scholarly journals Revised Accounting For Business Combinations

2008 ◽  
Vol 1 (2) ◽  
pp. 13-20
Author(s):  
Arlette C. Wilson ◽  
Kimberly Key
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Business Combinations ◽  
Business Combination ◽  
Representational Faithfulness ◽  
Acquisition Method

The Financial Accounting Standards Board (FASB) has recently issued Statement of Financial Accounting Standards No. 141 (Revised 2007) Business Combinations. The object of this Statement is to improve the relevance, representational faithfulness, and comparability of reported information about a business combination and its effects. This Statement replaces FASB Statement No. 141, but retains the fundamental requirements that the acquisition method of accounting (previously called the purchase method) be used for all business combinations. Some of the changes related to the accounting for business combinations as a result of the new requirements are discussed and illustrated below.

scholarly journals New Accounting Guidance For Business Combinations

2011 ◽  
Vol 1 (1) ◽  
Author(s):  
Allen W. McConnell ◽  
Bill D. Cox ◽  
John E. Elsea
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Business Combinations ◽  
Accounting Principles ◽  
Business Combination

The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 Business Combinations in June 2001.  SFAS 141 supersedes Accounting Principles Board (APB) Opinion No. 16 Business Combinations and SFAS No. 38 Accounting for Preacquisition Contingencies of Purchased Enterprises.  APB Opinion 16 created two acceptable methods of accounting for a business combination, the purchase and the pooling of interests methods.  These two different methods often resulted in very different financial results for economically similar transactions.

A HISTORY OF POOLING OF INTERESTS ACCOUNTING FOR BUSINESS COMBINATIONS IN THE UNITED STATES

1991 ◽  
Vol 18 (2) ◽  
pp. 155-192 ◽  
Author(s):  
Frank R. Rayburn ◽  
Ollie S. Powers
Keyword(s):  
Accounting Standards ◽  
The United States ◽  
Securities And Exchange Commission ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Business Combinations ◽  
Accounting Principles ◽  
History Of ◽  
Business Combination ◽  
The Subject

This paper traces the development of pooling of interests accounting for business combinations from 1945 to 1991. The history of the pooling concept is reviewed chronologically with particular emphasis on the events of 1969–1970 that were related to the most recent pronouncement on the subject, Accounting Principles Board (APB) Opinion No. 16. Early in its life (1974), the Financial Accounting Standards Board (FASB) placed a project on its agenda to reconsider pooling of interests accounting. That project was removed from the FASB's agenda in 1981. APB Opinion No. 16 has gone essentially unchanged as it relates to the accounting for a business combination as a pooling of interests. Resolution of implementation issues has been left largely to the Securities and Exchange Commission and the accounting profession. The FASB has a project on its agenda on Consolidations and Related Matters that may impact pooling of interests accounting. There also is some pressure for the FASB to revisit accounting for business combinations.

How Informative Are Earnings Numbers That Exclude Goodwill Amortization?

2001 ◽  
Vol 15 (3) ◽  
pp. 243-255 ◽  
Author(s):  
Stephen R. Moehrle ◽  
Jennifer A. Reynolds-Moehrle ◽  
James S. Wallace
Keyword(s):  
Information Content ◽  
Cash Flow ◽  
Performance Measures ◽  
Intangible Assets ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Business Combinations ◽  
Traditional Performance

In the original exposure draft, Business Combinations and Intangible Assets, the Financial Accounting Standards Board (FASB) proposed that companies be allowed to report a second per share earnings number that excludes goodwill amortization. Subsequently, the FASB has proposed that goodwill not be amortized at all. Instead, it will be written down when impaired. In this study, we assess the information content of earnings excluding amortization of intangibles relative to two traditional performance measures: earnings before extraordinary items and cash flow from operations. We find that the relative informativeness of earnings before amortization and earnings before extraordinary items do not differ significantly. We also find, consistent with prior research, that both earnings before amortization and earnings before extraordinary items are more informative than cash flow from operations. These findings suggest that goodwill amortization disclosures were not decision-useful and, therefore, support the FASB's revised position.

scholarly journals Comparison of accounting methods for business combinations

2012 ◽  
Vol 60 (2) ◽  
pp. 315-324 ◽  
Author(s):  
Jaroslav Sedláček ◽  
Zuzana Křížová ◽  
Eva Hýblová
Keyword(s):  
Comparative Analysis ◽  
Accounting Standards ◽  
International Committee ◽  
Financial Accounting ◽  
Business Combinations ◽  
Financial Position ◽  
Analysis And Synthesis ◽  
Business Combination ◽  
Accounting Rules ◽  
The Impact

The revised accounting rules applicable to business combinations in force on July1st 2009, are the result of several years efforts the convergence of U.S. and International Committee of the Financial Accounting Standards. Following the harmonization of global accounting procedures are revised and implemented also Czech accounting regulations. In our research we wanted to see how changes can affect the strategy and timing of business combinations. Comparative analysis is mainly focused on the differences between U.S. and international accounting policies and Czech accounting regulations. Key areas of analysis and synthesis are the identification of business combination, accounting methods for business combinations and goodwill recognition. The result is to assess the impact of the identified differences in the reported financial position and profit or loss of company.

scholarly journals Accounting for Business Combinations (Topic 805)

2019 ◽  
Vol 5 (2) ◽  
pp. 1
Author(s):  
Dahli Gray ◽  
Ruben Torres
Keyword(s):  
Accounting Standards ◽  
Future Research ◽  
Financial Accounting Standards Board ◽  
Managerial Accounting ◽  
Business Combinations ◽  
Governmental Accounting ◽  
Ethical Implications ◽  
History Of ◽  
Business Combination ◽  
Contract Liability

