Business combinations historically have been accounted for as either purchases or poolings of interests. Now, with SFAS 141 (R), the acquisition method is required. Why did FASB change the rules?

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Business

Anya Arroyo

4 May, 16:23

Business combinations historically have been accounted for as either purchases or poolings of interests. Now, with SFAS 141 (R), the acquisition method is required. Why did FASB change the rules?

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London Barr · Answer 1

FASB amended the rules to improve the comparability of the information about business combinations provided in financial reports. A variable interest entity is a legal business.

The Financial Accounting Standards Board issued SFAS 141 (R) in 2007 December, to substitute the SFAS 141. Evaluating the comment letters, articles and industry publications, they analyzed issues that were with SFAS 141 from the perspective of professionals, users and the FASB; it was evaluated 141 (R) to ascertain these weaknesses and they were corrected with solutions been profound in 141 (R).