The Business Combination Accounting and Probabilistic Purchase Methods

Nakano, Isao

The Business Combination Accounting and Probabilistic Purchase Methods

Isao Nakano
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Isao Nakano: Kobe University
Authors registered in the RePEc Author Service: Hidetoshi Yamaji

Kobe Economic & Business Review, 2009, vol. 53, 1-11

Abstract: In the US and International Accounting Standards, the purchase method is being universally required to beused. But no mentions are made for mergers of (nearly) equal firms where the acquiring and the acquired firms are difficult to determine. For these cases, I propose as an object for further research a new accounting method, a gprobabilistic purchase method hwhich has the advantage of consistency and comparability between pre-and post combination periods. Upon further an alyses,two kinds of probabilistic purchase method can be constructed. They are the equally weighted probabilistic purchase method and the (net asset-) size-proportional purchase method.Their meanings and significances are discussed.

Keywords: the purchase method; mergers of equals; the probabilistic method; the business combination accounting (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2009
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