Global convergence: Two steps forward, but in what direction?

This month’s installment in our ongoing Millennium Series is two different takes on the recently finalized (and long awaited) SFASs 141, Business Combinations, and 142, Intangible Assets: Accounting for Goodwill.

In “Goodwill Convergence” (page 18), Robert Waxman analyzes the similarities and differences between the new U.S. standards and their U.K. and international (IASB) counterparts. FASB’s solution to the problem of accounting for goodwill and other intangibles moves U.S. standards further away from its stated goal of global convergence.

In “Users’ Comments on SFASs 141 and 142 on Business Combinations and Goodwill” (page 26), Eric Lewis, Jeffrey Lippitt, and Nicholas Mastracchio analyzed the comment letters on the statements’ exposure drafts. The comments reveal financial statement users’ concerns, and the final statements imply that FASB, in many but not all cases, listened to users and responded to their priorities. It has long been difficult for standards setters to get a solid grasp on goodwill; on the whole, the recent statements represent a shot in the dark—but only time will tell how well it’s hit its mark.

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