AccountingLink

Business combinations

16 September 2014

Financial Reporting Developments - Business combinations
We have updated our Financial reporting developments publication on business combinations to clarify and enhance our interpretative guidance. Refer to Appendix G of the publication for a detailed list of these updates.

9 July 2014

Financial Reporting Developments - Intangibles - Goodwill and other
We have updated our FRD on goodwill and intangible assets to include guidance on the private company accounting alternative for goodwill and to make other enhancements to our interpretative guidance. Refer to Appendix D of the publication for a detailed list of these updates.

1 May 2014

To the Point - FASB proposes an optional pushdown accounting model
The FASB proposed allowing an acquiree to apply pushdown accounting in its standalone financial statements when an acquirer obtains control of the acquiree. The proposal is a consensus of the Emerging Issues Task Force. Our To the Point publication describes key aspects of the proposal.

16 January 2014

To the Point - An easier way for certain private companies to account for goodwill
The FASB issued final guidance that allows companies that don’t meet the new definition of a public business entity to amortize goodwill acquired in a business combination and to use a simpler one-step impairment test. While the guidance is effective for fiscal years beginning after 15 December 2014, early adoption is permitted, and companies can apply it to their 2013 financial statements if they have not yet made those statements available for issuance.

13 January 2014

Comment Letter - FASB proposal to eliminate development stage entity guidance
In our comment letter, we said we supported the FASB's efforts to reduce financial reporting cost and complexity by eliminating ASC 915 and its additional reporting requirements for development stage entities. However, we expressed our concern about how the proposed amendments could affect the way in which companies apply ASC 810's variable interest entity guidance and ASC 805's definition of a business when evaluating certain entities or operations that are in a development stage.

16 December 2013

Our commitment to executing quality audits: Information for audit committees 2013 update
Auditors play a vital role in the efficient functioning of the capital markets. We recognize and embrace the responsibility that has been entrusted to us as independent auditors. Our 2013 update discusses significant actions and investments EY is making as part of its commitment to continuous improvement in audit quality.

15 May 2013

Technical Line - Accounting for deals with puts, calls or forward contracts can be complex
Although the overall volume of merger and acquisitions activity has decreased slightly in recent years, we are seeing an increase in the complexity of deal structures, particularly those using call or put options or forward contracts (collectively referred to as equity contracts) that allow the buyer and seller to share the economic risks of an acquired business for a period of time. This Technical Line - the second in a series - addresses the accounting for equity contracts issued in a business combination. In December 2012, we issued a companion publication (pdf, 470.4kb) , which addressed the accounting and valuation considerations for contingent consideration issued in a business combination.

20 December 2012

Technical Line - Complex deal structures can affect future earnings and other metrics
We are seeing an increase in the complexity of deal structures, particularly those using contingent consideration or call or put options or forward contracts that allow the buyer and seller to share the economic risks of an acquired business for a period of time. This Technical Line – the first in a two-part series – addresses the accounting and valuation considerations for contingent consideration issued in a business combination. A companion publication that we will issue soon will address the accounting for equity contracts entered into between a buyer and a noncontrolling interest holder when the buyer acquires a controlling interest in an acquiree.

18 October 2012

Technical Line - How to qualitatively assess indefinite-lived intangibles for impairment
Accounting Standard Update (ASU) 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-lived Intangible Assets for Impairment, introduced an optional qualitative assessment for testing indefinite-lived intangible assets for impairment that may allow companies to avoid the annual calculation of the assets’ fair value. This Technical Line provides a framework for companies to consider when determining whether and how to apply the guidance and an example of a hypothetical company’s qualitative assessment.

27 July 2012

To the Point - Qualitative impairment test added for indefinite-lived intangibles
The FASB issued final guidance giving companies the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. Our To the Point summarizes what you need to know about the Accounting Standards Update.

24 April 2012

Comment Letter - Testing indefinite-lived intangible assets for impairment
In our comment letter, we support the Board’s efforts to reduce the cost and complexity of performing the impairment test. We also say the Board should consider adding implementation guidance on how to assess a mix of positive and negative evidence affecting the significant inputs used to determine fair value.

