Generally Accepted Accounting Principles
in the United States

U.S. GAAP Codification IFRS International Standards Accounting Topics

Business Combinations
(SFAS No. 141)

U.S. GAAP Codification IFRS, IAS by Topic,  Accounting Terms
Principles of AccountingIntermediate Accounting Advanced Accounting
Accounting Standards ASC Accounting by Topic,  Accounting Textbooks
Securities Law Library U.S. Tax Code by Section

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.

        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.

U.S. GAAP Codification
International Financial Reporting Standards (IFRS)
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
Overview of Financial Statements

Copyright  All Rights Reserved.