Business combination under the same control How to account for the original goodwill

For business combinations under the same control, the assets and liabilities of the merged party are recognized at their original book value, not at fair value.

to make adjustments, so that goodwill is not formed.

There is also no need to measure goodwill.

Goodwill usually refers to the value that a company can obtain above the normal rate of return on investment under the same conditions. This is due to the advantages of the geographical location of the enterprise, or due to various reasons such as high operating efficiency, long history, and high quality of personnel, compared with peer enterprises, it can obtain excess profits. Goodwill refers to the potential economic value that can generate excess profits for the business operations in the future period, or the capitalized value of an enterprise's expected profitability that exceeds the normal profitability of identifiable assets (such as the average social return on investment).

Goodwill is an integral part of the overall value of a business. In a business combination, it is the difference between the cost of the investment of the purchased enterprise and the fair value of the net assets of the merged enterprise.

They will not be rerecognized unless the time of the purchase date is that the fair value of the investment unit cannot be determined, but there is a possibility that goodwill will will be impaired.

If Company A merges with Company B, and the agreed value of fixed assets of RMB 1 million at that time is in the merger and acquisition, and the asset value of RMB 2 million or more is recognized as the basis for the accurate evidence of goodwill at the end of the year, it is naturally necessary to adjust the value of fixed assets, and the relevant goodwill will be affected.

Formula for calculating goodwill in a business combination not under common control:

Net personal asset value = operating income - operating expenses - depreciation of productive fixed assets - production tax + net income from renting out houses, net income from renting out other assets and net rent of self-owned housing conversion chain, etc. Net property income does not include premium income from the transfer of ownership of assets.

Real growth rate of per capita disposable income = (per capita disposable income in the reporting period per capita disposable income in the base period) Household consumption** index -100%.

1. The indirect measurement using the difference method is consistent with the provisions of the International Accounting Standards.

2. Tax treatment of goodwill: In view of the equity method accounting for long-term equity investment, according to the provisions of the Ministry of Finance and the State Administration of Taxation on the issuance of the "Answers to Questions Concerning the Implementation and Related Accounting Standards (III)", the tax law does not recognize positive goodwill, nor does it recognize negative goodwill.

3. Impairment treatment of goodwill: According to the provisions of Accounting Standards for Business Enterprises No. 8 - Asset Impairment, the impairment test and recognition of goodwill should be carried out in combination with the asset group or asset group combination related to it.

4. In accordance with the relevant provisions of the tax law, the items allowed to be deducted before the enterprise income tax must follow the principle of deduction based on the facts, and any form of reserves drawn by the enterprise according to the provisions of the financial accounting system shall not be deducted before the enterprise income tax. Therefore, the tax law does not recognize the provision for goodwill impairment. Si wide sails.

Summary. Goodwill is only recognized in the consolidated statements. Individual reports are not confirmed. Because goodwill is related to the whole.

If the shareholding merger is not under the same control, goodwill will not be recognized if it is a separate statement. In the case of consolidated statements, goodwill is recognized.

Why does the merger of enterprises not under the same control not recognize goodwill, but the preparation of consolidated financial statements is to recognize?

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Goodwill is only recognized in the consolidated statements. Individual reports are not confirmed. Because goodwill is related to the whole. If the shareholding merger is not under the same control, goodwill will not be recognized if it is a separate statement. In the case of consolidated statements, goodwill is recognized.

Currently, goodwill recognition is only required for business combinations that are not under common control. 1. Among them, the absorption and consolidation are confirmed in the individual statements as follows: debit

Goodwill credit of the assets of the absorbed merger: the liabilities of the absorbed merging party absorb the consideration paid by the merging party 2, the holding merger is recognized in the consolidated statements, and the entries are: debit:

Goodwill loan for owner's equity of the merged party: If the initial investment cost of the long-term equity investment is greater than the fair value share of the investee's identifiable net assets at the time of investment when the enterprise is not under the same control, the difference is goodwill, and the initial investment cost of the long-term investment is not adjusted. If the initial investment cost is less than the fair value share of the investee's identifiable net assets at the time of investment, the difference shall be non-operating income, and the book value of the long-term investment shall be increased.

Legal basis

Company Law.

Business combinations that are not under common control.

Formula for calculating goodwill:

Personal net worth.

Operating income - operating expenses.

Depreciation of productive fixed assets - production tax + net income from rental housing, net income from leasing other assets and net rent converted from self-owned residential fiber accompaniment house, etc. Net property income does not include premium income from the transfer of ownership of assets.

Disposable income per capita.

Real growth rate = (per capita disposable income in the reporting period per capita disposable income in the base period) Household consumption ** index.

You're right, goodwill is a tax differential, and the book value is greater than the tax base, but the deferred tax liability is not recognized, and the deferred tax should not be recognized when the goodwill is subsequently measured in the future. For example, the initial recognition of goodwill is 100 yuan:

If there is no impairment of goodwill in the current year, there is no accounting treatment.

If the goodwill is impaired by 20 in the current year, the impairment cannot be recognized as deferred tax, and the tax payable and current income tax expense shall be adjusted as a permanent difference that should be included in the profit or loss in the year.

When disposing of an investment, 80% of the carrying amount is transferred to a loss, which is not adjusted if a pre-tax deduction is allowed in accordance with local tax laws, and is still adjusted as a permanent difference if a pre-tax deduction is not allowed. According to the new accounting standards, the difference between the book value and the exchange price when disposing of the long-term investment of the parent company is tax deductible for the long-term investment of the subsidiary according to the cost method, and the goodwill is actually included in the long-term investment cost of the parent company.

The above is in IAS

12income

tax. Since our norms are converging with international norms, I do not see any difference.