Reasons for Merging Business

Oct 13, 2025 by talynt.org 2 views

Application of Accounting for Business Merging (PSAK No. 22) at PT. East Jaya Coldstorage and his colleagues

Business Merging: A Strategic Approach to Increase Competitiveness and Efficiency

Business merger is one of the most common strategies applied by companies to increase competitiveness and efficiency. In this case, PT. East Jaya Coldstorage conducts business merging with four other companies, namely PT. Putra Marine Coldstorage, PT. Cilamaya Sueur, PT. Safitrindo Dwisentosa, and PT. Benur Alam Samudra. The merger is regulated in PSAK No. 22, which was carried out based on the Notary Deed of Saal Bumella, SH, No. 66, signed on December 29, 2000.

Reasons for Merging Business

According to Floyd A. Beams, there are several reasons why companies choose to do business merging:

Cost Advantage (Cost Benefits): Combining two or more companies is often more efficient in cost compared to building new facilities from the start. This allows companies to utilize existing assets and infrastructure, thereby reducing initial expenditure and speeding up operational processes.
Lower Risk (Lower Risk): By buying existing product and market lines, companies can reduce the risks that are usually related to the development of new products and market penetration. Companies that have just joined can immediately take over existing market share, reducing uncertainty that usually accompanies new business development.
Avoidance of Takeovers (Preventing the Takeover): Merger is also often done as a strategic step to prevent company takeover by competitors. By combining strength, companies can be stronger and more difficult to acquire.

In addition, the company also considers tax benefits, such as postponement of tax payments and interest rate reduction. Business merging can also open up opportunities to go public, which can increase the liquidity and company value in the eyes of investors.

Application of PSAK No. 22

In the context of this merger, the application of PSAK No. 22 becomes very important. This standard regulates accounting for business merging, including the measurement and recognition of assets, liabilities, and company equity involved. The right application of PSAK No. 22 guarantees that the resulting financial statements reflect the accurate financial condition of the newly formed entity.

For example, when PT. East Jaya Coldstorage joins PT. Putra Marine Coldstorage and his colleagues, it is necessary to identify and assess the assets and liabilities that exist in each company. In addition, the determination of the price of acquisition and recognition of goodwill is also an important part of the accounting process that must be considered.

Accounting for Business Merging: A Comprehensive Approach

The application of PSAK No. 22 involves several steps, including:

Identification and Assessment of Assets and Liabilities: The company must identify and assess the assets and liabilities that exist in each company involved in the merger.
Determination of the Price of Acquisition: The company must determine the price of acquisition, which is the amount paid by the acquiring company to the acquired company.
Recognition of Goodwill: The company must recognize goodwill, which is the excess of the purchase price over the net assets of the acquired company.
Measurement and Recognition of Assets and Liabilities: The company must measure and recognize the assets and liabilities of the acquired company at their fair value.
Presentation of Financial Statements: The company must present the financial statements of the newly formed entity, which reflects the accurate financial condition of the company.

Benefits of Business Merging

The business merging conducted by PT. East Jaya Coldstorage and four other companies are strategic steps that can provide various benefits, including:

Reducing Costs: By combining two or more companies, the company can reduce costs and increase efficiency.
Reducing Risk: By buying existing product and market lines, the company can reduce the risks that are usually related to the development of new products and market penetration.
Preventing Takeovers: By combining strength, the company can be stronger and more difficult to acquire.
Increasing Liquidity and Company Value: By going public, the company can increase liquidity and company value in the eyes of investors.

Conclusion

The merging of business conducted by PT. East Jaya Coldstorage and four other companies are strategic steps that can provide various benefits, including reducing costs, risk reduction, and protection of the takeover. By following the provisions of PSAK No. 22, the company can ensure that this merger is well reflected in financial statements, provides transparency to stakeholders, and increases the value of the company in the market. Through the application of appropriate accounting principles, companies are expected to operate more efficiently and effectively after merging.

Recommendations

Based on the analysis of the business merging conducted by PT. East Jaya Coldstorage and four other companies, the following recommendations are made:

Companies should conduct thorough analysis and planning before conducting business merging.
Companies should ensure that the merger is well reflected in financial statements and provides transparency to stakeholders.
Companies should apply appropriate accounting principles to ensure that the merger is conducted efficiently and effectively.

By following these recommendations, companies can ensure that the business merging is conducted successfully and provides various benefits to the company.
Frequently Asked Questions (FAQs) about Business Merging and Accounting for PSAK No. 22

Q: What is business merging and why is it important for companies?

A: Business merging is a strategic approach where two or more companies combine their resources, assets, and liabilities to form a new entity. This can provide various benefits, including reducing costs, risk reduction, and protection of the takeover. Business merging is important for companies as it can increase competitiveness and efficiency, and provide opportunities for growth and expansion.

Q: What is PSAK No. 22 and how does it relate to business merging?

A: PSAK No. 22 is a standard issued by the Indonesian Accounting Standard Board (DPSAK) that regulates accounting for business merging. This standard provides guidelines for companies to follow when conducting business merging, including the measurement and recognition of assets, liabilities, and company equity involved.

Q: What are the key steps in applying PSAK No. 22 for business merging?

A: The key steps in applying PSAK No. 22 for business merging include:

Identification and Assessment of Assets and Liabilities: The company must identify and assess the assets and liabilities that exist in each company involved in the merger.
Determination of the Price of Acquisition: The company must determine the price of acquisition, which is the amount paid by the acquiring company to the acquired company.
Recognition of Goodwill: The company must recognize goodwill, which is the excess of the purchase price over the net assets of the acquired company.
Measurement and Recognition of Assets and Liabilities: The company must measure and recognize the assets and liabilities of the acquired company at their fair value.
Presentation of Financial Statements: The company must present the financial statements of the newly formed entity, which reflects the accurate financial condition of the company.

Q: What are the benefits of business merging for companies?

A: The benefits of business merging for companies include:

Reducing Costs: By combining two or more companies, the company can reduce costs and increase efficiency.
Reducing Risk: By buying existing product and market lines, the company can reduce the risks that are usually related to the development of new products and market penetration.
Preventing Takeovers: By combining strength, the company can be stronger and more difficult to acquire.
Increasing Liquidity and Company Value: By going public, the company can increase liquidity and company value in the eyes of investors.

Q: What are the challenges of business merging for companies?

A: The challenges of business merging for companies include:

Integration of Systems and Processes: The company must integrate the systems and processes of the two or more companies involved in the merger.
Cultural and Organizational Changes: The company must adapt to cultural and organizational changes that may arise from the merger.
Financial and Accounting Implications: The company must consider the financial and accounting implications of the merger, including the measurement and recognition of assets, liabilities, and company equity involved.

Q: How can companies ensure that the business merging is conducted successfully?

A: Companies can ensure that the business merging is conducted successfully by:

Conducting Thorough Analysis and Planning: The company must conduct thorough analysis and planning before conducting business merging.
Ensuring Transparency and Communication: The company must ensure transparency and communication with stakeholders, including employees, customers, and investors.
Applying Appropriate Accounting Principles: The company must apply appropriate accounting principles to ensure that the merger is conducted efficiently and effectively.

Q: What are the consequences of not following PSAK No. 22 for business merging?

A: The consequences of not following PSAK No. 22 for business merging include:

Inaccurate Financial Statements: The company may present inaccurate financial statements, which can lead to financial losses and damage to the company's reputation.
Non-Compliance with Regulatory Requirements: The company may not comply with regulatory requirements, which can lead to fines and penalties.
Loss of Investor Confidence: The company may lose investor confidence, which can lead to a decline in stock price and financial performance.