Accounting Rule, FASB 142

Paper Summary:

This paper takes a look at FASB 142 and the impact it has had on companies. According to the paper, companies are now required to test goodwill yearly for impairment along with other specific guidance (provided by FASB) on the testing process for impairment. The paper goes on to discusses the overall benefits of the implementation of FASB 142.

From the Paper:

"When investors see companies such as JDS Uniphase declare a $51 billion dollar loss, its perception of such losses can lead to a state of no-confidence in the financial markets overall. Many savvy investors knew enough to not use goodwill as any part of the analysis when considering whether to invest in certain companies (or not), but there are plenty of investors that are not savvy. These individuals may see the resulting changes in net income for companies such as AOL as signals to buy, instead of what the signs really are, which are signals to sell. Many analysts believe the same way and have been attempting for years to get the FASB to set higher standards, while demeaning companies attempts at obscuring the true costs of their acquisitions."

Sample of Sources Used:

• FASB 142, (2001), http://www.fasb.org/st/summary/stsum142.shtml, accessed May 31, 2006
• Galarza, Pablo (2001) The Goodwill Games, Money, Vol. 30, Issue 13, pg. 61
• Goodwill Impairment, (2006), http://www.appraisaleconomics.com/goodwill_imp.html, accessed May 31, 2006
• Krantz, Matt, (2003) Accounting Rule Targets Goodwill, USA Today, 02/06/2003
• Mueller, Jennifer M. (2004) Amortization of Certain Intangible Assets, http://www.aicpa.org/PUBS/jofa/dec2004/mueller.htm, accessed June 1, 2006

More papers on Accounting Rule, FASB 142:

• Essay # 35027 : "Accounting Standards"
• Analytical Essay # 122739 : "GASB and FASB: A Comparison"
• Persuasive Essay # 102359 : "Accounting for Intangible Assets: IAS 38"

APA Citation:

MLA Citation: