Similarities And Differences Between Direct Merger Method And Adjustment Merger Method

In the consolidated financial statements, both direct merger and adjustment of merger should be applied in accordance with the following provisions:

1. to prepare adjustment entries and adjust the following items of individual financial statements of subsidiary companies: (1) the accounting policies and statements of subsidiary companies that are inconsistent with the parent company shall be adjusted according to the accounting policies of the parent company and the financial statements of the subsidiary companies during the accounting period; (2) the subsidiaries are acquired under the same control, and the book value of assets and liabilities has not been adjusted due to the merger, and the criteria stipulate that the consolidated statements should be consolidated on the basis of the fair value of the purchase date.

Therefore, according to the records set up by the parent company to set up the reference book for the subsidiary company, the assets and liabilities of the subsidiary shall be adjusted on the basis of the fair value of the purchase date, and the financial statements of the subsidiary company shall be adjusted to determine the amount of assets and liabilities on the balance sheet date of this period, and the corresponding adjustment should be made for the adjustment of these assets, and the cost of depreciation, amortization or sale and consumption should be recaped or reduced.

2., the compilation of offset entries offsets the impact of internal pactions, shareholding, debt and debt on consolidated statements.

The specific offsetting items are shown in the second part of the article.

1. the basis of adjustment offset is different.

When a consolidated financial statement is made by the equity consolidation method, the long-term equity investment of a subsidiary must be adjusted according to the equity method. When preparing consolidated statements by direct merger method, the long-term equity investment of a subsidiary should be adjusted directly on the basis of the original cost accounting method.

According to the compilation of consolidated statements, the long-term equity investment of subsidiaries should not be adjusted according to the equity law.

The 2. part

Different.

Under the adjustment and merger method, the adjusted long-term value of the subsidiary companies includes the accrual portion of the net assets change since the parent company holds the interest method. Therefore, when the investment is set off, all the items of the owner's equity and interests of the subsidiary company should be fully sold and the minority shareholders' rights and interests should be recognized. Under the direct merger method, the subsidiary investment does not include the accrued share of the subsidiary's net assets change. Therefore, (1) investment.

It is limited to the investment cost of the parent company to the subsidiary company and the subsidiary company's record to the parent company's paid capital and the corresponding capital premium, rather than the total amount of each item of the two item or even the owner's equity.

(2) confirming goodwill is also a category of equity law accounting, so the direct Merger Law does not confirm goodwill.

(3) the profit distribution of subsidiaries is fully offset, and it is also the result of equity method accounting.

Under the direct merger method, the profit distribution is offset only by the profits of the subsidiary to the parent company and other subsidiaries in the group.

The profit that the subsidiary company assigns to the minority shareholders outside the group, the subsidiary company's own reserve surplus is not an internal paction, and should not be offset.

3. the specific "merge amount" of each item of the owner's equity of the consolidated statement is not the same.

Under the equity law, the original owner's equity of a subsidiary should be offset in full. After cancellation, the original owner's equity of a subsidiary should be 0 except for a few items. Under the direct merger method, the other owner's equity items of the subsidiary company will not be set off in addition to the internal equity investment. Therefore, after the adjustment and cancellation, most of the subsidiary owners' equity projects still have a balance, and the combined amount after the sum of the parent and subsidiary companies will not be equal to the "combined amount" under the adjustment of the Merger Law.

4. minority shareholders' gains and losses and minority shareholders' rights and interests are different methods of recognition: under the merger of rights and interests, minority shareholders' profit and loss and minority shareholders' rights and interests are offset by loss of interest and profit distribution related to equity law, as well as the offsetting of subsidiary investment and subsidiary owners' rights and interests. Under the direct Merger Law, minority shareholders' profit and loss and minority shareholders' interests can only be calculated by confirming their amounts, and they should be filled in the corresponding items of the work papers separately, and not be identified by adjusting or offsetting entries.