The Financial Statement Effects of Eliminating the Pooling-of-Interests Method of Acquisition Accounting

Accounting standard setters have become increasingly concerned with the perceived manipulation of financial statements afforded by the pooling-of-interests (pooling) method of accounting for corporate acquisitions. While different restrictions have been discussed, in September 1999 the Financial Accounting Standards Board (FASB) issued an Exposure Draft to eliminate the pooling method. This study provides a basis for evaluating restrictions on the pooling method by analyzing the financial statement effects on pooling acquisitions made by public corporations over the period 1992 through 1997. Using these acquisitions we (1) quantify the scope of the “pooling problem,” (2) estimate the financial statement repercussions of eliminating the pooling method, and (3) examine the effects of restricting pooling accounting to business combinations meeting various “merger of equals” restrictions. While our analysis does not address whether restrictions on the pooling method will influence the nature or level of acquisition activity, the results indicate that the pooling method generates enormous amounts of unrecognized assets, across individual acquisitions, and in aggregate. In addition, our results suggest that recording and amortizing these assets generate significant balance sheet and income statement effects that vary with industry. Regarding restrictions on the pooling method, our analysis indicates that size restrictions would significantly reduce the number and value of pooling acquisitions and unrecognized assets generated by these acquisitions.

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¿Ingresos integrales, teoría de la entidad o concepto de entidad? Un compromiso diplomático en la redacción de informes financieros

De Computis - Revista Española de Historia de la Contabilidad ◽

10.26784/issn.1886-1881.v13i25.261 ◽

2017 ◽

Vol 13 (25) ◽

pp. 8

Author(s):

Marco Angelo Marinoni ◽

Andrea Cilloni

Keyword(s):

Balance Sheet ◽

Accounting Standards ◽

Financial Statements ◽

Financial Accounting ◽

International Accounting ◽

International Accounting Standards ◽

Financial Accounting Standards Board ◽

Accounting Systems ◽

Generally Accepted Accounting Principles ◽

Income Statement

The globalizations of markets and increased international cooperation in the harmonized accounting systems have highlighted the difficulties inherent in the development of generally accepted accounting principles. The Financial Accounting Standards Board, FASB, and the International Accounting Standards Board, IASB, are therefore working - through shared projects – in conducting a “Conceptual Framework Project”, which will lead to increased knowledge and understanding of the principles of international accounting convergence.The process of international harmonization has defined the concept of “Comprehensive Income”, i.e. a new structure of the Income Statement, in which they reside clearly even charges and unrealized gains (as final assets adjustments, monetary exchange variations and so on). The Balance Sheet and the Financial Statements in general, continue to maintain an approach prone to theory of property valuation, given the shareholder, as the main carrier of social interest.

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Issues in Lessor Accounting: The Forgotten Half of Lease Accounting

Accounting Horizons ◽

10.2308/acch-10021 ◽

2011 ◽

Vol 25 (2) ◽

pp. 247-266 ◽

Cited By ~ 3

Author(s):

Mark P Bauman ◽

Richard N Francis

Keyword(s):

Balance Sheet ◽

Accounting Standards ◽

Decision Makers ◽

Financial Accounting ◽

Financial Statement ◽

International Accounting Standards ◽

Financial Accounting Standards Board ◽

Disclosure Quality ◽

Residual Values ◽

Lease Accounting

SYNOPSIS In July 2006, the International Accounting Standards Board and the Financial Accounting Standards Board (the “Boards”) added a leasing project to their agenda. In August 2010, the Boards jointly released an exposure draft proposing a “right-of-use” model for the recognition of lease-related assets and liabilities. In their deliberations, the Boards noted numerous studies focusing on lessee accounting, but very little research examining lessor-related topics. To address this gap in the literature, this paper identifies key reporting and disclosure issues associated with lessors, and suggests improvements that could be incorporated into lease accounting guidance. This study is based on an analysis of the financial statement disclosures of 57 of the 100 largest equipment lessors in the U.S. market. Disclosure quality, residual values, and the balance sheet impact of the proposal are examined, and numerous suggestions are offered to enhance the usefulness of lessor financial statement disclosures for decision makers.

