ACCOUNTING STANDARD

FOR

BUSINESS COMBINATION

Accounting Standard for Business Combination

CONTENTS

I.	General Provisions

1.	Purpose

2.	Scope of Application

3.	Definitions of Terms

4.	Classification of Business Combination

5.	Business Combination by Uniting Interests

II.	Acquisitions

6.	Cost of Acquisition

7.	Recognition of Identifiable Assets and Liabilities

8.	Determining Fair Values of Assets and Liabilities Acquired

9.	Goodwill

10.	Negative Goodwill

11.	Successive Share Purchases

12.	Adjustments to Purchase Consideration Contingent on Future Events

13.	Subsequent Identification or Changes in Value of Assets and Liabilities

14.	Tax Effect

15.	Preparation of Financial Statements

III.	Unitings of Interests

16.	Accounting for Unitings of Interests

IV.	Mergers Between Parents and Subsidiaries

17.	Merger Between Parent and Its Subsidiary or Between Subsidiaries

V.	Disclosure

18.	Note Disclosures

Addenda

Enacted on March, 24, 1999

CHAPTER I.

GENERAL PROVISIONS

1. Purpose

In accordance with Article 90 of the Financial Accounting standards for Business Enterprises, this Standard prescribes the accounting treatment for business combinations.

2. Scope of Application

This Standard should be applied in accounting for business combinations such as mergers and acquisitions.

(2-1) A business combination may involve the purchase by an enterprise of the equity of another enterprise, the purchase of the net assets and operations of a business enterprise or a legal merger (hereinafter collectively referred to as "business combination"). When the substance of the transaction is consistent with the definition of a business combination in this Standard, the accounting and disclosure requirements contained in this Standard should be applied irrespective of the particular structure adopted for the combination.

(2-2) The business combination includes all forms of transactions that give rise to a change in control over the net assets and operations of an enterprise or an alteration of economic identity through exchange of stock, payment of cash and cash equivalents, incurrence of a liability or other payments.

3. Definitions of Terms

The following terms are used in this Standard with the meanings specified:

A. A business combination is the bringing together of separate enterprises into one economic entity as a result of one enterprise uniting with or obtaining control over the net assets and operations of another enterprise (including a business division).

B. An acquisition is a business combination in which one of the enterprises, the acquirer, obtains control over the net assets and operations of another enterprise, the acquiree, in exchange for the transfer of assets, incurrence of a liability or issue of equity.

C. A uniting of interests is a business combination in which the shareholders of the combining enterprises combine control over their assets and operations to achieve a continuing mutual sharing in the risks and benefits attaching to the combined entity such that neither party can be identified as the acquirer.

D. Date of acquisition is the date on which control of the net assets and operations of the acquiree is transferred to the acquirer and the cost of the acquisition is determined.

E. Date of uniting of interests is the date on which the shareholders of the combining enterprises obtain control over their assets and operations.

(3-1) The date of acquisition means the date on which the acquirer has obtained effective control over the financial and business policies of the acquiree in order to take the benefits arising from operations. Control is not deemed to have been transferred to the acquirer until all conditions necessary to protect the interests of the parties involved have been satisfied. However, this does not necessitates a transaction being closed or finalized at law before control effectively passes to the acquirer.

4. Classification of Business Combination

A. A business combination is classified as an acquisition or a uniting of interests, depending on the substance of the transaction. A business combination which is as an acquisition should be accounted for by use of the purchase method of accounting. A uniting of interests should be accounted for by use of the pooling of interests method.

B. A business combination in which the acquirer can be identified should be treated as an acquisition, and a business combination in which the acquirer cannot be identified should be treated as a uniting of interests.

