BUSINESS
COMBINATION
An Introduction to Concepts &
[Link] Siddiki
Accounting
[Link] Saiyara
Tanhaa
[Link] Islam
[Link] Alam Himel
1 [Link] Hossain
[Link] Hasan Ta-
INTRODUCTION
• A transaction where one company obtains control over
another
• Involves acquiring assets or equity interests
• Governed by the acquisition method
2
OBJECTIVE OF BUSINESS
COMBINATIONS
Accurately reflect the transaction using fair value
Recognize assets and liabilities
acquired
Report non-controlling interests and goodwill
3
TYPES OF BUSINESS
COMBINATIONS
Merger – A+B = A
Acquisition – A buys B
Consolidation – A+B = C (new entity)
4
STEPS IN THE
ACQUISITION METHOD
[Link] the acquirer
[Link] acquisition date
[Link] assets/liabilities at fair value
[Link] goodwill or gain from bargain
purchase
5
STEPS IN THE
STATUTORY MERGER
METHOD
[Link] agree and get approval
[Link] takes over assets & liabilities
[Link] company is dissolved
[Link] continues as sole entity
[Link] assets/liabilities at fair value
6
STEPS IN THE
STATUTORY
CONSOLIDATION
[Link] agree to form a new entity
METHOD
[Link] assets & liabilities transferred to new company
[Link] companies are dissolved
[Link] company records assets at fair value
7
GOODWILL
Arises when:
Purchase price > Fair value of net assets
Reflects expected future economic benefits
8
9
NON-CONTROLLING
INTEREST
Equity not owned by the parent
Must be reported separately in
consolidated financials
1
0
1
1
BARGAIN PURCHASE
(NEGATIVE GOODWILL)
Purchase price < Net assets fair value
Difference used to reduce asset values or
recognized as gain
1
2
FINANCIAL
REPORTING
Pre-combination income NOT
included
Prior periods reflect only the
acquirer's results
1
3
DISCLOSURE
REQUIREMENTS
Name of acquiree
% interest acquired
Reason for acquisition
Goodwill justification
1
Contingent payments or R&D write-offs
4
CONCLUSION
• Business combinations consolidate control
• Acquisition method ensures transparency
• Key outcomes: recognition of assets, goodwill,
and non-controlling interest
1
5
THANK YOU
