The Board agreed that certain items will not be measured at fair value at the time of a business combination: deferred income tax assets and liabilities and benefit plan obligations.

The Board discussed whether the occurrence of a business combination should affect the fair value measurement of acquired assets and liabilities. For example, should the acquirer's credit rating affect the measurement of the acquiree's liabilities assumed. The Board noted that under FASB Concepts Statement 7, the most relevant measure of a liability always reflects the credit standing of the entity obliged to pay. The Board concluded that this requires further study.

The FASB and IASB have tentatively decided that this project will exclude issues related to the initial recognition and measurement of benefit plan obligations. However, within the scope of the project the Board will consider the measurement where the business combination itself affects the measurement of the post-employment benefit obligations. The Board considered three recommendations in this area, as follows:

• Recommendation 1: The assumptions of the acquirer in respect of future salaries, staff turnover etc should be used where the acquirer has a different assessment of future events to the acquiree. This was agreed by the Board.
• Recommendation 2: If the acquirer will change the plan of the acquiree to provide benefits to employees of the acquiree that are compatible with the benefits provided to its own employees or to curtail or terminate the plan, this should be treated as a post-acquisition event and not affect the measurement on acquisition. The Board supported this recommendation and noted that it differs from the current FASB position.
• Recommendation 3: If the acquirer is required to amend the plan as a condition of the business combination imposed by the owners of the acquiree, this should be included in the cost of acquisition. The Board deferred decision on this issue.

The Board discussed IAS 37 and the treatment of contingent liabilities on acquisition, including contractual termination benefits (such as golden parachutes) that arise as a result of an acquisition and restructuring provisions. No decisions were reached.