The company operates through the three business areas financial consulting, investment and reverse acquisitions
Many of the firms currently listed on Korea's stock exchanges went public through reverse acquisitions
and backdoor listings in 2005 and 2006, when an Asia-wide burst of interest in Korean pop culture infected investors.
The implementation guidance provides examples of how to account for different business combinations and explanations of topics, such as definition of a business; measuring the fair value of the acquiree; intangible assets; illustration of disclosure requirements; and reverse acquisitions
. Following are some highlights:
FEE is calling for clarification by the Commission on:u the application of the principle of substance over form;u the presentation of construction contracts in the balance sheet;u employee benefits: future salary increases related to promotion;u whether decommissioning costs can be included as part of production costs;u the preparation of consolidated accounts in reverse acquisitions
;u the intention to use the right of set off in netting.As accounting becomes more international, International Accounting Standards are likely to play a more important role in Europe, says FEE.
Thus, taxpayers confront temporary rules requiring stock basis and earnings and profits adjustments following reverse acquisitions and similar transactions, and a raft of proposed regulations involving subjects such as SRLY losses, investment adjustments, earnings and profits, and excess-loss accounts.
The chapter also delves into the implications of reverse acquisitions (where a large corporate group is taken over, in form, by a member of a smaller group, but the shareholders of the larger group obtain a controlling interest in the smaller group).
Sales to outsiders may vary in complexity from a sale to a single individual or entity to a public offering of shares previously held by group members.(13) * Reverse acquisitions: Under Regs.
(14) Examples of reverse acquisitions include IRS Letter Rulings 8849044 (9/12/88), 8914027 (1/4/89), 9016036 (1/19/90) and 9042037 (7/23/90).
[section]1.1502-75(d)(3) (involving reverse acquisitions
Determining whether a transaction is characterized as a reverse acquisition
under the consolidated return regulations can be challenging.
The ED modifies the circumstances in which a business combination could be regarded as a reverse acquisition
. It clarifies that for all business combinations effected through an exchange of equity interests, the acquirer is the combining entity with the power to govern the financial and operating policies of the other entity (or entities) so as to obtain benefits from its (or their) activities.
* Company B acquires Company A in a reverse acquisition
to become public.