The aim of this statement is to address the financial reporting and accounting for business supersedes and combinations ("Summary Of Statement No. 141"). The purpose of this statement is to improve representational, comparability, faithfulness, and relevance of the data that a reporting firm provides in the financial reports concerning an enterprise combination and its impacts.
This statement was issued because in the past the business combinations were accounted for using either purchase method or pooling of interest method ("Summary Of Statement No. 141"). However, analysts complained that using either of the two approaches was difficult because it is hard to compare the financial results as different methods were used. It measures and recognizes the financial statements of the identifiable assets needed assumed liabilities, and the non-controlling interest of the person acquiring ("Summary Of Statement No. 141 (Revised 2007)").
This statement requires that the intangible assets be identified as assets apart from goodwill in case they meet the two criteria of either separability criterion or contractual-legal criterion. It also measures and recognizes the goodwill taken in the business combination or a gain realized from a bargain purchase.
This statement also improves the financial reporting since the financial statement of companies engaging in business combinations will play the role of reflecting the underlying economics of several transactions ("Summary Of Statement No. 141"). It determines the type of information to disclose so that the users of financial statements can analyze the nature and financial effects of a business combination ("Summary Of Statement No. 141 (Revised 2007)").
This report is necessary and applicable to all the business combinations accounted for using purchase method for which the date of its acquisition is 1st July 2001 or later. This statement applies to all the business ventures that include mutual entities, which were previously used in pooling of interests methodology for some of the company combinations.
This statement is not applicable to a combination of two or more not for profit companies, takeover of a for-profit enterprise by an organization that is not for profit, and combination of two or even more mutual companies. This report is not applicable to the formation of a joint venture, acquisition of a group or an asset, which does not constitute a business, and combination of two firms under common control ("Summary Of Statement No. 141 (Revised 2007)").
The changes in this financial reporting can improve the financial reporting by better reflecting the investment, which is made by an acquired company ("Summary Of Statement No. 141"). The purpose of this statement is to help in improving the financial reporting concerning business combinations and promoting the international convergence of the accounting standards.
This report can also assist in improving the comparability of the reported financial information that all the business combinations are accounted using the single method ("Summary Of Statement No. 141"). This statement is also important, as it needs the acquirer to measure the non-controlling interest in the acquisition date of the fair value ("Summary Of Statement No. 141 (Revised 2007)").
The changes in the financial reporting is also important as it provides complete financial information in which the explicit criteria of recognition of the intangible assets apart from goodwill and This statement makes various amendments to the authoritative literature, which is intended to offer additional guidance in the literature, which is provided in this report.
In this statement, the acquirer does not need to identify changes that occur in an amount of deferred tax benefits. This statement requires the buyer to determine variations in an amount of the deferred tax benefits, which are recognized due to a business combination in the income from the accounting period.
"Summary Of Statement No. 141". Fasb.Org, http://www.fasb.org/summary/stsum141.shtml."Summary Of Statement No. 141 (Revised 2007)". Fasb.Org, http://www.fasb.org/summary/stsum141r.shtml.
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