(4-1) It could happen that an enterprise obtains ownership of the shares of another enterprise but as part of the exchange transaction issues enough voting shares, as consideration, such that control of the combined enterprise passes to the owners of the enterprise whose shares have been acquired. In this situation, although legally the enterprise issuing the shares may be regarded as the continuing enterprise, the enterprise whose shareholders now control the combined enterprise is the acquirer enjoying the voting or other powers. The enterprise issuing the shares is deemed to have been acquired by the other enterprise, and the latter enterprise is deemed to be the acquirer and should apply the purchase method to the assets and liabilities of the enterprise issuing the shares.

5. Business Combination by Uniting Interests

A business combination in which the following requirements are met should be regarded as a uniting of interests, and should be accounted for by use of the pooling of interests method.

A. 90/100 or more of the voting common shares of the combining enterprises should be exchanged or pooled.

B. The fair value of the net assets of one enterprise should not be significantly different from that of the other enterprise.

C. The shareholders of each enterprise should maintain the same voting rights and interest in the combined entity, relative to each other, after the combination as before.

(5-1) In the case of a business combination in which the shareholders of the combining enterprises join in a substantially equal arrangement to share control over their net assets and operations and the managements of the combining enterprises participate in the management of the combined entity, it is not possible to identify an acquirer. Such a business combination is a uniting of interests in which the shareholders of the combining enterprises share mutually in the risks and benefits of the combined entity.

(5-2) A mutual sharing of risks and benefits is usually not possible without a substantially equal exchange of voting common shares between the combining enterprises. Without a substantially equal exchange of voting shares, the relative ownership interests of the combining enterprises, and consequently their relative risks and benefits in the combined entity, can be hardly maintained. However, for a substantially equal share exchange to be effective in this regard, there cannot be a significant reduction in the rights attaching to the shares of one of the combining enterprises.

(5-3) In the following cases, the mutual sharing of the risks and benefits of the combined entity is not deemed achievable, and the business combination should not be treated as a uniting of interests because an acquirer can be identifiable:

1.	When there is a significant difference in fair values of the net assets of the combining enterprises or a significant difference in the percentage of voting common shares of the combining enterprises;

2.	When there is a financial agreement that provides a relative advantage to one group of shareholders over the other shareholders;

3.	When one party's share of the equity in the combined entity depend on how the business which it previously controlled performs subsequent to the business combination.

(5-4) In applying [5A], the percentage of the voting common shares should be determined using the common shares outstanding as of the date of uniting of interests.

CHAPTER II.

ACQUISITIONS

6. Cost of Acquisition

A. An acquisition should be accounted for at its cost, being the amount of cash or cash equivalents paid or the fair value of the other purchase consideration given by the acquirer in exchange for control over the net assets and operations of the other enterprise.

B. Any costs directly attributable to the acquisition should be included in the cost of the acquisition.

(6-1) An acquisition should be accounted for in the same manner as the purchase of an asset in that control over the net assets and operations of another enterprise is obtained in exchange for the transfer of assets, incurrence of a liability or issue of equity. Therefore, the fair value of the purchase consideration paid by the acquirer is the cost of the acquisition.

(6-2) Any liability incurred as part of purchase consideration should be measured at its present value calculated using an appropriate interest rate. In the event of no significant difference between nominal value and present value, the nominal value may be used.

(6-3) Marketable securities issued by the acquirer as part of purchase consideration should be measured at their fair value which is their market (closing) price at the issuance date.

(6-4) In case the closing price on one particular date cannot be regarded as fair value due to undue fluctuations of the market, the average closing price for one month immediately before the date of contracting should be used as the fair value. However, if there has been a significant event affecting stock prices, such as ex-rights, during the one-month period, the average closing price for the period from the date of the event to the date immediately before the date of contracting should be used

(6-5) The fair value of non-marketable securities should be measured using the most reasonable and objective estimate among the following:

1.	The proportional interest in the fair value of the net assets of the acquirer;

2.	The proportional interest in the fair value of the net assets of the acquiree; or

3.	The amount estimated using price-to-earnings ratios, dividend yields and expected yields of other enterprises comparable in terms of size, industry membership or risk.

