Business combinations accounting in the United States from AICPA to FASB: a study on the impact on M&A activity

• Author(s): Ribeiro, Humberto ; Crowther, David
• Date: 2008
• Persistent ID: http://hdl.handle.net/10198/8311
• Origin: Biblioteca Digital do IPB
• Subject(s): Goodwill; M&A accounting
• Document Type: Conference object
• Language: English
• Contributor(s): Biblioteca Digital do IPB

Description

This paper summarizes the problematic of accounting for business combinations since the 1960s. Albeit widely supported by the industry, the use of pooling of interests has been always subject to criticism, particularly from practitioners and academicians (see e.g. AAA, 1966; Mosich, 1968). In 1996, FASB added business combinations accounting to its agenda, with the purpose to improve its transparency. FASB would disallow the use of pooling of interests, despite numerous negative reactions from industry. Nevertheless, a later proposal of replacement of purchased goodwill amortization by impairment testing seems to have mitigated any outstanding criticism. Several authors (e.g. Zeff, 2002) described the fierceness of the lobbying on this FASB’s project. The paper studies whether SFAS 141 and SFAS 142 resulted in relevant economic consequences (see e.g. Zeff, 1978; Burchell et al., 1980; FASB, 1980) and finds that M&A activity has not been significantly affected by FASB’s changes