In late 2007, the Financial Accounting Standards Board (FASB) issued revised guidance on accounting for acquisitions under Statement of Financial Accounting Standards No. 141R (Business Combinations). FAS 141R has now become effective for annual periods beginning after December 15, 2008 and will apply to all transactions within the rule’s definition of a “business combination” where an acquirer obtains control of one or more businesses.
A detailed overview of FAS 141R is beyond the scope of this newsletter and companies should discuss the impact of the rule with their accounting advisors and be cognizant of the impact of the new rule on pending and potential acquisitions. Generally speaking, however, the new rule is seen as capturing a wider group of acquisition transactions than were subject to the prior purchase method rule due to the new definitions of “business” and “business combination.”
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