Legal risk and Merger accounting: Difference between pages

Revision as of 13:25, 22 July 2014

Merger accounting regards two or more parties as combining their interests on an equal footing.

The difference that arises on consolidation does not represent goodwill, but is instead added to (or deducted from) reserves.

Merger accounting is not allowed under the relevant international accounting standard IFRS 3 'Business combinations'.

Under UK domestic GAAP merger accounting is required - but under strictly limited circumstances - under FRS 6 'Acquisitions and Mergers'.

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+Merger accounting regards two or more parties as combining their interests on an equal footing.
+The difference that arises on consolidation does not represent goodwill, but is instead added to (or deducted from) reserves.
-The risk that transactions or business relationships may have unforeseen adverse legal consequences.
+Merger accounting is not allowed under the relevant international accounting standard IFRS 3 'Business combinations'.
-For example, giving rise to additional costs or to the inability to enforce legal rights.
+Under UK domestic [[GAAP]] merger accounting is required - but under strictly limited circumstances - under FRS 6 'Acquisitions and Mergers'.
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-The risk that the administration of legal matters may be more costly - or otherwise more burdensome - than foreseen.
-Legal risk may arise from existing laws and practice, or from changes in relevant laws and practice.
 == See also ==
-* [[Market risk]]
+* [[Acquisition accounting]]
-* [[Risk]]
+* [[FRS  6]]
-* [[Guide to risk management]]
+* [[IFRS  3]]
+* [[Merger]]
-[[Category:Compliance_and_audit]]
+* [[Merger reserve]]
-[[Category:Financial_risk_management]]