
Aldy Fernandes da Silva ◽  
Maria Thereza Pompa Antunes
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Financial Accounting ◽  
Net Income ◽  
Negative Effects ◽  
Statistical Parameters ◽  
Return On Assets ◽  
Balance Sheets ◽  
Return On Equity ◽  
Accounting Recognition

Abstract The purpose of this study was to empirically verify the existence or not of a distortion in the comparability of information when inflationary effects are omitted from financial statements. Although inflation has been under control in Brazil since the Plano Real, with indices well below those recorded in the 1980s and 1990s, discussing the need for accounting recognition of the effects of inflation remains an extremely relevant and pertinent issue in light of the proposal of accounting to produce faithful information that closely reflects the economic reality in which organizations operate. The results of the research show that financial accounting has been directly affected by the omission of inflationary effects in financial statements, drawing attention to the negative effects this has caused on the quality of the information produced. In order to operationalize the research, the Balance Sheet Monetary Correction (BSMC) was applied to the balance sheets of Brazilian companies from the siderurgical and metallurgical sector listed on the BM&FBOVESPA in the period from 1996 to 2016. Based on the variables net income, return on equity (ROE), and return on assets (ROA), and two conceptual axes of comparability (between entities and between periods), the statistical parameters were developed and the hypotheses were defined, which were tested using the Student t parametric test. This article shows the damage caused to the decision-making process of the external users for whom financial statements are intended when these are prepared neglecting the effects of inflation. This is verifiable through the analyses of the results obtained, including the observation of significant distortions between the means of the corrected indicators and the means of the historical indicators, such as in the case of net income in 2001, 2002, 2012, 2013, 2014, and 2016 (33.98%, 91.92%, -65.54%, -30.01%, -53.59%, and 26.30% variation, respectively), of ROE (-67.16%, -61.43%, -53.06%, -63.46%, -133.81%, and 65.00% variations in 2008, 2009, 2010, 2011, 2014, and 2015, respectively), and of ROA (-26,70%, -41.14%, -33,34%, -43,49%, 98,83%, and -413,68% in 2005, 2009, 2010, 2011, 2012, and 2014, respectively).

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