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Following its July decision to ban the
pooling-of-interests method of accounting, FASB issues Statement no.
141, Business Combinations, which requires that companies use
only the purchase method to account for business combinations
initiated after June 30 of this year. At the same time, the board
issues Statement no. 142, Goodwill and Other Intangible Assets,
which substitutes impairment testing for the amortization method
of accounting for goodwill. The effective date for companies reporting
on a calendar-year basis is January 1, 2002 (
www.fasb.org/news/nr070501.html ; www.fasb.org/news/nr072001.html ).
(See also “Say
Good-Bye to Pooling and Goodwill Amortization,” page 31, and
Official Releases, page 115.)
An AcSEC exposure draft of a proposed statement of
position, Accounting for Certain Costs and Activities Related to
Property, Plant, and Equipment, addresses the variety of
accounting methods applied to expenditures related to PP&E. A
related FASB exposure draft of a proposed statement of financial
accounting standards, Accounting in Interim and Annual Financial
Statements for Certain Costs and Activities Related to Property,
Plant and Equipment, discusses the same topic. Comments on both
proposals are due by October 15 ( www.aicpa.org/members/div/acctstd/edo/index.htm
).
A FASB technical bulletin, Effective Date for Certain
Financial Institutions of Certain Provisions of Statement 140
Related to the Isolation of Transferred Financial Assets,
defers application of the isolation standards until 2002 (
www.fasb.org/news/nr072301.html ).
The SEC issues staff accounting bulletin no. 102,
Loan Loss Allowance Methodology and Documentation Issues,
which offers views on the development, documentation and
application of a systematic loan-loss allowance methodology, but does
not change existing rules on accounting for loan-loss provisions or
allowances ( www.sec.gov/news/press/2001-67.txt
).
A new FASB standard, Statement no. 143, Accounting
for Asset Retirement Obligations, requires entities to record
the fair value of a liability for such an obligation in the period in
which it is incurred. The statement is effective for fiscal years
beginning after June 15, 2002 ( www.fasb.org/news/nr070501A.html ).
