Accounting and Tax Factors in Mergers and Acquisitions推荐.pdfVIP

7 Accounting and Tax Factors in Mergers and Acquisitions KENNETH R. FERRIS AND PHILIP DRAKE CHAPTER OBJECTIVES • Highlights the approaches for accounting for mergers • Highlights global merger and acquisition reporting practices • Highlights the taxation issues in mergers and acquisitions Two essential components of every corporate restructuring transaction are: (a) the method of accounting imposed on the transaction by local professional or governmental regulators and (b) the taxation implications created by the transaction. While greater transparency and uniformity in the accounting treatment of similar transactions have been achieved in recent years throughout the world, merger and acquisition tax laws remain obtuse and are often highly culturally-dependent, varying widely across national borders. This chapter attempts to overview the dominant accounting approaches to and tax consequences of various forms of corporate restructuring such as mergers and acquisitions. Accounting for Mergers and Acquisitions Generally speaking, when a company obtains a majority ownership of the outstanding voting shares of another entity, it is usually the Accounting and Tax Factors in Mergers and Acquisitions 161 case that the acquirer will be required to refl ect the fi nancial results (that is, the balance sheet, income statement and statement of cash fl ows) of the acquired entity on a consolidated basis with the parent company and any other companies controlled by the parent. The preparation of consolidated fi nancial results, it should be noted, has been standardized in many countries to help avoid the problem of information overload by investors. Imagine the diffi culty, for instance, of analyzing the numerous individual company-level fi nancial statements of such conglomerates as General Electric in the US, Mitsui in Japan o