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U.S. comment letter on measurement-period adjustments

Published on: Jul 02, 2015

Deloitte & Touche LLP comments on the FASB’s proposed Accounting Standards Update (ASU) Simplifying the Accounting for Measurement-Period Adjustments issued by the FASB on May 21, 2015.

An excerpt from the comment letter is shown below:

We support the Board’s efforts to make improvements to aspects of U.S. GAAP that are unnecessarily complex and  costly as part of its simplification initiative, and we believe that this proposed ASU will simplify the accounting for measurement-period adjustments. We agree that an acquirer should recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. Eliminating the requirement to account for these adjustments retrospectively should reduce cost and complexity since it will relieve entities from having to recast prior-period financial information for measurement-period adjustments or assess the materiality of any measurement-period adjustments not accounted for retrospectively. In addition, eliminating the requirement to retrospectively account for measurement-period adjustments should not disadvantage financial statement users because the proposed ASU would retain the reporting and disclosure requirements for measurement-period adjustments.

One related item we encourage the Board to clarify as part of this ASU is the reporting when negative goodwill (bargain purchase gain) is provisionally measured before the end of the measurement period. We are aware of alternative views expressed in practice in such a situation. One alternative expressed is to recognize the bargain purchase gain and disclose that the gain is provisional. Another alternative expressed is to defer recognition of any gain until the measurement period is closed, at which time the earning process is deemed to be complete.

Full text of the comment letter is available below.


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