WASHINGTON -- The Financial Accounting Standards Board forged ahead with its plan to eliminate pooling-of-interests accounting for mergers in favor of purchase accounting.
At a meeting Tuesday, the board confirmed it will require goodwill to be initially measured as the difference between the fair-value cost of the company purchased and the fair value of the net assets acquired.
FASB said it will distinguish between certain intangible assets and goodwill for accounting purposes. All unmeasurable intangible assets will be included in the amount recorded as goodwill. To qualify as a measurable intangible asset, it must be eligible for sale, transfer, or exchange.
In coming weeks the board will decide whether goodwill should be amortized. On May 31, Goldman Sachs and Morgan Stanley Dean Witter will make presentations to the board on various ways to account for goodwill.
Despite industry and congressional criticism, the FASB is expected to release a final rule eliminating pooling-of-interests accounting by yearend.
