merger accounting

A method of accounting that treats two or more businesses as combining on an equal footing. It is usually applied without any restatement of net assets to fair value and includes the results of each of the combined entities for the whole of the accounting period, as if they had always been combined. It does not reflect the issue of shares as an application of resources at fair value. The difference that arises on consolidation does not represent goodwill but is deducted from, or added to, reserves. The recently issued International Financial Reporting Standard 3, Business Combinations, prohibits merger accounting for all business combinations falling within its scope.

Accounting dictionary. 2014.

Look at other dictionaries:

  • merger accounting — A method of accounting for a business combination. It may only be used when a business combination falls within the definition of a merger in Schedule 4A to the Companies Act 1985 and Financial Reporting Standard 6. A business combination meets… …   Law dictionary

  • merger accounting — A method of accounting that treats two or more businesses as combining on an equal footing. It is usually applied without any restatement of net assets to fair value and includes the results of each of the combined entities for the whole of the… …   Big dictionary of business and management

  • merger accounting —    the false statement of subsequent profitability    Literally, the creation of provisions against the cost of assimilating an acquisition:     By the alchemy of merger accounting, some of the cost could be recycled into profits. (Daily… …   How not to say what you mean: A dictionary of euphemisms

  • Merger Accounting — ⇡ Pooling of Interests Methode …   Lexikon der Economics

  • merger accounting — / mɜ:dʒə əˌkaυntɪŋ/ noun a way of presenting the accounts of a newly acquired company within the group accounts, so as to show it in the best possible light …   Dictionary of banking and finance

  • merger reserve — merger capital reserve A reserve credited in place of a share premium account when merger relief is made use of. Goodwill on consolidation may be written off against a merger reserve (unlike the share premium account) …   Accounting dictionary

  • merger capital reserve — merger reserve …   Accounting dictionary

  • merger — A combination of two or more businesses on an equal footing that results in the creation of a new reporting entity formed from the combining businesses. The shareholders of the combining entities mutually share the risks and rewards of the new… …   Accounting dictionary

  • merger reserve — The availability of merger relief is an essential prerequisite for merger accounting; the reverse is not, however, the case and it is possible to obtain merger relief while acquisition accounting. Where this is the case, the premium on the issue… …   Law dictionary

  • merger — merg·er / mər jər/ n 1: the absorption of a lesser estate or interest into a greater one held by the same person compare confusion 2: the incorporation and superseding of one contract by another 3 a: the treatment (as by statute) of two offenses… …   Law dictionary

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