country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Nature Of Business Combinations And The Required Disclosures

tag 0 Download5 Pages / 1,075 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Write essay about the nature of business combination and required disclosures including referencing.
 
 

Answer:

Business combination is a type of merge wherein the two merging companies assets are consolidated as on under the ownership of one single person. Thus the fact that the controlling interest vests in the hands of a single business entity is its main feature. Business combinations generally takes place between entities which are in the same line of business activities so as to derive the benefit of large scale production and thus reduce cost of production. This in turn enables to cut down the competition in the market significantly.  The accounting for business combinations is also very clearly spelt out so as to ensure that the combining entities have the ease to work together while adhering to the statutory requirements as per IFRS3 (Khan, 2015).

Business combinations are of various nature and all have various requirements of disclosures. The disclosure is a mandate as it is through a financial statement of an entity that the end users are made aware of the activities that the organization has undertaken. The various nature of business combination and the disclosures exclusively for the combinations are enumerated as under:

1. Horizontal Combination: In the said nature the entities with similar lines of operation combine their activities so as to achieve economies of production and greater market share. Such as mergers and acquisitions. Merger is a method wherein two entities join hands and acquisition is a method where an entity known as the acquirer takes over the other entity known as acquire for financial benefits. Thus mergers are always friendly in nature whereas acquisitions can be mutual as well as hostile. But both kinds of combinations are done so as to create a monopoly or to gather a larger market share. It is a sort of horizontal combination (Singla, 2011). 

 

The said type of combination requires entities to disclose the purpose of acquisition, the goodwill it calculated via this association, the purchase price and the forms in which such purchase consideration is being fulfilled (Sai, 2015).

2. Vertical Combination: This nature of business engagement is internal to an organization. It basically thrives towards integrating various departments under the guidance of a single managing authority. This basically leads to a better communication between departments, thus reducing wastages, better co-ordination between the demand and supply chain and thus maximizing the profits. This kind of combinations are generally seen in a more positive manner by the investors as it prevents dilution of their interests and is less costly a method. Its disclosures basically needs to highlight the various departments that have been integrated and the kinds of benefits the entity has or expects to derive from such a combination (Rasel 2014).

3. Circular Combination: This sort of combination is basically to establish a big business empire with varied businesses and none of them are connected to each other but managed by a common business house. The perfect example for the same is that of TATA Group of companies which are engaged in iron and steel production, sugar industry, salt industry, motor vehicles and many more and none of them is dependent on each other for their production, marketing or sales processes. Even the disclosure requirements are different and the accounting standards applicable also varies industry wise (Qureshi, 2016). Thus a combination wherein different industries come together under the same roof of the management is known as circular combination. The disclosure requirements of such a combination is very simple. Individual financial statements are prepared and when the parent group’s results are published then a detail regarding its other businesses are only published. However the annual report of the various industries under one management are different (Bradford, 2013). 

 


4. Diagonal combination: This type of combination involves the main units of an organization to join hands with its ancillary industries whose services are required for the smooth and a speedy discharge of duties. For example a newspaper industry ties up with a transportation company so as to enable speedy delivery of the newspaper to its customers . This helps the ain industry function smoothly. Thus the disclosure requirements for such type of business combination is very simple. It just needs to disclose the reason for such an acquisition and the benefits with regards the scale of operations as well as monetary gains is to be established. The combination with an ancillary industry may not be a very expensive affair as the organization being acquired may be a small one and hence the cost of purchase may not be too high to effect the main business.

Apart from some specific disclosures required to be made for the various kinds of business combinations that an entity undertakes following are also needed to spelt out:

  1. The name and full description of the firm being acquired.
  2. The date from which such a combination came into effect.
  3. The amount of controlling interest acquired.
  4. The reason for such a combination.
  5. The methodology using which the purchase consideration has been arrived at (Financial Accounting standard Board, 2007).

Thus on a concluding note it is clear that a business combinations leads to a number of important financial as well as operational changes which is very significant to be disclosed for the investors and the users of the financial statement.  Assessing of the effects of a business combination post transaction on the profitability and the cash flows is very crucial. This assessment enables to understand how successful has the said business combination been for the acquirer and what value addition it has done for the shareholders. Lastly it is to be understood if a combination takes place after the reporting year ends but before th financial statement is issued then a disclosure for the same is a must.  It is a very common practice in today’s scenario to keep on acquiring businesses and indulge into various kinds of combinations so as to be able to survive this competition. 

 

References:

Khan, W., 2015, Business Combination, viewed on 21st May 2016.

Sai, S., 2015, Business Combination: Concept, Causes and Forms, viewed on 21st May 2016.

Rasel, 2014, Different Types of Business Combination, viewed on 21st May 2016.

Financial Accounting standard Board, 2007, Statement of financial Accounting Standards No. 141, Business Combinations, viewed on 20th May 2016.

Bradford, S., 2013, Types of Business Combinations, viewed on 21st May 2016..

Singla, R.K., 2011,Business Organization, VK (India) Enterprises: India

Qureshi, S., 2016, What is Business Combination and its types, viewed on 21st May 2016.

Download Sample

Get 100% money back after download, simply upload your unique content* of similar no. of pages or more. We verify your content and once successfully verified 100% value credited to your wallet within 7 days.

