Is a Merger or Acquisition in Your Future? FAS141R

Consider the Impact of New Accounting Standards for Business Combinations Before You Act. (FAS141R)

By Jim Weber

Businesses contemplating a merger or acquisition should consider the accounting implications of the transaction prior to entering into any agreements. That’s because the Financial Accounting Standards Board (FASB) recently issued Statement No. 141R, Business Combinations, establishing new standards for accounting for business combinations. Effective for transactions with closing dates that occur on or after December 15 (2009 for companies with a calendar year-end), Statement 141R will impact how businesses evaluate, negotiate and structure potential deals.

It is important to note that this statement applies to all business entities, including mutual entities that previously used the pooling-of-interests method of accounting for some business combinations. However, it does not apply to combinations between nonprofit organizations or the acquisition of a for-profit business by a nonprofit organization.

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