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FASB issues new accounting standards for business combinations
Christian Heuer1, Mary Ann K Travers
1Crowe Horwath LLP, Nashville, Tenn, USA. christian.heuer@crowehorwath.com
Summary
Not-for-profit organizations must adopt fair value accounting for mergers and acquisitions, focusing on intangible asset valuation. Noncompliance risks qualified audit reports and financing challenges.
Area of Science:
- Accounting
- Financial Reporting
- Non-profit Sector
Background:
- Accounting Standard Codification Topic 958 governs not-for-profit mergers and acquisitions.
- Entities must transition to fair value accounting, emphasizing intangible asset valuation.
- The standard became effective for calendar-year entities on January 1, 2010.
Purpose of the Study:
- To highlight the requirements of Accounting Standard Codification Topic 958 for not-for-profit entities.
- To emphasize the critical need for fair value accounting and intangible asset valuation.
- To inform organizations about the potential consequences of noncompliance.
Main Methods:
- Analysis of Accounting Standard Codification Topic 958.
- Review of implications for not-for-profit mergers and acquisitions.
- Assessment of financial reporting requirements.
Main Results:
- Transition to fair value accounting is mandatory for not-for-profit mergers and acquisitions.
- Accurate valuation of intangible assets is a key component of compliance.
- Failure to comply can result in qualified audit reports.
Conclusions:
- Not-for-profit entities must prioritize compliance with ASC Topic 958.
- Adherence to fair value accounting standards is crucial for financial health.
- Noncompliance poses significant risks to securing financing.
