FASB to consider business combination concerns

FASB has promised to give consideration to various stakeholder concerns that arose during a recent post-implementation review (PIR) of its business combinations standard.

The review report, released last week, described concerns about FASB Statement No. 141 (revised 2007), Business Combinations, also known as Statement 141(R).

In a response released Thursday, FASB acknowledged the Financial Accounting Foundation (FAF) team review, which found that some participants encountered difficulty with:

• Applying the definition of a business;
• Accounting for purchased loans; and
• Separately reporting some intangibles and goodwill.

FASB will consider these review findings in relation to other projects that already have begun.

The standard is largely converged with IRFS 3 (revised 2007), Business Combinations, which is under review by the International Accounting Standards Board (IASB).

FASB also acknowledged concerns about the cost and complexity of applying fair value measurement guidance to certain types of assets and liabilities acquired in a business combination. FASB has initiated a review of Statement No. 157, Fair Value Measurements, which provides that guidance.

Before deciding whether to undertake any standard-setting action, FASB will review the findings of the reviews of Statement No. 157 and coordinate with the IASB following the completion of the review of IFRS 3.

Leslie Seidman, FASB’s chairman, gave the board’s response in a letter to FAF Standard-Setting Process Oversight Committee Co-Chairs John Davidson and Cynthia Eisenhauer. As progress is made, FASB will report back to FAF’s oversight committee and board of trustees.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA senior editor.