Business Combination

Business Combination Reporting Requirements
Kristina Cacaj
Capella University

Company: Google Inc.
Business Combination
Business combination refers to transactions in which one company gains control, or at least controlling interest, in another company. It is a way adopted by companies to grow their size. It facilitates the growth of a company by joining the business and bringing their assets under one control. Apart from growth, it helps the companies in eliminating the competition from the business. It helps in taking advantage of economies of scale by reducing the management cost, research and development cost and aids in increasing the capital of the company. Generally, Business combinations can be categorized into four different types; Vertical combination, Horizontal combination, Circular combination, and Diagonal combination.
Change in Reporting Requirements
On July 1, 2009, Financial Accounting Standard Board (FASB) issued amended reporting standards for business combinations. The following changes were made to the reporting standards:
Business Combination Disclosures
ASC 805-10-50-1 states that acquirer of the business should disclose information to enable users of its financial statements to estimate the effect of such combination
  a) During current reporting period,
  b) Before issuing the financial statements if after reporting date.
General Disclosures
ASC 805-10-50-2(a) through (d) states that the business entity must disclose the following information:
  a. The name and description of the acquiree.
  b. The date of acquisition.
  c. The reason for acquisition.
  d. The percentage of voting rights acquired.
The reporting standards prior to 2009 does not required the description of acquirer but of acquirer entity.
Consideration Transferred
Deloitte (December, 2009), says that ASC 805-30-50-1(b) says that a business entity should disclose following considerations that take place during reporting period:
  1. Cash
  2. Intangible or...