Sign In

Accounting for business combinatio

1. What key financial ratios will be affected by the adoption of FAS 141R and FAS 160? What will be the likely effect? The key financial ratios which will be affected by the adoption of FAS 141R and FAS 160 include debt to asset debt to equity ratios as well as return on equity (Marianne 2010). Adoption of FAS 141R and FAS 160 will consequently reduce debt to asset and debt to equity ratios (Cadman et al 2014). This is because regrouping of non-controlling interests on assets will lead to an increase in equity. As a result return on equity will be reduced as equity is increased and return on equity is obtained by dividing net income by the average of shareholder’s equity (Cadman et al 2014). 2. Could any of the recent and forthcoming changes affect the company’s acquisition strategies and potentially its growth? The current changes also goodwill in U.S. GAAP in the event of acquisition as it makes use of a fair value of the net assets. In IFRS goodwill is only given to the controlling interests (Marianne 2010). In conducting impairment test of goodwill two-step approach is employed in U.S. GAAP whereas IFRS makes use of one step approach (Marianne 2010). References Aghimien P. Asiri A. A. & Yamani A. G. (2014). ACCOUNTING FOR BUSINESS COMBINATIONS: APPLICATION OF RULES FROM IFRS SAUDI ARABIA AND USA. International Journal of Business Accounting & Finance  8(1). Cadman B. Carrizosa R. & Faurel L. (2014). Economic determinants and information environment effects of earnouts: New insights from SFAS 141 (R). Journal of Accounting Research  52(1) 37-74. Marianne J. L. (2010). Accounting for business combinations and the convergence of International Financial Reporting Standards with U.S. Generally Accepted Accounting Principles: A case study. Journal of the International Academy for Case Studies 16(1) 95-108.
[…]
Unit VII Case Study
To read the case study below, you must first log into the myCSU Student Portal and access the Business Source
Complete database found in the CSU Online Library.
Read the case study indicated below, and answer the following questions:
Marianne, J. L. (2010). Accounting for business combinations and the convergence of International Financial Reporting Standards with U.S. Generally Accepted Accounting Principles: A case study. Journal of the International Academy for Case Studies, 16(1), 95-108.
1. What key financial ratios will be affected by the adoption of FAS 141R and FAS 160? What will be the likely effect?
2. Could any of the recent and forthcoming changes affect the company’s acquisition strategies and potentially its growth?
3. What were FASB’s primary reasons for issuing FAS 141R and FAS 160?
4. What are qualifying SPEs? Do they exist under IFRS? What is the effect of FAS 166 eliminating the concept of qualifying SPEs on the convergence of accounting standards?
5. If the company adopts IFRS, what changes should management be aware of?
6. What are the principle differences between IFRS and U.S. GAAP?
Your submission should be a minimum of three pages in length in APA style; however, a title page, a running head, and an abstract are not required. Be sure to cite and reference all quoted or paraphrased material appropriately in APA style.
Information about accessing the grading rubric for this assignment is provided below

Looking for this or a Similar Assignment? Click below to Place your Order Instantly!

%d bloggers like this: