Congressional Spotlight on FASB.
Statement 141 will significantly improve the transparency of the accounting and reporting for business combinations by requiring that all business combinations be accounted for under a single method--the purchase method. Use of the pooling-of-interests method is no longer permitted. The purchase method provides investors with the information necessary to determine the true cost of one company buying another and, as a result, provides a basis for consumers to track future returns on the investment.
Statement 142 will improve the purchase method in a number of ways. Most significantly, it requires that goodwill no longer be amortized to earnings but will instead be tested for impairment. That improvement will provide greater transparency of the economic value of goodwill and the amount and timing of its impact on companies' earnings.
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|Title Annotation:||Financial Accounting Standards Board|
|Article Type:||Brief Article|
|Date:||Oct 1, 2001|
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