Business combibation with a counterpaty

[Margo101]

During the FY the company A acquired company B that used to have operations with.
At the aquisition date the companies have AP-AR with each other. Which accounting treatment for the operations is appliceble:
1) Should I exclude the INCO balances at the acquisition date as a part of net assets and goodwill calculation?
2) How I can write-off or eliminate these balances in Company A? Will they affect RE or goodwill?

I would be grateful for promt reply!

[Marek Muc]

will A and B remain separate legal entities? are there any special provisions in the share purchase agreement relating outstanding balances? i.e. will they be settled as usual after the business combination?

[Margo101]

Both companies will remain as separate entities, no special provisions in share purchase agreement so they will be settled as usual.
However, I'm not really sure on the consolidation of the companies.

[Marek Muc]

On the business combination date you will derecognise intercompany balances from the consolidated financial statements and recognise only external acquired receivables and payables. The effect on net assets will cancel out so there won't be any impact on goodwill.