AG5_Merger_Accounting_for_Common_Control_Combinations.pdf

AG 5 Issued November 2005 Effective upon issue Accounting Guideline 5 Merger Accounting for Common Control Combinations MERGER ACCOUNTING FOR COMMON CONTROL COMBINATIONS COPYRIGHT ? Copyright 2008 Hong Kong Institute of Certified Public Accountants This Accounting Guideline contains Hong Kong Institute of Certified Public Accountants copyright material. Reproduction in unaltered form retaining this notice is permitted for personal and non- commercial use subject to the inclusion of an acknowledgment of the source. Requests and inquiries concerning reproduction and rights for commercial purposes should be addressed to the Director, Operation and Finance, Hong Kong Institute of Certified Public Accountants, 37/F., Wu Chung House, 213 Queens Road East, Wanchai, Hong Kong. ? Copyright 1A AG 5 MERGER ACCOUNTING FOR COMMON CONTROL COMBINATIONS Contents Paragraphs ACCOUNTING GUIDELINE 5 MERGER ACCOUNTING FOR COMMON CONTROL COMBINATIONS INTRODUCTION 1 - 5 THE PRINCIPLES 6 - 9 THE PROCEDURES 10 - 13 ACCOUNTING PERIOD COVERED BY A NEWLY FORMED PARENT 14 - 15 DISCLOSURES IN ADDITION TO THOSE REQUIRED BY APPLICABLE HKFRSs 16 - 19 EARNINGS PER SHARE 20 APPENDIX - EXAMPLE ? Copyright 2 AG 5 MERGER ACCOUNTING FOR COMMON CONTROL COMBINATIONS Hong Kong Accounting Guideline 5 Merger Accounting for Common Control Combinations Introduction 1. Starting from 1 January 2005, HKFRS 3 Business Combinations applies to all business combinations except where a combination is specifically excluded from its scope. For those business combinations outside the scope of HKFRS 3, for example, business combinations involving entities or businesses under common control, there is no specific accounting standard addressing the appropriate accounting treatment. 2. HKFRS 3 defines a business combination involving entities or businesses under common control as “a business combination in which all of