The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was:
A)The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the purchase method of accounting for the combination.
B)The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the pooling method of accounting for the combination.
C)The unrealistic balance sheet assets that would be created if firms were required to use the purchase method of accounting for the combination.
D)The unrealistic balance sheet assets that would be created if firms were required to use the pooling method of accounting for the combination.

Question

Quizplus · Accepted Answer

The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was the negative effects on subsequent earnings of amortizing goodwill if firms were required to use the purchase method of accounting for the combination. This was a contentious issue as it was argued that the immediate recognition of goodwill under the purchase method would lead to lower reported earnings in subsequent periods due to the need to amortize goodwill. Many argued that this would make firms less attractive to investors, impacting share prices and the overall health of the economy.

The Most Political Issue in the FASB's Most Recent Deliberations