All change on goodwill, merger and brand accounting?

Article Abstract:

The Accounting Standards Committee (ASC) Exposure Draft (ED) 47, Accounting for Goodwill, changes the UK accounting treatment of purchased goodwill to require goodwill to be capitalized and written off against profit on an annual basis. The ASC's ED 48, Accounting for Acquisitions and Mergers, restricts the use of merger accounting, requiring six tests which must be met to require merger accounting, including: neither party sees itself as acquiror or acquiree; neither party dominates management; and neither party has more than 50% of the others equity. The ASC's Technical Report 780, Accounting for Intangible Fixed Assets, proposes that an intangible fixed asset be recognized in its own right when it satisfies certain terms: historical costs are known or discernible; its characteristics can be distinguished from other assets and goodwill; and its costs can be measured independently of earnings or other assets.

Laws, regulations and rules, Acquisitions and mergers, Brand name products, Brand names, Goodwill (Business), Accounting Standards Committee

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Turning funds into cash

Article Abstract:

The Accounting Standards Board has replaced the SSAP10 funds flow statement with the FRS1 cash flow statement. The SSAP10 was widely considered to be a weak and confusing standard as it conceptualized funds as working capital. Its use in showing working capital movements as links to both profit and loss (p&l) and balance sheet statements made it a lightly-regarded alternative financial statement. The FRS1, on the other hand, adopts cash instead of working capital, and thus achieves a sharper focus on liquidity while improving its clarity as a financial statement. The FRS1 cash flow statement is, as such, considered more likely to achieve equal status with the p&l and balance sheet reports than the SSAP10.

Financial statements, Cash flow

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Probing the foundations

Article Abstract:

The Statement of Standard Accounting Practice 19 (SSAP 19), Accounting for Investment Properties, was recently reviewed by the Institute of Chartered Accountants of Scotland at the request of the Accounting Standards Board (ASB). The working party tasked with reviewing the more than 10-year old standard noted several areas of concern regarding SSAP 19. These include the increasing significance of investment property interests to non-property groups, the ease with which development properties may be made to qualify as investment properties and the danger of including other properties as investment properties. Recommendations offered by the working party to the ASB are discussed.

Evaluation, Real estate investment, Real estate investments, Institute of Chartered Accountants of Scotland

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