Business combinations and stock compensation to be considered

✍ Scribed by Paul Munter

• Publisher: John Wiley and Sons
• Year: 1997
• Tongue: English
• Weight: 359 KB
• Volume: 8
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/jcaf.3970080216

✦ Synopsis

he FASB, of course, is continuing its work on existing agenda projects such as consolidations and related matters, T comprehensive income, earnings per share, financial instruments, and liabilities for closure or removal of long-lived assets. Exhibit 1 summarizes the current status of each of these projects. While completion of these projects is important for business entities, the FASB has recently added new topics to its agenda which have the potential to result in significant changes in financial reporting practices by companies in the future.

The three new projects recently included on the FASB's agenda are (1) business combinations, (2)impairmentissues, and (3)s~kcompensation. Since the projects have only recently been activated, it is premature to speculate on a timetable for completion. Nonetheless, the underlying issues associated with the projects are important and should be carefully monitored by accounting and business practitioners. Here, each of these projects as well as the potential implications are discussed.

Business Combinations

The subject of business combinations has long been covered by the provisions of APB Opinion No. 16, "Business Combinations," which was issued by the APB in August 1970. Additionally, the issue of accounting for intangible assets-including goodwill-is addressed in APB Opinion No. 17, "Intangible Assets," which was issued simultaneously with APB Opinion No. 16 in August 1970. According to APB Opinion No. 16, a business combination is classified as either a pooling of interests if it meets the 12 criteria paul Munter, p h . ~. , CPA, is KPMG Peat Marwick specified or, otherwise, as a purchase. Exhibit 2 summarizes the pooling criteria found in APB Opinion No. 16.