FASB responds to post-implementation review of business combinations accounting

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31 May 2013

The Financial Accounting Standards Board (FASB) has issued a response that evaluates the outcome of the Financial Accounting Foundation’s (FAF) Post-Implementation Review (PIR) of FASB Statement No 141(R), ‘Business Combinations’ (codified in FASB Accounting Standards Codification, Topic 805).

The report notes the following challenges faced by companies in adopting the new standard: “(1) applying the definition of a business, (2) accounting for purchased loans, and (3) separately reporting some intangibles and goodwill.” The FASB has noted that it will consider these findings while working on other ongoing projects.

The PIR findings also note that companies experienced issues implementing FASB Statement No. 157, Fair Value Measurements, to certain types of assets and liabilities acquired in a business combination. The FASB also noted that it will decide on starting any additional standard-setting activities after the upcoming PIR on Statement 157 is available and it has an opportunity to work with the IASB once the review of IFRS 3 is complete. The FASB will continue to keep the FAF’s Oversight Committee and the Board of Trustees updated of any progress that is made.

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