(6-6) In case the acquirer's stock is issued below the par value, the difference between the par value and the issuing price should be treated as discount on stock issuance. When the stock is issued above the par value, such a difference should be recorded as paid-in capital in excess of par value.

(6-7) Direct costs relating to an acquisition include a registration tax and fees paid to lawyers and accountants. Costs of maintaining related departments and other administrative expenses that are not directly related to the acquisition should be recognized as a expense when they occur.

7. Recognition of Identifiable Assets and Liabilities

A. All the identifiable assets and liabilities acquired from the acquiree (hereinafter referred to as "identifiable assets and liabilities") should be recognized at their fair value at the date of acquisition.

B. Liabilities should not be recognized at the date of acquisition if they result from the acquirer's intentions or actions. Liabilities should also not be recognized for future losses of operations expected to be incurred after the acquisition, restructuring costs of the acquirer and other costs related to the acquisition.

C. Notwithstanding [7B], for the expenses to be incurred by the acquirer in relation to restructuring plan including discontinuance of operations of the acquiree after the date of acquisition, a provision for estimated liability may be established when all of the following requirements are met:

1.	Major contents of the restructuring plan should be publicly announced before the date of acquisition and the plan should be expected to be carried out;

2.	A detailed implementation plan which includes at least the items below should be made within three (3) months from the date of acquisition (or within the date of financial statements for the fiscal year in which the acquisition has taken place if the date of financial statements precedes the end of the three-month period):

(ⅰ) Related operations;

(ⅱ) Business segments to be affected;

(ⅲ) Number of employees to be compensated due to the planned reduction of manpower, their duties and working segments;

(ⅳ) Estimated expenditure; and

(ⅴ) Schedule of implementing the plan.

D. Expenses for which a provision can be established are as follows:

1.	Compensation expenses in relation to reduction of employees of the acquiree

2.	Expenses for closing the acquiree's equipment and production line; and

3.	Expenses to be incurred by the acquirer when contracts made by the acquiree are canceled.

(7-1) Identifiable assets and liabilities acquired from the acquiree should include all identifiable assets and liabilities existing as of the date of acquisition, regardless of their presence in the acquiree's balance sheet.

(7-2) In principle, no provisions should be established for losses or liabilities which will occur after the date of acquisition. However, as for the liabilities expected, as of the date of acquisition, to be incurred by the acquirer as a direct result of the acquisition in relation to restructuring of the acquiree's operations, they may be regarded as identifiable liabilities acquired from the acquiree.

8. Determining Fair Values of Assets and Liabilities Acquired

A. Fair value of identifiable assets and liabilities acquired from the acquiree should be determined as follows:

1.	Marketable securities (including investment securities): market price

2.	Non-marketable equity securities: the more reasonable and objective value of the following:

(ⅰ) The proportional interest in the fair value of the net assets of the issuing enterprise; or

(ⅱ) The amount estimated using price-to-earnings ratios, dividend yields and expected yields of other enterprises comparable in terms of size, industry membership or risk.

3.	Trade receivable, loans, other receivables (including non-marketable receivables): present value calculated using an appropriate interest rate after deducting expected bad debt expenses and collection expenses. However, in case the difference between nominal value and present value is not material, the nominal value may be used;

4.	Inventory

(i)	Merchandise and finished goods: net realizable value less normal profit	margin;

(ii)	Work-in-process: estimated selling price less additional processing	costs, selling expenses and normal profit margin; and

(iii)	Raw materials: current replacement cost.

5.	Tangible assets and intangible assets: the more reasonable and objective value of market value or appraisal value;

6.	Severance and retirement benefits: estimate of the amount to be paid assuming termination of employment of all officers and employees at the date of acquisition;

7.	Tax-related assets and liabilities: potential tax effects estimated from a forecast of operating income of the combined entity and valuation of identifiable assets and liabilities at fair value;

8.	Trade payables, long-term borrowings, accounts payable, and other payables: present value calculated using an appropriate interest rate. However, in case the difference between nominal value and present value is not material, the nominal value may be used; and

9.	Treasury stocks acquired through the business combination: amount calculated in accordance with Item 1 and 2 above.

B. In case the fair value of intangible assets is measured by use of the method other than market value, the intangible assets may be recognized only to the extent that negative goodwill is not increased.

