Merger mysteries – Accounting for business combinations
Abstract: Merger and acquisition activity has slowed over the past two years, but may be on the verge of a comeback. This could be a good time for companies contemplating an M&A to review the applicable accounting standards. The Financial Accounting Standards Board (FASB) has issued a series of Staff Positions and Accounting Standards Updates to clarify earlier Statements regarding the measurement of fair value. Current rules regarding treatment of contingent considerations are also discussed, along with FASB’s new FSP FAS 141(R)-1, which addresses the recording of contingent assets and liabilities.