This article discusses the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, as promulgated by the 2019 Accounting Standards Update (ASU) concerning Business Combinations. It focuses on revenue from contracts with customers. Several concerns regarding how and when to recognize an assumed liability after a business combination were raised by users and preparers of financial statements. Concerns emerged from the differing views on how a liability (that is, performance obligation) is defined within the FASB ASC Topic 606 regarding revenue from contracts with customers. Determining how and if a contract liability is recognized in a business combination from a revenue contract were the major concerns. This article reviews a brief history of business combinations and contracts with customers. It explores the issue from various accounting perspectives (such as financial and managerial accounting, tax accounting, governmental accounting issues, ethical implications, and international accounting). Potential questions for future research regarding this topic are presented. The 16 Comment Letters sent to the FASB are discussed. The results of a survey administered as part of this research are presented.

scholarly journals Teaching The Interrelationships Among Costs, Expense, And Liability Of A Defined Benefit Pension Plan

2008 ◽  
Vol 5 (2) ◽  
Author(s):  
Arlette C. Wilson ◽  
Norman H. Godwin
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Pension Plan ◽  
Financial Accounting ◽  
Defined Benefit ◽  
Financial Accounting Standards Board ◽  
Operating Income ◽  
Defined Benefit Pension Plan ◽  
Other Comprehensive Income ◽  
Representational Faithfulness

The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS #158).  Their intent is to comprehensively reconsider the accounting for postretirement benefit plans in phases.  The first phase was to provide timely and significant improvements and resulted in SFAS #158.  The object of this Statement is to improve the understandability and representational faithfulness of the amounts reported in the employer’s statement of financial position by recognizing as an asset or liability the overfunded or underfunded status of a defined benefit postretirement plan.  The purpose of this paper is to provide a logical approach for teaching accounting for a defined benefit pension plan.  This objective will be accomplished by providing a discussion with detailed illustrations of the interrelationships of the effects on income (both operating income and other comprehensive income) and the amount reported on the balance sheet.

Response to the FASB Invitation to Comment Identifiable Intangible Assets and Subsequent Accounting for Goodwill

2021 ◽  
Author(s):  
Shana Clor-Proell ◽  
Nerissa Brown ◽  
Stephen Stubben ◽  
Brian White ◽  
Elizabeth Blankespoor ◽  
...  
Keyword(s):  
Financial Reporting ◽  
Intangible Assets ◽  
Accounting Standards ◽  
Standard Setting ◽  
Financial Accounting ◽  
Future Research ◽  
Financial Accounting Standards Board ◽  
Accounting Standard ◽  
Business Combination ◽  
Accounting Standard Setting

In October 2019, the Financial Reporting Policy Committee of the Financial Accounting and Reporting Section of the American Accounting Association submitted a comment letter to the Financial Accounting Standards Board regarding the accounting for certain identifiable intangible assets acquired in a business combination and subsequent accounting for goodwill. This paper summarizes the content of the comment letter and discusses opportunities for future research on intangible assets that may inform accounting standard-setting decisions.

Do Financial Statement Users Judge Relevance Based on Properties of Reliability?

2012 ◽  
Vol 87 (4) ◽  
pp. 1335-1356 ◽  
Author(s):  
Kathryn Kadous ◽  
Lisa Koonce ◽  
Jane M. Thayer
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
Firm Valuation ◽  
Financial Accounting ◽  
Financial Statement ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Representational Faithfulness ◽  
The Relationship

ABSTRACT Relevance and reliability (now referred to as “representational faithfulness”) are qualities of financial information that both the Financial Accounting Standards Board and the International Accounting Standards Board use in setting standards for financial reporting. Despite their importance, very little research has addressed how financial statement users apply these constructs. Via experiments set within the fair value context, we show that users do not view them as independent constructs. Instead, variations in properties that are associated with the reliability of a measurement influence users' assessments of the relevance of fair value. The relationship between assessed relevance and assessed reliability is unidirectional, in that factors underlying reliability influence judgments of relevance, but factors underlying relevance do not influence judgments of reliability. Our findings are important because inappropriate assessments of relevance can influence firm valuation. The results are particularly meaningful in the context of fair value because such measurements can vary widely in reliability. JEL Classifications: M41.

AN ACCOUNTANT'S EDUCATION

2003 ◽  
Vol 30 (1) ◽  
pp. 155-196 ◽  
Author(s):  
George J. Staubus
Keyword(s):  
20Th Century ◽  
Accounting Standards ◽  
Financial Accounting ◽  
University Of Chicago ◽  
Financial Accounting Standards Board ◽  
Decision Usefulness ◽  
Market Simulation ◽  
Broad Field ◽  
The University

This is a review of how various experiences in my career have contributed to my understanding of accounting. I recall the circumstances surrounding several of my efforts towards the development of accounting theories, viz. (1) decision-usefulness theory, (2) activity costing, and (3) market simulation accounting, as well as my excursion into (4) market association research in seeking to validate decision-usefulness theory and (5) a search for the effects of firms' economic environments on the development of enterprise accounting in the 2nd millennium, C.E. I give my impressions of several of the important players in the evolution of accounting thought in the 20th century with whom I was closely associated, such as Vatter, Moonitz, Chambers, and Sterling, as well as other prominent figures in the broad field of accounting. Some of my gains from associations with three institutions—the American Accounting Association, The University of Chicago, and the Financial Accounting Standards Board—are identified. I conclude with a few summary thoughts on what I have learned.

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