The purpose of this report is to give an overview of methods of accounting for business combinations have been used in the consolidated financial statements of major European companies in 1999 and 2000 in order to be able to contribute to the discussion on accounting methods for business combinations. A limited review of the country’s legislation and national standards has been conducted in order to provide insight into the possible methods of accounting for business combinations in a certain country. The report also provides an overview of goodwill treatments.

The survey examines in detail the six elements of business combinations:

– What is being obtained: shares (in entities) or other assets?
– What is the consideration: by transferring shares (contribution in kind or legal merger), cash, or other assets?
– What is the substance of the transaction: an acquisition or a uniting?
– How is it accounted for: by purchase, pooling or fresh start?
– How is any goodwill calculated?
– How is goodwill treated?

Position Paper