25 January 2012

To the Point - FASB tries to simplify impairment test for indefinite-lived intangibles
Based on concerns raised by financial statement preparers about recurring costs and complexity of calculating the fair value of indefinite-lived assets for impairment testing, the FASB today issued a proposed ASU to simplify the impairment test. The proposal would give companies the option to perform a qualitative assessment (similar to the one introduced by ASU 2011-08 for goodwill) to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. Comments are due by 24 April 2012.

17 November 2011

Technical Line - How to use the new qualitative screen to test goodwill for impairment
Accounting Standard Update (ASU) 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment, introduced an optional qualitative assessment for testing goodwill for impairment that may allow companies to skip the annual two-step test. This Technical Line provides a framework for companies to consider when determining whether and how to apply the qualitative screen.

15 September 2011

To the Point - Optional screen for goodwill impairment
The FASB issued an ASU on testing goodwill for impairmentwhich gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount and, in some cases, skip the two-step impairment test. The ASU is effective for fiscal years beginning after 15 December 2011 and early adoption is permitted. Our To the Point summarizes what you need to know about the ASU.

6 June 2011

Comment Letter - Testing goodwill for impairment
Our comment letter supports the Board's efforts to reduce the cost and complexity of performing the first step of the goodwill impairment test. We also say the Board should consider adding implementation guidance and consider allowing the use of a qualitative screen for the impairment testing of indefinite-lived intangible assets.

25 April 2011

To the Point - Screen considered for goodwill impairment testing
Based on concerns raised about recurring costs and complexity regarding the calculation of fair value, the Board issued a proposed ASU to simplify how a company is required to test goodwill for impairment. Our To the Point summarizes the proposal.

11 November 2009

Hot Topic - Definition of a business
Our Hot Topic provides an overview of the guidance on the definition of a business in ASC 805 as well as examples of the application of this guidance to certain transactions in the life sciences, real estate and extractive industries.

7 October 2009

Hot Topic - Proposed ASU: acquired R&D assets and contingent consideration in an asset acquisition
Our Hot Topic discusses a FASB proposal that would address the accounting for acquired research and development assets and contingent consideration in an asset acquisition.

26 June 2009

Technical Line - Implications of Statement 141(R) on mutual entities
Our Technical Line summarizes the implications of Statement 141(R) for business combinations of mutual entities.

26 May 2009

Hot Topic - FASB issues Statement 164 on business combinations by not-for-profit entities
Our Hot Topic addresses Statement 164 that amends the accounting for business combinations between two or more not-for-profit entities and establishes principles and requirements for how a not-for-profit entity determines whether a combination is a merger or an acquisition.

3 April 2009

Hot Topic - FASB issues FSP FAS 141(R) on preacquisition
Our Hot Topic summarizes FSP FAS 141(R)-1. The FSP significantly changes the accounting for pre-acquisition contingencies required by Statement 141(R) and has the same effective date as Statement FAS 141(R).

3 April 2009

Technical Line - FAS 142 impairment testing subsequent to the adoption of FAS 141(R), 157 and 160
Our Technical Line highlights the amendments made to FASB Statement No. 142¸ Goodwill and Other Intangible Asset by Statements No. 141(R) No. 157 and No. 160.

13 January 2009

Comment Letter - Proposed FSP FAS 141(R)-a-Preacquisition contingencies in business combinations
This comment letter presents our views on the proposed FASB FSP on pre-acquisition contingencies in business combinations.

22 December 2008

Hot Topic - Goodwill impairment considerations
Our Hot Topic is a reminder to consider the effect current conditions may have on goodwill impairment testing, including the need to perform interim impairment tests and the role market capitalization plays in the goodwill impairment model.

19 December 2008

Hot Topic - FASB issues proposed FSP on preacquisition contingencies
Our Hot Topic discusses the provisions of a proposed FSP that would amend Statement No. 141(R) by significantly changing the accounting for pre-acquisition contingencies required by Statement 141(R).

20 June 2008

Hot Topic - Statement 141(R) implementation series
Our Hot Topic focuses on issues related to the implementation of the new FASB standard on business combinations under Statement 141R.