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Accounting in Financial Statements of Subsidiaries Acquired by Purchase ISSUE



What level of ownership change in a company should result in a new basis of accounting for that company? How would the new basis of accounting be computed? At what amount would noncontrolling interests be reported? EITF DISCUSSION The Task Force was unable to reach a consensus on this issue. One Task Force member indicated, and others agreed, that current practice with respect to application of a new basis is diverse. Several members stated that this diversity results from lack of authoritative guidance and inconsistent positions taken about the applicability of new basis accounting as expressed in SAB 54 when the situation involves less than 100 percent acquisition of a company or when step acquisitions are involved. The SEC Observer stated that new basis accounting is being required (with 1 exception) only in those situations in which there is both virtually a 100 percent acquisition (for example, 97 percent) and no outstanding publicly held debt or preferred stock. Any inconsistencies in application are unintended and may have resulted because not all registrant filings are examined. Copyright © 2008, Financial Accounting Standards Boar

Year: 1985
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