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Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on FASB Exposure Draft of Proposed Accounting Standard Update: Notes to Financial Statements (Topic 235): Assessing Whether Disclosures Are Material

Current Issues in Auditing ◽

10.2308/ciia-51450 ◽

2016 ◽

Vol 10 (2) ◽

pp. C1-C9

Author(s):

Urton L. Anderson ◽

Marcus M. Doxey ◽

Marshall A. Geiger ◽

Willie E. Gist ◽

Diane J. Janvrin ◽

...

Keyword(s):

Accounting Standards ◽

Financial Statements ◽

Data Availability ◽

Financial Accounting ◽

Financial Statement ◽

Financial Accounting Standards Board ◽

Accounting Standard ◽

Stated Objective ◽

Auditing Standards ◽

The Way

SUMMARY On September 24, 2015 the Financial Accounting Standards Board (FASB) solicited public comments on a proposed Accounting Standards Update of the FASB Accounting Standards Codification. The stated objective is to improve the effectiveness of footnote disclosures to financial statement users. The focus of the Update is to clarify the way materiality should be considered when assessing requirements for providing information in the notes. The comment period ended on December 8, 2015. This commentary summarizes the contributors' views on these amendments. Data Availability: The exposure draft of Proposed Accounting Standard Update: Notes to Financial Statements (Topic 235): Assessing Whether Disclosures Are Material is available at: http://www.fasb.org/cs/ContentServer?c= Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176166402325

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Response to the Financial Accounting Standards Board’s and the International Accounting Standard Board’s Joint Discussion Paper Entitled Preliminary Views on Financial Statement Presentation

Accounting Horizons ◽

10.2308/acch.2010.24.1.149 ◽

2010 ◽

Vol 24 (1) ◽

pp. 149-158 ◽

Cited By ~ 5

Author(s):

Stephen Moehrle ◽

Thomas Stober ◽

Karim Jamal ◽

Robert Bloomfield ◽

Theodore E. Christensen ◽

...

Keyword(s):

Accounting Standards ◽

Financial Accounting ◽

Financial Statement ◽

International Accounting ◽

Financial Accounting Standards Board ◽

Discussion Paper ◽

Accounting Standard ◽

Proposed Model ◽

Financial Decision ◽

International Accounting Standard

SYNOPSIS: The Financial Accounting Standards Board (hereafter, FASB) and the International Accounting Standard Board (hereafter, IASB) issued a joint discussion paper titled Preliminary Views on Financial Statement Presentation. The Boards are seeking comments on whether their proposed model for financial statement presentation would improve the usefulness of the financial statement information for financial decision makers. This paper sets forth the American Accounting Association Financial Accounting Standards Committee (hereafter, the committee) summary comments as well as responses to several of the FASB’s and IASB’s (hereafter, jointly mentioned, the Boards) specific objectives and principles-related questions. Overall, the committee believes that the model has several appealing features, but also has several potential problems. Many of the problems discussed related to potential learning impediments for users to adapt to the new presentation format.

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A Gain by Any Other Name: Accounting for a Bargain Purchase Gain

Issues in Accounting Education ◽

10.2308/iace-51084 ◽

2015 ◽

Vol 30 (3) ◽

pp. 233-248

Author(s):

Mark J. Kohlbeck ◽

Thomas J. Smith

Keyword(s):

Fair Value ◽

Financial Accounting ◽

Financial Accounting Standards Board ◽

Accounting Standard ◽

Business Combinations ◽

Market Values ◽

Accounting Courses ◽

Value Estimation ◽

Net Assets ◽

The Impact

ABSTRACT Students gain insight into a unique accounting treatment in acquisition accounting by completing this case—that of a bargain purchase gain (BPG). In December 2007, the Financial Accounting Standards Board (FASB) revised accounting for business combinations when they promulgated Statement of Financial Accounting Standard No. 141R, Business Combinations. Under the revised standard, acquirers record net assets of the acquiree at their respective fair market values at the time of acquisition and recognize the excess of net assets over the consideration paid as a BPG included in income from continuing operations. This case takes place after the acquisition is negotiated and the consideration is agreed upon. Students are required to estimate fair values of acquired net assets based on the information provided, determine whether goodwill or a bargain purchase gain exists, and evaluate the impact of this transaction on the financial statements. The case also requires students to consider subjectivity within the analysis, as well as to identify potential incentives that may influence certain estimates and judgments that managers make. The case is appropriate for accounting courses where business combinations, goodwill, and fair value estimation are discussed.