(8-1) Organization costs and goodwill of the acquiree should not be recognized as assets.

(8-2) Although tax-related assets and liabilities were not recognized in the acquiree's balance sheet, tax effects arising as a result of the business combination are recognized as deferred income tax debit (credit).

9. Goodwill

A. Any excess of the cost of the acquisition over the acquirer's interest in the fair value of the identifiable assets and liabilities acquired at the date of acquisition should be recognized as goodwill.

B. Goodwill should be amortized on a straight-line basis over its useful life.

C. The useful life of goodwill should be the period during which future economic benefits are expected to flow to the enterprise, but should not exceed twenty (20) years.

D. Goodwill recognized as an asset at the date of acquisition should be remeasured at its recoverable amount at each fiscal year end. If the book value exceed the recoverable amount and the difference is material, an impairment loss should be recognized. Once recognized, the impairment loss cannot be reversed.

(9-1) In case the useful life of goodwill has been estimated as a range estimate, the shortest period should be adopted.

10. Negative Goodwill

A. Any excess, at the date of acquisition, of the acquirer's interest in the fair values of the identifiable assets and liabilities acquired over the cost of the acquisition should be recognized as negative goodwill.

B. Negative goodwill should be classified as follows. However, the negative goodwill mentioned in Item 1 below is recognizable only when the related losses or expenses are indicated in the acquisition contract:

1.	Negative goodwill related to losses or expenses expected to occur in the future although not recognizable as identifiable liabilities at the date of acquisition; and

2.	Other negative goodwill.

C. The negative goodwill related to future losses or expenses which are indicated in the acquisition contract should be recognized as income when the future losses or expenses actually occur. However, if such losses or expenses do not occur in the period indicated in the acquisition contract, [10D] below should be applied.

D. Other negative goodwill should be accounted for as follows:

1.	The amount of negative goodwill not exceeding the total fair value of acquired identifiable non-monetary assets should be recognized as income on a straight-line basis over the remaining weighted average useful life of the identifiable acquired depreciable assets; and

2.	The amount of negative goodwill in excess of the total fair value of the acquired identifiable non-monetary assets should be recognized as extraordinary gain at the date of acquisition.

E. Negative goodwill should be presented as a deduction from intangible assets in the balance sheet.

(10-1) The existence of negative goodwill may indicate that identifiable assets have been overstated or identifiable liabilities have been omitted or understated. Therefore, all identifiable assets and liabilities should be measured at fair value before negative goodwill is recognized.

(10-2) The sources of negative goodwill can be classified as follows:

1.	The cost of acquisition may be affected by losses or expenses expected to occur in the future although not recognizable as identifiable liabilities at the date of acquisition: and

2.	The acquired company may be purchased at a price lower than its value.

(10-3) In the case of negative goodwill related to losses or expenses expected to occur in the future, it is usually difficult to estimate the amount of negative goodwill. Accordingly, it can be recognized only when the contents of such losses or expenses are indicated in the acquisition agreement.

(10-4) Other negative goodwill arises when the acquired company is purchased at a price lower than its value, due to the acquirer's superior bargaining power. Therefore, negative goodwill arising with respect to identifiable non-monetary assets (the amount of negative goodwill not exceeding the fair values of identifiable non-monetary assets) should be recognized as income, as economic benefits embodied therein flow to the acquirer, on a straight-line basis over the weighted average useful life of non-monetary assets.

(10-5) The amount of negative goodwill in excess of the fair values of non-monetary assets is deemed arising from purchasing monetary assets at low prices. Accordingly, it is recognized as a gain immediately.

