What are the disadvantages of business combination for both the acquirer and acquiree? In a business acquisition, one company buys another company. The buying company gains the employees of the seller, as well as the seller's rights to patents, copyrights and trademarks. A buyout allows a company to eliminate a competing firm from the market, while gaining its strengths. The company has to deal with the disadvantages of financing the purchase and organizing the combination of companies (Eric Novinson, eHow Contributor (2012)).As mention from advantage of business combination, monopoly in the market may have a negative impact with major job losses of community. It might be impact affected the profit with un-improving service and products. When production increases, the lack of service and product may increase too. One of the main disadvantages is that Management of the company becomes difficult. When combining two depends firm has completely different organizational structure will be difficult for management. From my personal experience at my workplace, our office is recently combined with other office, communication and social relationship problems are increasing for the workers. The major issue of consolidation is scandal and massive accounting failures. When two firms combine, the complexity of acquisition accounting may lead to heavy losses and cause the creditors and investors suffered. Both companies merger must clarify all financial reporting process and relating accounting rules avoid any threaten of consolidation.What are financial factors that should be considered by both parties? The one of bigger consideration of financial factor is fair value measurements. Since business combination is based on fair values, the measurement of fair value takes on added importance. The acquirer must value at fair values the consideration it exchanges in a business combination, each of the individual assets and liabilities acquired, and any non- controlling interest in the acquiree. Normally, a business combination involves an arm’s – exchanges between two unrelated parities. The value of consideration given in the exchange is usually the best measure of the value received; therefore, it reflects the value of the acquirer’s interest in the acquiree. FASB 141R is focused directly on the value of the consideration given rather than just using it to impute a fair value for the acquiree as whole. The other is impacted under the acquisition method, the full acquisition –date fair values of the individual assets acquired, both tangible and intangible, and liabilities assumed in a business combination are recognized. With the same method the impact of goodwill, an acquirer measure and recognizes goodwill from a business combination based on the difference between the total fair value of the acquired company and the fair value of its net identifiable assets (Baker, R. E., Christensen, T., & Cottrell, D. (2011)). The fair value takes most influence of consolidation as a financial factor for both parties.What nonfinancial factors should be considered? FASB 141R allows for a period of time, called the measurement period, to acquire the necessary information. The measurement period ends once the acquirer obtains the necessary information about the facts as of the acquisition date, but may not exceed one year (Baker, R. E., Christensen, T., & Cottrell, D. (2011)). If it exceed one year, it will affect the year end of finance report that will be considered financial factor. The other consideration is exchanged by the acquirer in a business combination is not fixed in amount, but rather is contingent on future events. For example, the acquiree and acquirer may enter into a contingent – share agreement whereby, in addition to an initial issuance of shares, the acquirer may agree to issue a certain number of additional shares for each percentage point by which the earnings umber exceeds a set amount over the next five years. Thus, total consideration exchanged in the business combination is not known within the measurement period because the number of share to be issued is dependent on future event. Another nonfinancial factor is in – process research and development. When a company acquires valuable ongoing research and development projects from an acquiree in a business combination, a question arises as to whether these should be recorded as assets. FASB conclude the projects are assets and should be recorded at their acquisition – date fair values, even if they have no alternative use. These projects should be classified as having indefinite lives and therefore, should not be amortized until completed or abandoned (Baker, R. E., Christensen, T., & Cottrell, D. (2011)). In consolidation of business, company should be more considered the nonfinancial factors such as research and development. It might be the most of impact for the company potential and upcoming profit.Running Head: Accounting standards for business consolidationsAccounting standards for business consolidations XXXXACC 407 Your nameDate2Business ConsolidationAccounting standards for business consolidationsIn competing market it is very common for one business to merge with another one. In order to survive in this rivalry marketplace, Companies need to expand business to the most profitable capacity. No matter what kind of reasons for company seeking extension under the ownership, the main one is to track potential profit. Today’s business environment Financial Accounting Standards Board (FASB), one of regulators represented concepts related with business combinations. Below is my briefly understanding of accounting standards of business combination.What is the history of account for business combinations? How many businesses are consolidated with each other? Companies often learn that entry into new product areas or geographic regions is more easily accomplished by acquiring or combining with other companiesthan through internal expansion. For example, SBC Communications, a major telecommunications company and one of the “Baby Bells,” significantly increased its service area by combining with pacific Telesis and Ameritech, later acquiring AT&T ( and adopting its name), and subsequently combining with BellSouth. Moreover, Cingular Wireless, the largest provider of mobile wireless communications in the United States and now part of AT&T, was operated as a joint venture of AT&T (Baker, R. E., Christensen, T., &