Upload Unique Document

Document Under Evaluation

Get Credits into Your Wallet

*The content must not be available online or in our existing Database to qualify as unique.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2017). Nature Of Business Combinations And The Required Disclosures. Retrieved from https://myassignmenthelp.com/free-samples/nature-of-business-combinations-and-the-required-disclosures.

"Nature Of Business Combinations And The Required Disclosures." My Assignment Help, 2017, https://myassignmenthelp.com/free-samples/nature-of-business-combinations-and-the-required-disclosures.

My Assignment Help (2017) Nature Of Business Combinations And The Required Disclosures [Online]. Available from: https://myassignmenthelp.com/free-samples/nature-of-business-combinations-and-the-required-disclosures
[Accessed 04 July 2020].

My Assignment Help. 'Nature Of Business Combinations And The Required Disclosures' (My Assignment Help, 2017) <https://myassignmenthelp.com/free-samples/nature-of-business-combinations-and-the-required-disclosures> accessed 04 July 2020.

My Assignment Help. Nature Of Business Combinations And The Required Disclosures [Internet]. My Assignment Help. 2017 [cited 04 July 2020]. Available from: https://myassignmenthelp.com/free-samples/nature-of-business-combinations-and-the-required-disclosures.


Getting nightmare regarding pending chemistry assignment? Then it is high time you consider hiring chemistry assignment help service of MyAssigemnthelp.com. We at MyAssignmenthelp.com deliver quality subject specific assistance on more than 100+ subjects. For us, students' need is foremost, and we work round the clock to offer science, humanities and commerce assignment help. Among Commerce wing, our one of the most popular services is capital budgeting assignment help. In science segment, we have gained popularity with biology assignment help.

Latest Management Samples

MGT306 Strategic Management

Download : 0 | Pages : 9
  • Course Code: MGT306
  • University: University Of The West Of England
  • Country: United Kingdom

Answer: Business Environment Vision  To become one of the leading ecommerce organizations that provides for mutual development of all stakeholders. Mission To provide a world class shopping experience to customers by offering best quality products. Goals To create a world class online platform that is secure, user friendly and creates a lasting impression. To create a high degree of customer reach with dedicated marketing and adv...

Read More arrow

MIS782 IT Portfolio Theory

Download : 0 | Pages : 7

Answer: Gap digitised its entire product inventory system  and introduced retailed service   Digital capability; Digital capability to understand the customer needs and trends followed by the customers in fashion industry. The google trends service helped the company to understand the future pathway of business. Gap implemented big data based to execute the predictive marketing. Gap replaced the positi...

Read More arrow Tags: Australia Carnegie Management University of New South Wales 

LAW514 Commercial Law01

Download : 0 | Pages : 7
  • Course Code: LAW514
  • University: Charles Darwin University
  • Country: Australia

Answer: Whether the agreement which had been formed between Rajeev and Vicky for the sale of the café Best espresso valid or not A contract is a document which is formed between two parties with mutual consent. A very important requirement of the formation of a contract is that the contract has not been formed between the parties with free consent. The consent which is provided in relation to a contract can only be regarded as a free ...

Read More arrow

ITC561 Cloud Computing01

Download : 0 | Pages : 8
  • Course Code: ITC561
  • University: Charles Sturt University
  • Country: Australia

Answer: PowerPoint Presentation on Cloud Architectures Slide 1: Title Slide Slide 2: Introduction Slide 3: Definition of Cloud Computing Slide Note: Cloud computing can be defined as the IT hypothesis for transferring, storing, managing and processing any data or information. The Internet service delivery is also involved in the cloud computing. Moreover, several networking of remote servers is also done. Slide 4: Concepts of Cloud C...

Read More arrow

COIT20261 Network Routing And Switching01

Download : 0 | Pages : 4

Answer: Objectives This assessment task requires you to demonstrate your knowledge of basic routing concepts by completing a number of exercise questions.  The questions contain numerical as well as descriptive questions covering the material up to Week 6.   The questions are designed to help you to achieve the unit learning outcomes as listed in the unit profile. You must do this assignment on your own – it is not a gro...

Read More arrow
Next
watch

Save Time & improve Grade

Just share Requriment and get customize Solution.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,355,354

Orders

4.9/5

Overall Rating

5,080

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

610 Order Completed

100% Response Time

Cheryl Zhao

PhD in Statistics

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1692 Order Completed

98% Response Time

Alfred Dodd

PhD in Computer and Information Science with specialization in Database

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

230 Order Completed

97% Response Time

Liya Han

Master Of Science in Geotechnical Engineering (MSc Geotec)

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

529 Order Completed

95% Response Time

Ivan Blank

PhD in Functional Human Biology

Wellington, New Zealand

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

I got 85% in that assignment. Which really helps me to gey good scores in that unit. Thanks.

flag

User Id: 399934 - 04 Jul 2020

Australia

student rating student rating student rating student rating student rating

I got great feedback from my instructor and my grade was 100%. thank you for all your help.

flag

User Id: 448656 - 04 Jul 2020

Australia

student rating student rating student rating student rating student rating

Thank you, this is the first time I did not have to change anything in the requested essay. Great job!

flag

User Id: 442767 - 04 Jul 2020

Australia

student rating student rating student rating student rating student rating

I'm happy. On time and very professional. It was done to my instruction. I'll use the service again

flag

User Id: 455606 - 03 Jul 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?