NEWS RELEASE 02/13/01
FASB Issues Limited Exposure Draft on Accounting for Goodwill in Connection with Proposal on Business Combinations
Norwalk, CT, February 13, 2001—The Financial Accounting Standards Board (FASB) will issue on February 14 a revised limited Exposure Draft of its 1999 proposed Statement, Business Combinations and Intangible Assets. The revised limited Exposure Draft contains the FASB's tentative decisions reached in December 2000, requiring use of a nonamortization approach to account for purchased goodwill. Under that approach, goodwill would not be amortized to earnings, as originally proposed. Instead, it would be reviewed for impairment, that is, written down and expensed against earnings only in the periods in which the recorded value of goodwill exceeded its fair value.
The revised limited Exposure Draft will be accessible from the FASB Web site at www.fasb.org. The 30-day comment period will conclude on March 16, 2001, at which time all comments must be received by the FASB.
The FASB will not issue a final Statement on business combinations and intangible assets until it has addressed issues raised in the revised limited Exposure Draft and has reviewed the entire set of tentative decisions reached during redeliberations. The Board expects to issue its final Statement by the end of June 2001.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely heavily on credible, transparent, and comparable financial information. For more information about the FASB, visit our Web site at www.fasb.org.