ORDER OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF MOLDOVA

of September 26, 2007 No. 81

About approval of the National accounting standard 22 of "Merging of the companies"

In pursuance of provisions of the Order of the Government N710 of September 23, 1994 "About the state program of transition of the Republic of Moldova to the international system of financial accounting and statistics" and based on the Law on the financial accounting N426-XIII of April 4, 1995 I ORDER:

1. Approve the National accounting standard 22 of "Merging of the companies" it (is applied).

2. Enact in the territory of the Republic of Moldova this standard for recognition of associations of the companies since January 1, 2008.

NATIONAL ACCOUNTING STANDARD 22

MERGING OF THE COMPANIES

Introduction

1. This standard is developed on the basis of IFRS 3 of the "Merging of the companies" approved by Council for International accounting standards in 2004.

Purpose

2. The purpose of this standard consists in determination of accounting treatment for associations of the companies, applying purchase method, and also in submission of information on associations in financial statements.

Scope of application

3. This standard is applied in all cases of consolidation of subjects, the companies, except for the following associations:

a) in which certain subjects unite for participation in jointly controlled business activity;

c) the subjects which are under general control;

c) in which two or several subjects - participants of joint activities are involved;

d) in whom subjects were united on the basis of the agreement, without receipt of share.

Identification of merging of the companies

4. In cases of merging of the companies the buyer receives generally control over one or several acquired companies. If the subject acquires group of the assets or net assets which are not the company, the appropriate subject distributes the cost of this group between individual identifiable assets and obligations of the corresponding group on the basis of fair market value (further - fair value) this group for date of acquisition.

5. Merging of the companies can be performed for legal, tax or other motives in the way:

a) purchases by one subject of equity of other subject;

c) purchases of all net assets or purchase of part of the net assets of other subject forming one or several subjects;

c) purchases of the net assets which are not maternal and affiliated enterprises including any goodwill, but without purchase of the capital;

d) adoption of obligations of other subject.

Associations can be performed in the form of the relations between subjects by means of release of equity instruments, money transfer, equivalents of this money or other assets or by combination of the listed methods. Transactions can be performed between shareholders (participants, shareholders), subjects participating in consolidation or between one organization and shareholders (participants, shareholders) of other subjects. As a result of consolidation the new subject which will exercise control over the united subjects or over the transferred net assets can be created, or restructuring of one or more subjects participating in consolidation can take place.

6. Merging of the companies can be performed as the relation between the parent and affiliated companies when buyer is the mother company, and the acquired party - affiliated, except for the subitem in) Item 5. In such cases the buyer in case of creation of consolidated financial statements applies provisions of this standard. The buyer includes share in the acquired subject in own financial statements as investments into affiliated enterprises (NSBU 27 "Consolidated financial statements and accounting of investments into affiliated enterprises").

7. The field of activity of this standard includes also merging of the companies in case of which one subject receives control over other subject, at the same time date of final receipt of control (date of acquisition) does not match with date of transfer of the right to property. Such situation can arise, for example, when certain subject, being investee, signs the agreement with the investors on share repurchase (share) owing to what control over the invested subject changes.

8. This standard does not establish accounting method of share in joint businesses (NSBU 31 "Reflection in the financial reporting of share in jointly controlled business activity").

The merging of the companies including the subjects and the companies which are under general control

9. The merging of the companies including the subjects and the companies which are under general control represents such consolidation in case of which all combined subjects in fact are controlled by the same subject or the company both to, and after consolidation, and this control is not temporary.

10. It is considered that the group of physical persons (citizens) controls certain subject if as a result of the arrangement these persons on collective basis have rights to management of financial and operational policy of this subject for the purpose of receipt of economic benefits from its activities. Respectively merging of the companies is out of field of activity of this standard if the same group of physical persons (citizens) as a result of contractual requirements has final collective rights to management of financial and operational policy of each of the subjects participating in consolidation for the purpose of receipt of economic benefits from activities, and this collective right is not temporary.

11. The subject can be under control of one physical person or group of the physical persons acting together according to contractual requirements, and this person or the corresponding group of persons can not fall under requirements of national accounting standards. Therefore, inclusion of the combined organizations in the same consolidated financial statements of the subjects which are under general control is not the compulsory provision.

12. In case of determination of availability of the organizations which are under general control in this consolidation the cost of share of participation of minority in each subject before consolidation does not matter. Also the fact that one of the combined organizations is affiliated enterprise does not matter and it is excluded from consolidated financial statements of group according to NSBU 27 "Consolidated financial statements and accounting of investments into affiliated enterprises" if this consolidation includes the organizations which are under general control.

Determinations

13. In this standard terms of the following content are used:

Joint activities - the agreement according to which two or more parties perform the economic financial activities which are subject to joint control.

Merging of the companies - connection of certain subjects or the companies in single the reporting subject.

Merging of the companies including the subjects or the companies which are under general control - merging of the companies in case of which all uniting subjects or the companies participating in consolidation are controlled on final instance by the same subject or other subjects both to, and after consolidation and this control is not temporary.

Control - the right to manage financial and operational policy of the subject or the company for the purpose of extraction of economic benefits from their activities.

Date of acquisition - date for which the buyer receives the actual control over the acquired subject.

Date of the agreement - date for which the agreement between the parties participating in consolidation is independently signed and in case of the quotation of subjects at the exchange this agreement is brought to the attention of the public. In case of forced absorption it is considered that the agreement is signed independently between the parties participating in consolidation only for date for which the sufficient number of owners of the acquired subject accepts the proposal of the buyer on establishment of control over the acquired subject.

Date of exchange - date of exchange when merging the companies performing exchange by the single transaction is date of acquisition. When consolidation is performed by means of several transactions, for example, when it is performed step by step by consecutive share purchases, date of exchange is date of recognition of each separate investment in the financial reporting of organizatsiipokupatel.

Contingent obligation - the term "contingent obligation" is used in the value determined in NSBU 37 "Estimative obligations, contingent obligations and contingent assets" namely:

a) the possible obligation which arises from last events and which availability will be confirmed only with approach or not approach of one or more uncertain future events which are not completely under control of the subject; or

c) the current obligation which arises from last events, but is not recognized because:

i) there is no probability that disposal of the resources concluding economic benefits will be required for settlement of the obligation; or

ii) the amount of the obligation cannot be estimated with sufficient reliability.

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