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.

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.

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.

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.

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 On Narrowing The Credibility GAAP: Has The Financial Accounting Standards Board (FASB) Enhanced The Credibility Of Generally Accepted Accounting Principles (GAAP)?

2011 ◽  
Vol 9 (2) ◽  
pp. 76 ◽  
Author(s):  
Douglas K. Schneider ◽  
Gordon S. May ◽  
David R. Shaffer
Keyword(s):  
Accounting Standards ◽  
Psychological Research ◽  
Financial Accounting ◽  
Future Research ◽  
Financial Accounting Standards Board ◽  
Financial Reports ◽  
Generally Accepted Accounting Principles ◽  
Perceived Credibility ◽  
Accounting Principles ◽  
Social Psychological Research

The purpose of this study was to apply social-psychological research methods to address an issue of widespread concern in the accounting profession. One of the primary motives underlying the creation of the Financial Accounting Standards Board (FASB) was to increase the credibility of Generally Accepted Accounting Principles (GAAP). Our main objective was to assess any differences in the perceived credibility of FASB GAAP and pre-FASB GAAP, as indicated by three groups of FASB constituents familiar with these procedures: corporate preparers of financial statements (preparers), CPAs who audit financial reports to ensure their adherence to GAAP (auditors), and accountants who use financial reports to make lending and investment decisions (users). The results indicated that (a) the credibility of accounting principles can be assessed, (b) not all dimensions that have been touted as contributors to the credibility of accounting practices predict accountants perceptions of credibility, and (c) examples of FASB GAAP were perceived as less credible than corresponding examples of pre-FASB GAAP by each of the above three groups of FASB constituents. Some implications of these results and suggestions for future research are discussed.

The FASB and Accounting for Economic Reality

2006 ◽  
Vol 6 (1) ◽  
pp. 1-21 ◽  
Author(s):  
Thomas A. Lee
Keyword(s):  
Conceptual Framework ◽  
Accounting Standards ◽  
Social Reality ◽  
Global Strategy ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Socially Constructed ◽  
Accounting Numbers ◽  
History Of ◽  
Economic Reality

The proposal by the Financial Accounting Standards Board (FASB) in 2002 to produce principles-based accounting standards is an explicit commitment to use its conceptual framework to improve financial accounting. In effect, it is a proposal to assist accounting for economic reality. However, an evaluation of the proposal and related FASB communications reveals a global strategy more concerned with achieving comparability and consistency than identifying improved ways of recognizing and representing socially-constructed reality by accounting numbers. The paper examines the philosophical notions of social reality and truthful correspondence in light of principles-based accounting standards and suggests that the FASB's superficial use of its conceptual framework in this respect is consistent with a history of conceptual frameworks as means of legitimating standard setting activities. As such, the FASB proposal would be no more than a short-term palliative to the long-term ills of financial accounting world-wide. The paper recommends a better understanding of the construction and representation of social reality by all concerned with the world of financial accounting.

scholarly journals Accounting for Stock Options

2005 ◽  
Vol 19 (4) ◽  
pp. 115-134 ◽  
Author(s):  
Jeremy Bulow ◽  
John B Shoven
Keyword(s):  
Stock Options ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
Financial Statement ◽  
Financial Accounting Standards Board ◽  
Public Companies ◽  
Valuation Method ◽  
History Of ◽  
Reported Earnings

As public companies begin their new fiscal years, they are implementing a new and controversial Financial Accounting Standards Board (FASB, 2004) proposal for expensing stock options. Applied to 2003 and 2004, this rule would have slashed reported earnings of the Standard & Poor's 500 by 8.6 and 7.4 percent; the effect in the bubble years would have been more than twice as large. We describe the history of how these options have been expensed for financial statement purposes. We assess the new FASB approach and find that it is deeply flawed. The main purpose of the paper is to describe an alternative options expense valuation method, the Bulow-Shoven approach, that addresses these problems. Our approach is simpler than the new FASB methodology, less prone to earnings manipulation and more consistent with the way the rest of compensation is treated in financial statements.

Standard-Setting Issues and Academic Research Related to the Accounting for Financial Asset Transfers

2007 ◽  
Vol 21 (1) ◽  
pp. 59-80 ◽  
Author(s):  
Katherine Schipper ◽  
Teri Lombardi Yohn
Keyword(s):  
Cross Section ◽  
Financial Reporting ◽  
Academic Research ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Future Research ◽  
Financial Asset ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board

A large number and cross-section of firms undertake financial asset transfers. The Financial Accounting Standards Board and the International Accounting Standards Board have been grappling with the appropriate accounting for financial asset transfers, especially with respect to derecognition—that is, when the assets should be removed from the transferor's balance sheet. This paper discusses the financial reporting issues surrounding financial asset transfers and summarizes the related academic research. It also discusses potentially useful future research that could provide insights for standard-setters and suggests some impediments to that research.

Insights from Academic Participation in the FAF's Initial PIR: The PIR of FIN 48

2014 ◽  
Vol 28 (3) ◽  
pp. 479-500 ◽  
Author(s):  
Jennifer L. Blouin ◽  
Leslie A. Robinson
Keyword(s):  
Accounting Standards ◽  
Academic Community ◽  
Income Taxes ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Governmental Accounting ◽  
Fin 48 ◽  
Setting Process ◽  
Governmental Accounting Standards Board

SYNOPSIS In 2009, the Financial Accounting Foundation (FAF) determined that the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) standard setting process required a formal review to monitor and address issues that can arise after the implementation of accounting standards. The FAF selected FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, as the initial post-implementation review (PIR) standard. This paper informs the academic community about the PIR process and provides an academic perspective on the initial PIR of FIN 48. In particular, we demonstrate the role of the academic literature using the FIN 48 literature review prepared as part of the PIR process.

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.

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