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Penyusunan Laporan Keuangan Pada Sumurboto Stationery Semarang Tahun 2016 Berdasarkan Sak Etap

Jurnal Aktual Akuntansi Keuangan Bisnis Terapan (AKUNBISNIS) ◽

10.32497/akunbisnis.v1i1.1227 ◽

2018 ◽

Vol 1 (1) ◽

Author(s):

Lasa Laksita ◽

Adilistiono Adilistiono

Keyword(s):

Cash Flow ◽

Balance Sheet ◽

Accounting Standards ◽

Financial Statements ◽

Financial Accounting ◽

Financial Statement ◽

Public Accountability ◽

Final Project ◽

Income Statement ◽

Cash Flow Statement

Financial statement preparation is very important because it can describe the finance of an entity and as a basis for decision making. The purpose of this Final Project is to prepare the company's financial statements consisting of Balance Sheet, Income Statement, Statement of Changes in Equity and Cash Flow Statement based on Financial Accounting Standards of Entities Without Public Accountability (SAK ETAP), with the result that assist Sumurboto Stationery in preparing financial statements. Interview and documentation are used in data collection method. On the other hand, this Final Project used description and exposition method for the writing method. The result of this Final Project is to gain the knowledge in how have Sumurboto Stationery done their financial statement preparation in 2016 based on Financial Accounting Standards of Entities Without Public Accountability (SAK ETAP) that consisting of Income Statement, Statement of Changes in Equity, Balance Sheet and Cash Flow Statement. Hopefully, Sumurboto Stationery can be able to prepare their financial statement for the next period in accordance with Financial Accounting Standards of Entities Without Public Accountability (SAK ETAP)

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THE EVOLUTION OF THE RELATIONSHIP BETWEEN THE US FINANCIAL ACCOUNTING STANDARDS BOARD AND THE INTERNATIONAL ACCOUNTING STANDARD SETTERS: 1973–2008

Accounting Historians Journal ◽

10.2308/0148-4184.39.1.1 ◽

2012 ◽

Vol 39 (1) ◽

pp. 1-51 ◽

Cited By ~ 12

Author(s):

Robert J. Kirsch

Keyword(s):

Accounting Standards ◽

Financial Accounting ◽

Working Relationships ◽

International Accounting ◽

International Accounting Standards ◽

Financial Accounting Standards Board ◽

Accounting Standard ◽

Staff Members ◽

The Us ◽

The Relationship

ABSTRACT Utilizing archival materials as well as personal interviews and correspondence with personnel of the Financial Accounting Standards Board (FASB) and International Accounting Standards Committee/Board (IASC/B), including former Board chairmen and staff members, this paper examines the development of the working relationships between the FASB and the IASC/B from their earliest interactions in 1973 through the transformation of the IASC into the IASB and the Convergence Program rooted in the 2002 Norwalk Agreement up to 2008.

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Managing Pro Forma Stock Option Expense under SFAS No. 123

Accounting Horizons ◽

10.2308/acch.2003.17.1.31 ◽

2003 ◽

Vol 17 (1) ◽

pp. 31-45 ◽

Cited By ~ 39

Author(s):

Steven Balsam ◽

Haim A. Mozes ◽

Harry A. Newman

Keyword(s):

