SFAS 141R, Business Combinations (#64)
/In this podcast episode, we discuss the new requirements of SFAS 141R, Business Combinations . Key points made are:
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Most assets and liabilities associated with an acquisition transaction should be recorded on the acquirer’s balance sheet at fair value.
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Any noncontrolling interest in the acquiree is valued at its fair value.
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The acquisition method is now used, instead of the purchase method.
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Everything should be valued as of the acquisition date.
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The cost of the acquisition is charged to expense as it is incurred, because these expenditures do not meet the definition of an asset.
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In-process research is recognized as an asset; it is amortized or written off later.
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Contingent consideration (an earnout) is to be recognized up front, at its expected fair value.