Business Combinations Focus of Briefings.

FEI has launched an extensive education effort about the new statements on business combinations and intangibles issued during the summer by the Financial Accounting Standards Board. A teleconference was held Sept. 17, with a follow-on session scheduled for Oct. 23. In addition, FEI will be holding one-day conferences on the new rules in New York on Dec. 12 and in San Francisco Dec. 14.

In the Sept. 17 conference, moderated by FEI President Philip B. Livingston, FASB Chairman Edmund Jenkins joined with Project Manager Kim Petrone to go over implications raised by Statements 141 and 142. The statements, which cover business combinations and accounting for intangibles, have raised a number of reporting-related issues.

Statement 141, Petrone said, eliminated the pooling-of-interests method of accounting and supersedes Opinion 16 in its entirety, though it carries through that opinion's guidance on the purchase method of accounting. It sets up criteria for recognizing intangible assets that are separate from goodwill -- such as customer lists or trademarks.

Statement 142 eliminates amortization of goodwill, replacing it with an annual "impairment test." It replaces Opinion 17. Petrone noted that the definition of the "reporting unit" a company chooses will be a key to impairment testing, adding that the basis for the guidance is the "operating segment" language in FAS 131.

The statement calls for a two-part impairment test -- the first to identify any potential impairment, and the second to actually test it. Petrone said the actual test can be done at any time of the year, but once done for a specific unit, the test should be repeated 12 months later for that same unit, Both statements take effect Dec. 15 for calendar year-reporting companies, and do not apply to nonprofits or mutually owned companies, Petrone said.