FAS 141R: Valuing Contingent Assets and Liabilities

Description

First, FAS 141R revamped FASB's standards for valuing contingent assets and liabilities obtained through a merger, acquisition or combination. Then FASB rewrote some of that guidance when it issued FAS 141R-1 in April, directing that both take effect for post-Dec. 15, 2008 combinations.

Changes in FAS 141R and FAS 141R-1 as a whole offer relief to companies with newly acquired assets and liabilities that may or may not be recognized due to economic uncertainties. However, businesses and advisors have found it confusing to sort through the reporting changes and still react quickly.

Those changes include an altered recognition date for some assets, revisions to the standard for when to recognize assets and liabilities, and new disclosure requirements that depend on the recognition date. But, how do the two FAS documents work together, and how did the second alter the first?

Listen as our panel of experienced valuation professionals explains the recent changes to combination accounting standards and how financial reporting and compliance practices should shift as a result.

Outline

1. FAS 141R-1 revisions to merger and acquisition accounting
   1. Definition of contingent assets and liabilities
   2. Determining the recognition date for contingencies
   3. Valuation of recognized contingencies at fair value
   4. Valuation of unrecognized contingencies under FAS 5
2. Disclosure requirements for contingencies with known and unknown recognition dates
   1. “Nature of contingencies” disclosures
   2. FAS 5 disclosures
   3. Disclosures eliminated under the revisions
3. FAS 141R and FAS 160 considerations
   1. FAS 141R
      1. Definition of a business provisions
      2. Coping with same-period disclosures
      3. In-process R&D capitalization
      4. Expensing acquisition costs
   2. FAS 160

Benefits

The panel will offer best practices for following FASB's valuation standards for mergers and acquisitions, addressing key topics such as:

• Determining the appropriate recognition date for contingent assets and liabilities.
• Following the appropriate valuation model, once the recognition date is determined.
• Accurately completing the disclosures required for recognized contingencies.
• Profiting from lessons learned from FAS 141R and FAS 160 in the first months of their effectiveness.

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