Does goodwill accounting matter?
Article Abstract:
A survey of top executives working for companies in The Times 1000 showed that the majority of respondents did not believe that the views of stock analysts would be affected by changes in accounting rules for the treatment of goodwill. A significant minority, however, felt that such changes might influence the opinions of analysts. The survey also showed that the executives' preference for goodwill treatment were not affected by the imposition of' frozen' or 'rolling' restrictions on management compensation contracts and on debt. Furthermore, the survey also revealed that companies with restrictions based on generally accepted accounting procedures had to consider the issue of renegotiation expenditures. Finally, the survey indicated that most executives felt that analysts' opinions would only be influenced by changes in the treatment of goodwill if any added information derived were truly relevant to analysts' concerns.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1996
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Onerous contracts: another view
Article Abstract:
The Accounting Standards Board (ASB) has failed to properly consider certain problems that arise to the accounting of onerous contracts held by a target company involved in an acquisition. These problems include matters such as provisions for the cost of the target company's reorganization and the recognition of onerous contracts as financial liabilities. Accordingly, it may be said that the principles espoused in the ASB's report 'Fair Values in Acquisition Accounting' are not as clear-cut as the ASB initially believed. This report, which is better known as Financial Reporting Standard No. 7, should therefore be referred to the Urgent Issues Task Force for a thorough review of its most objectionable provisions, particularly in relation to the definition of what constitutes an onerous contract and the provisions that cover the treatment of such contracts.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1995
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Problems and more problems
Article Abstract:
Financial Reporting Standard No 13, 'Derivatives and Other Financial Instruments: Disclosures,' appears to be an easily implementable standard but it contains a number of requirements that may complicate compliance. The principal requirements are narrative disclosures regarding accounting policies for financial instruments and a narrative discussion of the role of financial instruments in the creation and management of risks. In addition to these narrative requirements, the standard also mandates numerical disclosures pertaining to interest-rate risk, currency risk, fair values and hedging. Difficulties may emerge from the details of these requirements, particularly in areas regarding numerical disclosures.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1999
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