New M&A accounting rules not widely understood.

• Author: Heffes, Ellen M.
• Position: Financial Reporting - Brief Article

A majority of senior financial executives -- 64 percent of survey respondents -- said that their transaction teams need more guidance on the implications of the new accounting guidelines released by the FASB in June. KPMG LLP polled 121 senior executives across a broad industry base at a firm-sponsored "Accounting Update Briefing" in New York City.

The two Statements of Financial Accounting Standards (SEAS 141 and 142) significantly revamp how companies account for mergers and acquisitions. Statement 141 requires all business combinations initiated after June 30 to be accounted for using the purchase method of accounting; Statement 142 replaces the requirement to amortize intangible assets with indefinite lives and goodwill with a requirement for a goodwill impairment test.

"We have always expected companies to continue to merge and acquire, regardless of the accounting principles, when the deal is the right one for stakeholders," said Brian Heckler, partner in charge of Transaction Structuring Services for KPMG. Also, 82 percent of the respondents...