Definition And Scope Definition Of Enterprise Merger

Enterprise merger is a paction or matter that combines two or more than two separate enterprises to form a reporting body.

The result of an enterprise merger is usually the control of an enterprise to one or more businesses.

If an enterprise obtains control over another or more businesses, and the buyer (or the merged party) does not constitute a business, the paction or matter does not form an enterprise merger.

When an enterprise obtains a set of assets or net assets that do not form a business, the purchase cost shall be allocated on the basis of the relative fair value of the identifiable assets and liabilities acquired on the purchase date, and shall not be processed according to the enterprise merger criteria.

Business refers to the combination of certain production and operation activities or assets and liabilities within the enterprise.

From the definition of enterprise merger, whether enterprise merger is formed or not depends on whether the enterprise is a business. The key lies in whether the main body of the report changes after the paction or event occurs.

The change of reporting body arises from the change of control rights.

After the paction occurs, one party can control the production and operation decisions of the other party and form a relationship between the parent subsidiary and the company, which involves the pfer of control rights. After the paction or event occurs, the subsidiary company needs to be incorporated into the scope of the consolidated financial statements of the parent company, and form a change in the reporting body from the perspective of the consolidated financial report; after the paction occurs, one party can control all the net assets of the other party, and the merged enterprise loses its legal person qualification after the merger, and also involves the change of control rights and the change of the reporting body, thus forming the merger of enterprises.

It is assumed that the two enterprises of A and B are independent legal entities before the merger, and they all constitute business. The merger of enterprises as defined in the merger criteria includes, but is not limited to, the following situations:

1. the enterprise A has acquired all the shares of the enterprise B through the issuance of its own common stock from the original B shareholder. After the paction, B continued to operate.

2. the A payment consideration of the enterprise will get all the net assets of the enterprise B, and the corporate qualification of B will be revoked after the paction occurs.

3. the enterprise A invested in the enterprise B with its own assets, and gained control of the B of the enterprise. After the paction took place, the B of the enterprise still maintained its independent legal person qualification and continued to operate.

The result of an enterprise merger is usually the control of an enterprise to one or more businesses.