NORWALK, Conn. - The Financial Accounting Standards Board said on Tuesday that it is ready to begin testing a plan that would take some of the sting out of its proposed ban on pooling-of-interest accounting for mergers and acquisitions.
The accounting group has made clear that it wants to put an end to the practice of accounting for acquisitions by simply combining the assets of the firms involved. The board originally wanted merger accounting to recognize the difference between the book value of an acquisition and the price paid for it - known as "goodwill" - and depreciate that amount regularly over time. In a conference with representatives of the American Bankers Association, the accounting group said it will examine the feasibility of a compromise floated last spring by banks and other financial services firms: that goodwill should be booked as an asset, but tested periodically to see if it has declined in value. A fall in value would require a corresponding writedown of the company's assets.