FEE study on accounting methods

09 April 2002

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The purpose of the study is to give an overview of methods of accounting for business combinations being used by major European companies. The report provides a snapshot of the current situation for business combinations and informs the debate on the future use of accounting methods.

Accounting for business combinations under national requirements, as well as under IAS and US-GAAP are explained in the study. The scope is limited to consolidated financial statements. A review of each country’s legislation and national standards has been included. The report also provides a helpful overview of goodwill treatments.

The study examines in detail the six elements of business combinations:

What is being obtained: e.g. shares (in entities) or other assets

What is the consideration: e.g. transferring shares or other assets

The substance of the transaction: e.g. an acquisition or a uniting?

How is it accounted for: e.g. purchase, pooling or fresh start

Calculation of goodwill

Treatment of goodwill

See full FEE study.

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