What is FAS 141R?

What is FAS 141R?

FAS 141R applies to all transactions or events in which an entity obtains control of one or more businesses, which is a broader definition than the old rule. This new definition includes not only typical mergers but also acquisitions of control achieved by contract or through a lapse of minority rights.

What is FAS 141R and FAS 160?

In December 2007, the FASB introduced FAS 141r and FAS 160, changing longstanding accounting rules for business combinations and noncontrolling (minority) interests, respectively. Both revisions are effective for annual reporting periods beginning on or after December 15, 2008.

What is FAS 160?

160, Noncontrolling Interests in Consolidated Financial Statements. Statement 160 establishes accounting and reporting standards for noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary.

What were FASB primary reasons for issuing FAS 141R and FAS 160?

The FASB’s main objective in the issuance of FAS 141R and FAS 160 was to improve the information reported about a business combination and to achieve global convergence with the IASB and IFRS 3 (IASB, 2008). The FASB worked closely with the IASB to promote international convergence of accounting standards.

Are lease commissions intangible assets?

Although the actual property is a physical asset, the leasehold is only an interest, and therefore it is not a physical asset. A company has the contractual right to use the property for its long-term future benefit. Therefore, a leasehold meets the specifications of an intangible asset.

What is negative goodwill which is sometimes referred to as a bargain purchase )?

Negative goodwill (NGW) refers to a bargain purchase amount of money paid when a company acquires another company or its assets. Negative goodwill is the opposite of goodwill, where one company pays a premium for another company’s assets.

What is parent company theory?

The parent company theory recognizes that although the parent does not have direct ownership of the assets or direct responsibility for the liabilities of the subsidiary, it has the ability to exercise effective control over all of the subsidiary’s assets and liabilities, not simply a proportionate share.

Which of the following is the best theoretical justification for consolidated financial statement?

Which of the following is the best theoretical justification for consolidated financial statements? In form the companies are separate; in substance they are one entity. In form the companies are separate; in substance they are one entity. more fairly present the activities of the consolidated companies.

Why is minority interest subtracted from EV?

The aim of adding minority interest to EV is to facilitate an “apples to apples” comparison between EV and figures such as Total Sales, EBIT, and EBITDA. Thus, if the parent company owns 80% of its subsidiary and its subsidiary is worth $1,000, then the equity value reflects 80% of $1,000, or $800.

What is proprietary theory?

The proprietary theory states that there is no fundamental difference between owners of the business and the business itself. Basically, the entity does not exist separately or otherwise from its owners.

Are long-term receivables intangible assets?

Assets such as bank deposits, accounts receivable, and long-term investments in bonds and stocks lack physical substance, but are not classified as intangible assets. In most cases, intangible assets provide services over a period of years. As a result, they are normally classified as long-term assets.

What is the impact of FAS 141 ( are )?

After the adoption of FAS 141 (R), the reduction is a discrete item in the acquirer’s income tax provision for the quarter in which the acquisition is consummated. FAS 141 (R) amended FAS 109 to require a deferred tax asset to be recorded for the excess of tax deductible goodwill over book goodwill as of the acquisition date.

What is acquisition method in FAS 141 ( are )?

FAS 141 (R) retains the “acquisition method” (formerly known as the “purchase method”) of accounting for all business combinations and requires an acquirer to be identified for each business combination.

How are restructuring costs accounted for in FAS 141?

Under FAS 141 (R), restructuring costs of the acquiree that are not obligations as of the acquisition date are charged to post-acquisition earnings. In certain circumstances, if restructuring costs are “liabilities” as of the acquisition date, then the liabilities can be accounted for as part of a business combination.

Which is an example of statement 141 of FASB?

For example, Statement 141 required the acquirer to include the costs incurred to effect the acquisition (acquisition-related costs) in the cost of the acquisition that was allocated to the assets acquired and the liabilities assumed. This Statement requires those costs to be recognized separately from the acquisition.