[lethal117]

Hi, I need help with business combination.

How does business combination relate to the concept of control?

I am not able to get my head around this. Its driving me insane!

If anyone is able to help me please?it would be greatly appreciated.

Thank You

[helemuo]

There are four basic forms of business combination and control. You need to study the features of Statutory Merger, Statutory consolidation, Acquisition of Common Stock, and Acquisition of Assets to have a grasp of the control being exerted by the acquiring company called the combinor.
For the purpose of answering your question, I will explain what takes place in the case of an acquisition of common stock. If Delta Airline, for example, wishes to thwart competition, it might bid for the common stock of United Airline and try to acquire as many outstanding shares as possible using cash, bonds and some other negotiable instruments. If she obtains more than 50% of United Airlines outstanding share, Delta could exert an enormous control over the affairs or the management of United. A more than 50% controlling interest means in effect that there are minority shareholders of United (49%) who did not want to sell their shares. The control could be as high as 100% in which case, there are no more minority interest to provide for. Every financial year the combinor is required to present a consolidated financial statement, that is, its accounting presentation must reflect a single entity concept.