Push-down accounting: FAS 200?

Article Abstract:

Push-down accounting is a relatively new accounting technique used in such transactions as secondary public offerings, mergers, and tender offers leading to purchases. Users revalue assets and liabilities to fair market value, and recognize goodwill. Although government organizations such as the SEC and the Federal Home Loan Bank Board have set precedents for the application of push-down accounting, the private sector has yet to adopt a stance or a standard on the technique. Major arguments for and against push-down accounting are reviewed, and Financial Accounting Standard 200, a proposal that would maximize the aggregate utility of its potential users, is described and illustrated.

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The bottom line

Article Abstract:

A former member of the Financial Accounting Standards Board (FASB) offers his suggestions as to how the FASB could be improved. Among the suggestions discussed are: (1) prepare more technical bulletins and fewer statements of standards, (2) decide whether current cost accounting or historical cost accounting is the preferable method to use, and (3) require the preparation of cost-benefit statements related to each FASB project. The last suggestion is perhaps the most obvious, since it effectively states that changes should be encouraged only when such changes improve the status quo.

Methods, Managerial accounting

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