SFAS 141R, Business Combinations (#64)

In this podcast episode, we discuss the new requirements of SFAS 141R, Business Combinations. Key points made are:

  • Most assets and liabilities associated with an acquisition transaction should be recorded on the acquirer’s balance sheet at fair value.

  • Any noncontrolling interest in the acquiree is valued at its fair value.

  • The acquisition method is now used, instead of the purchase method.

  • Everything should be valued as of the acquisition date.

  • The cost of the acquisition is charged to expense as it is incurred, because these expenditures do not meet the definition of an asset.

  • In-process research is recognized as an asset; it is amortized or written off later.

  • Contingent consideration (an earnout) is to be recognized up front, at its expected fair value.

Related Courses

Business Combinations and Consolidations
Mergers and Acquisitions