What is the connection and difference between a long term equity investment and a business combinati

1. There are both crossover and differences in the scope of accounting, and there is no restriction on the investment ratio of long-term equity investment, as long as it is not for the purpose of trading, no matter how much the shareholding ratio is, it belongs to the category of long-term equity investment, and the investment ratio of business combination is limited, generally more than 50%.

2. The treatment of the merger differenceThe investment difference of different long-term equity investments is divided into two situations: one is greater than the difference, that is, the initial investment cost of the long-term equity investment is greater than the difference between the fair value of the identifiable net assets of the acquiree, and the difference is under unified control, borrowing the "capital reserve" account, which is not adjusted under the same control, and directly retains the initial cost of the long-term equity investment, and the second is the small fish difference, which is under unified control, and the credit "capital reserve" account is included in the "profit and loss" account under the same control.

Business combinations are classified as mergers by absorption.

Holding merger, new merger. As a result of the merger by absorption and the merger of new establishments, only one accounting entity exists, so the consolidated financial statements are not involved.

Holding mergers are divided into mergers under unified control and mergers under non-common control, through the acquisition of shares of other enterprises or mutual exchange** to obtain each other's shares, to achieve control of other enterprises. The "other party's shares" acquired are the long-term equity investment of the merging party (purchaser) in the merged party (acquiree).

The content of the long-term equity investment evaluation:

1. Evaluation of equity investment Equity investment is an investment behavior in which the investor directly invests in the invested enterprise with cash assets, physical assets or intangible assets, obtains the equity of the invested enterprise, and obtains income by controlling the invested enterprise.

Equity investment includes two forms of investment: one is the form of direct investment, in which the investor usually invests directly in the invested enterprise with cash, physical assets and intangible assets, and obtains a capital contribution certificate issued by the invested enterprise to confirm the equity; The second is the form of indirect investment, in which the main investor is usually in the market to achieve the purpose of equity investment by purchasing the issuer. The evaluation of equity investments will be discussed separately for direct and indirect investments.

The long-term equity investment formed by the business combination, that is, the holding merger, more than 50, must be the cost method. Other forms formed, not necessarily, can cost, can equity, see if it is 20 50.

There are four types of long-term equity investments.

1. Equity investment held by the enterprise that can exercise control over the investee, i.e., investment in subsidiaries.

2. Equity investment held by the enterprise that can be jointly controlled by the investee with other joint venture parties, i.e., investment in the joint venture.

3. Equity investment held by the enterprise that can have a significant impact on the investee, that is, investment in associates.

4. Equity investments in which the enterprise does not have control, joint control or significant influence over the investee, has no ** in the active market and the fair value cannot be reliably measured.

To put it simply, the long-term equity investment formed by the merger of enterprises is said to be a holding merger, more than 50%, which must be the cost method! Other forms formed, not necessarily, can cost, can equity, see if it is 20 50. After studying advanced accounting, you will understand that as long as the question does not mention under the same control or not under the same control, it is generally a way other than business combination.

Being able to control is merging.

There are many criteria that can be controlled, but as long as it can determine the financial decisions of the investee company, it can be included in the scope of the merger.

For example, it accounts for more than 50% of the shares, can control the board of directors, and the articles of association stipulate ......

Long-term equity investments are not financial assets. Long-term equity investment refers to the acquisition of shares of the investee through investment. Financial assets are the symmetry of physical assets, which refers to the rotten imitation assets in the form of value owned by units or individuals.

Article 3 of the Company Law of the People's Republic of China A company is an enterprise legal person, has independent legal person property, and enjoys the property rights of legal person. The company is liable for the debts of the company with all its property. The shareholders of a limited liability company are liable to the company to the extent of their subscribed capital contributions; Shareholders of the Company are liable to the Company to the extent of the shares they have subscribed for.

Article 5 of the Company Law of the People's Republic of China The company engaged in business activities must comply with the law and administrative regulations, abide by social morality and business ethics, be honest and trustworthy, accept the supervision of the public and bear social responsibility. The legitimate rights and interests of the company are protected by law and are not infringed.

Legal Analysis: Differences: 1. Investment Ratio:

There is no restriction on the investment ratio for long-term equity investment, while there is a limit on the investment ratio for business combinations, which is generally more than 50%; Second, the distribution of merger costs is different: long-term equity investment does not involve the allocation of merger costs, and in enterprise mergers, only absorption mergers and establishment mergers exist in the allocation of merger costs; Wait a minute.

Legal basis: Company Law of the People's Republic of China

Article 172:A merger of a company may be a merger by absorption or a merger by a new establishment.

The absorption of another company by one company is a merger by absorption, and the absorbed company is dissolved. The merger of two or more companies to create a new company is a new merger, and the parties to the merger are dissolved.

The long-term equity investment formed by the business combination refers to the long-term equity investment generated by two or more enterprises through the conclusion of a merger agreement, which is divided into a business combination under the control of the same Sui and a business combination under the control of the same Shuyi. In the case of a merger of enterprises under the same control, the enterprises participating in the merger are subject to the final judgment of the same party or the same multiple parties before and after the merger. In a business combination that is not under common control, the enterprises participating in the merger are not ultimately controlled by the same party or the same multiple parties before and after the merger.

A business combination refers to a transaction or event in which two or more separate businesses are combined to form a single reporting entity.

Business combinations are divided into mergers by merger, including holding merger, absorption merger and new merger.

1. Merger of holdings.

Under the holding merger method, if the merged party or the acquired party continues to operate as an independent legal person after the merger, the merging party or the purchaser shall confirm the investment in the merged party or the acquired party formed by the business combination.

In the case of a holding merger, whether it is a business combination under the same control or a business combination not under the same control, the individual financial statements of the merging party (or the purchaser) are reflected as the long-term equity investment of the parent company (the merging party or the purchaser) in the subsidiary (the merged party or the acquiree).

2. Absorption and merger.

Merger by absorption means that the merging party obtains all the net assets of the merged party in the business combination, and merges the relevant assets and liabilities into the merging party's own books and statements for accounting (individual reporting entities). After the merger of enterprises, the legal personality of the merged party shall be cancelled.

3.Newly established merger.

A new merger refers to the registration of a new enterprise in a business combination, which holds the assets and liabilities of the original parties involved in the merger and operates on a new basis (individual reporting entity). The parties to the original merger shall have their legal personality revoked after the merger.

Obviously, in the above-mentioned form of merger, only the accounting of long-term equity investment generated by the holding merger is the enterprise form of the parent subsidiary, that is, the equity investment controlled by the merging party over the merged party.

Business combinations are divided into business combinations under common control and business combinations under non-common control.

1.Business combination under the same control, if the enterprises participating in the merger are under the ultimate control of the same party or parties before and after the merger, and the control is not temporary, it is a business combination under the same control. The date of merger refers to the date on which the merging party actually acquires control over the merged party.

Typically, a business combination under common control is a merger that takes place between enterprises within the same enterprise group. In addition to this, it is generally not used as a business combination under the same control.

2.Business combinations that are not under common control.

If the parties involved in the merger are not under the ultimate control of the same party or the same multiple parties before and after the merger, it is a business combination that is not under the same control. The date of purchase refers to the date on which the purchaser actually obtains control over the acquiree.

The rest is something other than a business combination.

After the merger of the holdings, the parent company can exercise control over the subsidiary, and the other two ways have only one enterprise, which has nothing to do with it.