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Valuation Under SFAS 141R - Term Paper Example

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Author : marjorierosenba

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Valuation under SFAR 141 Name: Institution: Instructor: Subject: Date: Valuation under SFAR 141 and its impacts on the acquiring firm’s books Any valuation under the section SFAR 141 is an evaluation of the fair value of assets and any liabilities which are forth acquired during a business combination…

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Valuation Under SFAS 141R

Any goodwill forthcoming from the merger or acquisition is examined and appraised under SFAR 142, in regards to its fair value. The whole context was aimed at adding more items to what constitutes a business when the acquisition or a merger is undertaken. The acquisition method is still followed as before, but more items are included here as well as different ways of ascertaining the fair value of assets and liabilities, which are acquired. The SFAR 141 principle of measuring goodwill requires the full goodwill approach reporting by the acquiring firm. This is explained as full measure i.e. 100% of both identifiable assets and liabilities and any non-controlling interest in the acquired firm, to be reported by the acquiring firm. Inadvertently, goodwill still stands as the salvage of the fair value of the business consideration exchange during the acquisition or merger, over the fair value of the assets acquired and liabilities undertaken. Goodwill is thus spread over both the controlling and non-controlling interests by the acquiring firm in the new rule. The rules under the new section of SFAR 141 require that companies should report retrospectively. This means that the acquiring company has to recast prior business periods to reflect the correct valuations in their books. ...
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