Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles
in the United States

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Business Combinations
(SFAS No. 141)

U.S. GAAP by Topic

Statements of Financial Accounting Standards (SFAS)

SFAS No. 141

Statement of Financial Accounting Standards (SFAS) No. 141
        a. Business Combinations
        b. Issued in June 2001
        c. Supersedes APB Opinion No. 16, "Business Combinations."

Purchase Method only
        a. All business combinations
             --> required to use purchase method.

        b. Pooling of interests method is not allowed.

             [APB Opinion No. 16]
             a. Business combinations meeting certain requirements
                      --> Pooling of interests method should be used.

             b. All other business combinations
                      --> Purchased method should be used.

Goodwill
        a. Fair value of net assets acquired < Purchase cost of net assets acquired
        b. Goodwill
             = Purchase cost - Fair value of net assets
        c. Goodwill is recognized as an asset.

Negative Goodwill

        a. Fair value of net assets acquired > Purchase cost of net assets acquired

        b. Negative Goodwill
             = Fair value of net assets - Purchase cost
             --> Excess of fair value over cost

        c. Such excess is allocated
             --> to reduce the cost of non-current assets acquired
                   (except certain assets).

        d. Remaining excess after reducing
             the cost of non-current assets acquired to zero
             --> recognized as extraordinary gain.

Accounting for Goodwill (SFAS No. 142)

        a. Goodwill is not amortized.
                --> Goodwill is tested for impairment

        b. Impaired
                --> fair value < carrying amount

        c. Test for impairment
                --> on an annual basis

        d. If certain events would reduce fair value below carrying amount,
            --> test for impairment is done
                  between annual tests.

Other Accounting Topics

Inventory Valuation Methods

Depreciation Methods

Revenue Recognition Principle

Accrual Basis vs. Cash Basis Accounting

Basics of Journal Entries

Ratios for Financial Statement Analysis

U.S. GAAP by Topic

Statements of Financial Accounting Standards (SFAS)

	Wiley GAAP 2008: Interpretation and Application of Generally Accepted Accounting Principles 2008 Paperback Edition CD-Rom Edition Book & CD-Rom Edition
	Wiley CPA Exam Review 2007-2008: 2 Volume Set 2 Volume Set Volume 1: Outlines and Study Guides Volume 2: Problems and Solutions
	Wiley CPA Exam Review 2007: 4 Volume Set 4 Volume Set Financial Accounting and Reporting Business Environment and Concepts Regulation Auditing and Attestation