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Your assignment is to prepare and submit a paper on applying the acquisition method joint project of the iasb and fasb.
Your assignment is to prepare and submit a paper on applying the acquisition method joint project of the iasb and fasb. The primary objective of the project is to create a standard of accounting for business combinations that can be used for both domestic and global financial reporting. The goal is to establish a standard that encompasses a common set of principles and guidance that yields information useful for decision-making. Furthermore, the Boards believe a standard should improve the usability of financial information in regard to business combinations by explaining which assets and liabilities are to be recognized, by requiring that the assets obtained and the liabilities taken on are measured consistently and relevantly, and by ensuring that like events are comparably accounted for via a clearly defined scope of the standard.
The Boards also made an assertion regarding the responsibilities of an acquirer once control of an acquiree is obtained. In addition, the recognition principle, fair value measurement principle, and disclosure principle were confirmed as the main principles for applying the acquisition method.
b. This issue affects acquirers involved in a business combination, both domestic and global, where assets are acquired and liabilities are assumed that must be recognized and measured. These assets/liabilities may include but are not limited to goodwill, intangible assets, operating leases, assets held for sale, and/or employee benefit obligations. Joint ventures, however, will be excluded from the scope of the final Statements on business combinations.
A potential bias may exist due to the fact that only those assets acquired or liabilities assumed that make up the acquiree should be accounted for under the acquisition method. All other transactions are to be accounted for in accordance with other IFRS/US GAAP standards. These include those that were arranged by or on behalf of the acquirer or the combined entity. Factors such as the reasons for the event, the initiator of the event, and the timing of the event must be taken into consideration to determine whether a transaction was initiated for the benefit of the acquirer/combined entity or the acquiree and its former owners. The bias exists because depending on which method is beneficial to the acquirer may determine how these factors are viewed.