U.S. Accounting and SEC Technical Services Group.

• Author: Marshall, Jeff
• Position: Brief Article

One issue the accounting board is reexamining is the critical one of goodwill, says Jim Harrington, PricewaterhouseCoopers' leader of the U.S. Accounting and SEC Technical Services Group and a member of FASB's Consolidations Task Force. The board is looking at various alternatives to goodwill and the current amortization schedule, with the thinking that if it goodwill amortization were allowed, that instead of the current 40 years, the schedule would not exceed 20 years. Another alternative would be to abolish goodwill and substitute a model to test assets for impairment.

One problem that the FASB has been wrestling with, Harrington says, is that the current pooling methodology has blurred the distinction between historic and current costs. "When you go through a purchase, what you do is record all of the assets and liabilities at fair value. You're stepping all of them up," he says -- even though the rest of the acquiring entity's assets and liabilities are recorded at historic cost. If all pooling transactions required use of historic costs, comparability would be far...