30 May 2013

FASB responds to post-implementation review on business combinations

The review, conducted by the FASB’s parent organisation, the Financial Accounting Foundation (FAF), examined FASB Statement No 141 (revised 2007), 'Business Combinations' (Statement 141(R)) (codified in Accounting Standards Codification Topic 805, Business Combinations). The standard requires an acquiring organisation to recognise the assets acquired, the liabilities assumed, and any non-controlling interest in the acquired organisation at the acquisition date, measured at their fair values as of that date, with limited exceptions. Statement 141(R) is largely converged with IFRS 3 (revised 2007), 'Business Combinations'. The International Accounting Standards Board (IASB) has initiated a review of IFRS 3.

In its response, the FASB acknowledged the PIR findings that some participants expressed difficulty in (1) applying the definition of a business, (2) accounting for purchased loans, and (3) separately reporting some intangibles and goodwill. The Board said it will consider the PIR report’s findings in relation to other projects that are currently underway.

The FASB also acknowledged the PIR findings related to the cost and complexity of applying the fair value measurement guidance in FASB Statement No. 157, 'Fair Value Measurements', to certain types of assets and liabilities acquired in a business combination. The FASB said it would review the findings of the forthcoming PIR on Statement 157, and will coordinate with the IASB once the review of IFRS 3 is complete, before deciding whether to undertake any standard-setting action.

Press release

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