US

FASB’s New Accounting Rules: A Recipe for Profitable Business Combinations

Douglas P. Faucette. Aaron M. Kaslow. Muldoon Murphy & Faucette LLP. dfaucette@mmf-law.com. akaslow@mmf-law.com. (Assisted by Corey D. O’Brien)

After years of heated debate, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets, which eliminate the pooling-of-interest method of accounting for business combinations and the amortization of goodwill. For some U.S. companies, FASB’s action signals a new era in structuring business combinations in the United States. For other U.S. companies, the new accounting rules signal increased competition for attractive acquisition targets. These new rules have - created perhaps only temporarily - an accounting advantage for U.S. companies over their foreign counterparts.