11. Successive Share Purchases

A. In case an acquisitions is achieved by successive purchases, goodwill or negative goodwill should be recognized at the date of acquisition.

B. In case the cost of purchasing the acquiree's stocks in stages exceeds the acquirer's interest in the fair value of the acquiree's net assets at the date of acquisition, the excess amount should be recognized as goodwill. In the opposite case, negative goodwill is recognized.

(11-1) In case the stocks of the acquiree are purchased in stages before the date of acquisition, the cost of the acquisition should be measured as the total of the book value of those stocks recorded on the financial statements of the acquirer immediately preceding the date of acquisition and the fair value of purchase consideration paid at the date of acquisition.

(11-2) Gain or loss on valuation of investment securities (a capital adjustment account) related to the stocks of the acquiree should be recognized as income or loss in the fiscal year to which the date of acquisition belongs.

(11-3) As for new shares received from the Acquiree prior to the date of acquisition, they should be accounted for as treasury stock, measured at the book value.

12. Adjustments to Purchase Consideration Contingent on Future Events

A. When the acquisition agreement provides for an adjustment to the purchase consideration contingent on one or more future events, the amount of the adjustment should be included in the cost of the acquisition at the date of acquisition if the adjustment is probable and the amount can be measured reliably. Goodwill or negative goodwill should also be adjusted accordingly.

B. When an adjustment to the purchase consideration is contingent on the results of from the acquiree's operations subsequent to the date of acquisition, the cost of the acquisition and goodwill or negative goodwill should be adjusted accordingly.

C. In some circumstances, the acquirer may be required to issue additional securities or debt to the acquiree as compensation for a reduction in the market price of securities or debt issued as consideration. In such cases, an adjustment should be made to the initial price, instead of adjusting the cost of the acquisition.

13. Subsequent Identification or Changes in Value of Assets and Liabilities

A. Identifiable assets and liabilities, which were acquired but which were not recognized when the acquisition was initially accounted for, should be recognized subsequently. In case the fair values of identifiable assets and liabilities, which were recognized at the date of acquisition, are found to have been recorded incorrectly, their carrying amounts should be adjusted at the time additional evidence becomes available.

B. When additional identifiable assets and liabilities are recognized or the carrying amounts of identifiable assets and liabilities previously recognized are adjusted, pursuant to [13A], prior to the end of the fiscal year beginning after the date of acquisition, goodwill or negative goodwill should also be adjusted.

C. In case additional identifiable assets and liabilities are recognized or the carrying amounts of identifiable assets and liabilities previously recognized are adjusted, pursuant to [13A], subsequent to the end of the fiscal year beginning after the date of acquisition, the amount should be recognized as a gain or loss in the current fiscal year.

D. The provisions established in accordance with [7C] should be adjusted if one of the following takes place, and goodwill or negative goodwill should be adjusted accordingly:

1.	When it is not expected that the acquirer will incur an outflow of economic benefits; or

2.	When the restructuring is not executed in accordance with the detailed implementation plan.

E. The adjusted goodwill should be amortized over the remaining period and the adjusted negative goodwill should be accounted for in accordance with [10D].

(13-1) Identifiable assets and liabilities of an acquiree may not have been recognized at the time of acquisition because they did not meet the recognition criteria for identifiable assets and liabilities or the acquirer was unaware of their existence. In such cases, identifiable assets and liabilities acquired should be recognized at the time they meet the recognition criteria or their existence becomes known. In addition, when additional evidence becomes available regarding the fair values assigned at the date of acquisition to the identifiable assets and liabilities, their carrying amounts should be adjusted.

14. Tax Effect

A. Temporary difference in assets and liabilities arising from inconsistency between the accounting treatment for a business combination and income tax laws should be recognized as a deferred income tax debit or credit in accordance with the Financial Accounting Standards for Business Enterprises.