Small Firms ◽

Stock Option ◽

Financial Accounting ◽

Financial Statement ◽

First Year ◽

Parameter Estimates ◽

Option Value ◽

Income Statement ◽

Options Value ◽

Pro Forma

We investigate whether footnote disclosures under Statement of Financial Accounting Standards (SFAS) No. 123 are managed in 1996, the first year that the disclosure was required. The 1996 phase-in of SFAS No. 123 provided firms with a unique opportunity to manipulate the pro forma disclosure in the initial years. SFAS No. 123 allows firms discretion in estimating the value of their stock option grants and in allocating that value across accounting periods. Although we find little evidence that firms manage the estimated value of their option grants, we find that firm-specific incentives affect how that value is allocated. Specifically, firms that provide high levels of either CEO compensation or stock option compensation relative to performance allocate a smaller proportion of the options' value to the 1996 pro forma expense, apparently to reduce criticism of that compensation. Small firms and firms that recently went public also allocate a smaller proportion of option value to the 1996 pro forma expense, apparently to increase perceptions of their profitability. We conjecture that firms were less likely to manage the value of the options granted than the allocation of that value in 1996 because the parameter estimates underlying the reported option value must be disclosed in the footnote, whereas the inputs to the allocation computation are not disclosed. These results, which suggest that firms manipulated pro forma stock option expense when their estimate choices cannot be observed, have implications for both standard setters and financial statement users. In particular, the FASB's current deliberations on the transition from footnote disclosure to income statement recognition for stock options should consider additional disclosures to minimize unobservable choices. More generally, the FASB may reduce potential manipulation by requiring expanded disclosures about the choices used in computing both pro forma and reported numbers.

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Constructive Capitalization of Operating Leases in the Hong Kong Fast-Food Industry

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v3i1.3270 ◽

2013 ◽

Vol 3 (1) ◽

pp. 128 ◽

Cited By ~ 2

Author(s):

Benjamin Y. Tai

Keyword(s):

Hong Kong ◽

Fast Food ◽

Balance Sheet ◽

Accounting Standards ◽

Financial Accounting ◽

Financial Accounting Standards Board ◽

Return On Assets ◽

Fast Food Industry ◽

Operating Leases ◽

Lease Contracts

The current study is undertaken to investigate the potential problems resulting from the proposed adoption of a new accounting standard concerning mandatory capitalization of all lease contracts. In 2010, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) issued a joint exposure draft (ED2010/9) on accounting for leases. Under the new standard, lessees are required to capitalize all lease contracts as assets and liabilities. The distinction between operating leases and capital (finance) leases will no longer exist. The long-standing off-balance sheet treatment of operating leases will be prohibited. After the adoption of the proposed standard, companies with significant operating leases are likely to experience an increase in assets, increase in liabilities, and decrease in equity, resulting in the deterioration of their return-on- assets and debt-to-equity ratios. This research examines two large fast-food restaurant chains based in Hong Kong; and through constructive capitalization, demonstrates how the companies’ key financial ratios are negatively impacted if the new standard is implemented. The results indicate that both the return-on-assets and debt-to-equity ratios of the two companies, under various discount rates assumptions, suffer serious deterioration when their operating leases are capitalized.

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Deferred Tax Accounting Concepts and Their Bond to the Accounting Ideologies

Accounting Analysis Auditing ◽

10.26794/2408-9303-2021-8-4-34-50 ◽

2021 ◽

Vol 8 (4) ◽

pp. 34-50

Author(s):

A. A. Aksent’ev

Keyword(s):

Balance Sheet ◽

Financial Accounting ◽

Corporate Management ◽

Controversial Issues ◽

Deferred Taxes ◽

Accounting Standard ◽

Domestic Practice ◽

Important Object ◽

Deferred Tax ◽

Tax Accounting

Deferred taxes are an important object of accounting observation to judge the degree of discrepancies between financial and tax accounting. Meanwhile, the information discloses to users the effects arising from the tax planning tools usage for corporate management and forecasting cash outflows associated with the payment of income tax in the future. The paper formalized two concepts of accounting for deferred taxes in the form of models: temporary and timing differences associated with accounting ideologies. The author ha structured the logic of reflecting deferred taxes on accounting accounts using the balance sheet and “cost” methods. Analysis of foreign experience and domestic practice made it possible to conclude that there are controversial issues on the assessment of deferred taxes in reporting, including at present value. Also, the author revealed discrepancies in Russian Accounting Standard (PBU) 18/02 which were conceptually different from a similar international standard and conflicting with it in a number of theoretical and methodological positions. The research results are aimed at scientific and practical workers in the field of financial accounting, taxation and audit.

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