ACCT 1B Lecture Notes - Lecture 25: Income Statement, Unit Testing, Calendar Year
Document Summary
In august 1970: apb opinion 20 was issued prior to this pooling that was widely used and abused. This apb developed detailed criteria for use of pooling method. However, it was felt that allowing pooling and purchase methods hampered comparability of f/s. The board after years of research and deliberation prohibited pooling and decided the goodwill (gw) would no longer be amortized and would periodically be tested for impairment. In 2001, a decision was made that all business combinations must be accounted for by purchase. Sfas 141 prohibited pooling for any business combination after 6/30/01. Goodwill previously acquired is no longer amortized after calendar year 2001. Critics question whether goodwill impairment test opens door for manipulation of earnings. 141r (asc805) business combinations which completely replaced fasb statement 141. The new standards use the term acquisition method to replace purchase method. most of the primary conclusions reached with sfas141 were carried forward to 141r.
