{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chap001_Day2_class

Chap001_Day2_class - Please finish group selection and...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Please finish group selection and email me the list by 5pm this Friday. 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Student Helpers each class: 2 students help with recording class participation d 3 b i t reward: 3 bonus points P ti i ti Participation 1 point for answering a question or ask a meaningful course related question meaningful course-related question 2 bonus points for doing in-class problems on the white board 2
Background image of page 2
Class participation grading Top 40% 10 points Middle 30% 7 5 points 7.5 points Bottom 30% 5 points Grades lower than 5 may be given under i i 3 certain circumstances.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 1 Part II Accounting for Business Combinations Evolution of Accounting Methods for Business Combination Terms and Concepts for Acquisition Method Total Differential & Goodwill Bargain Purchase 4
Background image of page 4
A ti d R ti M th d Accounting and Reporting Methods Prior to June 2001 There were two acceptable methods for reporting business combinations--the Purchase Method and the Pooling Method. Goodwill should be amortized over a period not to exceed 40 years. June 2001 – 2007 Pooling Method is disallowed. (SFAS 141) Goodwill is no longer amortized, but should be tested for impairment at least annually. If goodwill is impaired, its carrying amount is reduced and an impairment loss is recognized. (SFAS 142) 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2007 Acquisition Method replaced “Purchase Method” (SFAS 141R) Acquisition Method must be used if the acquisition date is in fiscal years beginning on or after December 15, 2008. T t t f G d ill i th GW i t Treatment of Goodwill remains the same -- GW is not amortized but will be tested annually for impairment.) 6
Background image of page 6
h l f Purchase v. Pooling of Interest h i purchase accounting Required by SFAS 141 in June 2001 Target’s ownership interest eliminated Transaction recorded at fair market value pooling of interest No longer GAAP continuity of ownership stock offered in payment transaction recorded at book value of target’s owner’s equity 7
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Why didn’t FASB simply disallow pooling method and require all firms to use purchase method and amortize the goodwill? Pooling or Purchase + No GW Amor. + Purchase + GW Amor. GW Impairment Test Purchase + GW Amor. 8
Background image of page 8
Managers Dislike Purchase with GW Amortization. "The elimination of the pooling method will discourage mergers of knowledge-based companies and will have a chilling effect on the fl f t it l t i i t " flow of venture capital to promising new sectors." said Jim Barksdale, President of the Barksdale Group and former CEO of Netscape. "From my Group and former CEO of Netscape. From my own experience, I can tell you that the AOL/Netscape merger would not have occurred if li h d b i pooling had not been an option.“ (Jim Barksdale’s speech after FASB proposed to stop using pooling method) 9
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}