A business combination can occur when a company merges with or more companies to become one accounting entity and the new entity continues the activities of the previous companies that were previously separate. At this time many companies are combining businesses to raise capital, compete in business, have international networks, expand and maintain business. A business combination is a statement of two or more separate companies into one economic entity because one company merges with the consolidated company's financial records is more complex than that of a stand-alone company. In the consolidated financial records, the parent (controlling) and subsidiary (controlled) companies are identified. The results of the discussion indicate that the consolidated financial statements are a financial complement to the business groups which are presented as one economic entity. Consolidated financial statements must be prepared by the parent company or the highest controller in the business group. The acquirer entity is the entity that obtains control of the entity acquired in a business combination transaction; while the entity being acquired or the target entity is an entity in a business combination transaction controlled by another entity
