FASB Proposed FSP: Fair Value of Business Combinations, Impairment
October 24, 2006
FEI Summary
On Oct. 23, 2006, the Financial Accounting Standards Board (FASB) released Proposed FASB Staff Position (FSP) No. FAS 141-b, 142-e and 144-b, “Fair Value Measurements in Business Combinations and Impairment Tests.”
n The proposed FSP would amend FAS 141, Business Combinations, FAS 142, Goodwill and Other Intangible Assets, and FAS.144, Accounting for the Impairment or Disposal of Long-Lived Assets, to clarify the guidance on fair value measurements in those Statements.
n The proposed FSP would be effective until the reporting entity adopts FAS 157, Fair Value Measurements.
o Upon adopting FAS 157, the reporting entity should apply the guidance in FAS 157 for the circumstances addressed by this FSP
o However, the FSP’s proposed amendment to FAS 141, paragraph 35, which clarifies the measurement attributes to be applied in a business combination, is not affected by FAS 157 and continues to apply after FAS 157 is adopted.
n The impact of FAS 157 on the paragraphs in Statements 141, 142 and 144 that are amended by this FSP is shown in the appendix (paragraphs A1–A3).
n The proposed FSP is available here and the 30 day comment period ends Nov. 22, 2006.
Additional Proposed FSPs, Final FSP Issued
Separately, FASB released two other Proposed FSPs and one Final FSP on October 20.
Proposed FSPs:
· Proposed FSP EITF 00-19-b, "Accounting for Registration Payment Arrangements." Comment deadline Dec. 4.
· Proposed FSP EITF 03-6-a, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." This proposed FSP addresses EPS implications of certain instruments granted as share-based payments. Comment Deadline Dec. 19.
Final FSP:
Other FASB News
A summary of the October 18 FASB board meeting prepared by FEI staff is available here.
Prepared Oct. 24, 2006 by Edith Orenstein (eorenstein@FinancialExecutives.org), Director, Technical Policy Analysis, Financial Executives International (FEI). This summary does not represent FEI opinion, unless specifically noted above