The most political issue in the FASB's most recent deliberations and pronouncements 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 pronouncements 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 issue sparked debate and controversy, with some arguing that the use of the purchase method would result in more accurate financial statements, while others argued that the amortization of goodwill would unfairly penalize firms for making acquisitions. Ultimately, the FASB decided to adopt a new standard that eliminates the requirement to amortize goodwill, but instead requires companies to test for impairment annually.

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