B. When a tax effect arising from temporary difference not recognized by the acquirer at the date of acquisition is realized after the date of acquisition, the carrying amount of goodwill should be adjusted as follows. However, in this case, negative goodwill should not be increased:

1.	Goodwill should be adjusted to an amount which would have been reported if the deferred income tax debit had been recognized as an identifiable asset at the date of acquisition;

2.	The reduction of goodwill calculated pursuant to Item 1 above should be reported as expense.

15. Preparation of Financial Statements

A. Financial statements for the year of acquisition should be prepared in the comparative form.

B. Results from the acquiree's operations after the date of acquisition should be included in the acquirer's income statement, and the acquired assets and liabilities and goodwill/negative goodwill should be reported in the acquirer's balance sheet.

(15-1) The financial statements for the preceding fiscal year do not include information about financial position and operating performance of the acquiree.

CHAPTER III.

UNITINGS OF INTERESTS

16. Accounting for Unitings of Interests

A. In accounting for a uniting of interests, assets, liabilities and stockholders' equity of the combining enterprises should be transferred using their book values. In the case of difference accounting methods among the combining enterprises, the financial statement items should be adjusted in accordance with the accounting method of the combined entity.

B. Any difference between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount recorded for the share capital acquired should be adjusted first against capital surplus and then against retained earnings of the combined entity.

C. All expenditures incurred in relation to a uniting of interests should be recognized as expenses in the period in which they are incurred.

D. The financial statements for the fiscal year in which the business combination occurs should be prepared in the comparative form. The financial statements for the previous year should be presented as if the enterprises had been combined from the beginning of the previous year.

E. The financial statements of an enterprise should not incorporate a uniting of interests to which the enterprise is a party if the date of the financial statements is before the date of the uniting of interests.

(16-1) The substance of a uniting of interests is that no acquisition has occurred and there has been a continuation of the mutual sharing of risks and benefits that existed prior to the business combination. Use of the pooling of interests method recognizes this by accounting for the combined enterprises as if the separate businesses were continuing as before. Accordingly, assets, liabilities and stockholders' equity of the combining enterprises are transferred using their book values and goodwill or negative goodwill is not recognized.

(16-2) Retained earnings of the combining enterprises and their capital adjustment accounts related to assets and liabilities are also transferred to the combined entity. However, when the total par value of stocks issued for uniting interests exceeds the paid-in capital of the combining enterprises, the difference should be deducted first from capital surplus and then from retained earnings of the combined entity. On the other hand, when the total par value of stocks issued for uniting interests falls below the paid-in capital of the combining enterprises, the difference should be added to capital surplus of the combined entity.

(16-3) Since a uniting of interests results in a single combined entity, a single uniform set of accounting policies should be adopted by that entity. Therefore, the combined entity recognizes the assets, liabilities and equity of the combining enterprises at their existing carrying amounts adjusted only as a result of conforming the combining enterprises' accounting policies and applying those policies to all periods presented.

(16-4) The effects of all transactions between the combining enterprises, whether occurring before or after the uniting of interests, should be eliminated in preparing the financial statements of the combined entity.

(16-5) In case treasury shares held at the time of the combination are transferred, they should be accounted for as if new shares have been issued after retirement of them.

CHAPTER IV.

MERGERS BETWEEN PARENTS AND SUBSIDIARIES

17. Merger Between Parent and Its Subsidiary or Between Subsidiaries

In a merger between a parent and its subsidiary or between subsidiaries, the carrying amounts in the consolidated financial statements are transferred.

(17-1) A parent company and its subsidiary mean the enterprises for which the parent- subsidiary relationship prescribed in the Accounting Standard for Consolidated Financial Statements is established.

(17-2) The parent and its subsidiary become an single economic entity when the parent-subsidiary relationship is established. Accordingly, a merger between a parent and its subsidiary or between subsidiaries after the date of the establishment of a parent-subsidiary relationship brings about only a change in their legal substance with no change in their economic substance. For this reason, a merger between them is accounted for using the carrying amounts in consolidated financial statements.

