Merger accounting: Difference between revisions

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Merger accounting regards two or more parties as combining their interests on an equal footing.   
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 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'.
The difference in reserves is generally reported separately and labelled "merger reserve".
 
 
Relevant accounting standards include IFRS 3, and Section 9 and Section 19 of FRS 102.


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


== See also ==
== See also ==
* [[Accounting]]
* [[Acquisition accounting]]
* [[Acquisition accounting]]
* [[FRS  6]]
* [[Consolidation]]
* [[Goodwill]]
* [[Goodwill on consolidation]]
* [[IFRS  3]]
* [[IFRS  3]]
* [[FRS  102]]
* [[Merger]]
* [[Merger]]
* [[Merger reserve]]
* [[Merger reserve]]
* [[Reserves]]


[[Category:Accounting,_tax_and_regulation]]

Latest revision as of 13:35, 14 February 2023

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 difference in reserves is generally reported separately and labelled "merger reserve".


Relevant accounting standards include IFRS 3, and Section 9 and Section 19 of FRS 102.


See also