Last Friday the Financial Accounting Standards Board (FASB) released the long-awaited Statement No. 141 (revised 2007), Business Combinations. “The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects,” according to the Summary. The revised Statement establishes principles and requirements for how the acquirer:
- Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree.
- Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.
- Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
Replacing Statement No. 141 (2001), SFAS 141R also supersedes FIN No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method, and amends SFAS No. 109, Accounting for Income Taxes. It amends SFAS 142, Goodwill and Other Intangible Assets, “to, among other things, provide guidance on the impairment testing of acquired research and development intangible assets and assets that the acquirer intends not to use.” Application is prospective to business combinations “for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.” To read the full Statement No. 141R, click here.
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