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The Scope and Content of FAS 142

Mark Sever, Chair of the Accounting Standards Executive Board and Jan Hauser, Chair of the Business Combinations Task Force expressed their concerns and their disapproval over what would become SFAS 142 in response to a solicitation of comments by the Financial Accounting Standards Board to the Exposure Draft of the proposed accounting change. Sever and Hauser (2001) commented that:

"Goodwill is an asset that results from the allocation of purchase price and declines in value over time. Accounting and financial reporting should recognize that diminution in value through amortization. If an entity is able to maintain the value of acquired goodwill, it is because the acquired goodwill is being replaced with internally generated goodwill or other unrecognized intangible assets. We therefore support a model that reflects the decline in value of acquired goodwill without consideration of internally generated goodwill or other unrecognized intangibles. We acknowledge that a systematic method of amortizing goodwill may not be entirely representative of the actual decline in the economic value of acquired goodwill but consider the result to be an appropriate balance between conceptual soundness and operationality at an acceptable cost." (AICPA, 2001, Online)

The Financial Accounting Standards Board (2002) summarizes the purpose of Statement 142 as follows:

"This Statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements."

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The Scope and Content of FAS 142. (1969, December 31). In Retrieved 11:26, August 20, 2017, from
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