CHAPTER V.

DISCLOSURE

18. Note Disclosures

A. For all business combinations, the following disclosures should be made in the financial statements for the period in which the combination has taken place:

1.	The names and descriptions of the combining enterprises;

2.	The method of accounting for the combination;

3.	The effective date of the combination (the date of acquisition or uniting of interests), the date of combination agreement, the date of a shareholders' meeting for the resolution on the combination;

4.	Any operations resulting from the business combination which the enterprise has decided to dispose of; and

5.	Summary balance sheets and income statements of the combining enterprises for the immediately preceding year and up to the date of business combination.

B. For a business combination which is an acquisition, the following additional disclosures should be made in the financial statements for the period in which the combination has taken place:

1.	The percentage of voting shares acquired;

2.	The cost of acquisition and a description of contingently payable;

3.	Details of provisions recognized in accordance with [7C] at the date of acquisition in relation to the restructuring expenses; and

4.	Amount of goodwill or negative goodwill.

C. For a business combination which is an acquisition, the following additional disclosures should be made in the financial statements for the period in which the combination has taken place;

1.	Description and number of shares issued, together with the percentage of each enterprise's voting shares;

2.	Amounts of assets and liabilities contributed by each enterprise; and

3.	Sales revenue, other operating revenues, extraordinary items and the net profit or loss of each enterprise prior to the date of the combination that are included in the net profit or loss shown by the combined entity's financial statements.

D. For goodwill, the following additional disclosures should be made in the financial statements:

1.	Amortization period adopted;

2.	Descriptions of changes in goodwill:

(ⅰ) Beginning balance;

(ⅱ) Increase during the period;

(ⅲ) Amortization recognized during the period;

(ⅳ) Any adjustments resulting from subsequent identification or changes in value of identifiable assets and liabilities;

(ⅴ) Impairment losses recognized during the period; and

(ⅵ) Ending balance (ⅰ)+(ⅱ)-(ⅲ)±(ⅳ)-(ⅴ).

E. For negative goodwill, the financial statements should disclose:

1.	A description of negative goodwill related to the expected future losses and expenses and the timing of those losses or expenses;

2.	A description of negative goodwill not related to the expected future losses and expenses and the expected period for recognizing it as income;

3.	Descriptions of changes in negative goodwill:

(ⅰ) Beginning balance;

(ⅱ) Increase during the period;

(ⅲ) Amount recognized as income during the period;

(ⅳ) Any adjustments resulting from subsequent identification or changes in value of identifiable assets and liabilities; and

(ⅴ) Ending balance (ⅰ)+(ⅱ)-(ⅲ)±(ⅳ).

F. In an acquisition, if the fair values of the identifiable assets and liabilities or the purchase consideration can only be determined on a provisional basis at the end of the period in which the acquisition took place, the following should be disclosed:

1.	The fact and reasons thereof;

2.	When there are subsequent adjustments to such provisional fair values, those adjustments should be disclosed and explained in the financial statements of the period concerned.

G. When a combining enterprise prepares its financial statements before the date of the combination (the date of acquisition or uniting of interests), the information mentioned in [18A] to [18C] should be disclosed in the accompanying notes. In the case that the enterprise is unable to disclose such information due to inevitable reasons, such fact should be stated.

Addenda

1. This Standard shall be effective from March 25, 1999.

2. This Standard should be applied to agreements of business combinations after January 1, 2000. However, this Standard may be applied to combination agreements after its effective date.

3. The Accounting Standard for Mergers established by the SFC on April 1, 1998 (hereinafter referred to as "the previous Standard") is superseded by this Standard.

4. Gain on business combination recorded under the previous Standard should be reclassified as other capital surplus.

5. When reference to the previous Standard is made in any other accounting standards as of the effective date of this Standard, that reference is regarded as the reference to this Standard.