The review, conducted by the FASB's parent organization, the Financial Accounting Foundation (FAF), examined FASB Statement No. 141 (revised 2007), Business Combinations (Statement 141(R)) (codified in Accounting Standards Codification Topic 805, Business Combinations). The standard requires an acquiring organization to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired organization at the acquisition date, measured at their fair values as of that date, with limited exceptions. Statement 141(R) is largely converged with IFRS 3 (revised 2007), Business Combinations. The International Accounting Standards Board (IASB) has initiated a review of IFRS 3.
In its response, the FASB acknowledged the PIR findings that some participants expressed difficulty in (1) applying the definition of a business, (2) accounting for purchased loans, and (3) separately reporting some intangibles and goodwill. The board said it will consider the PIR report's findings in relation to other projects that are currently underway.
The FASB also acknowledged the PIR findings related to the cost and complexity of applying the fair value measurement guidance in FASB Statement No. 157, Fair Value Measurements, to certain types of assets and liabilities acquired in a business combination. The FASB said it would review the findings of the forthcoming PIR on Statement 157 and will coordinate with the IASB once the review of IFRS 3 is complete, before deciding whether to undertake any standard-setting action. The FASB will report back to the FAF's Oversight Committee and the Board of Trustees as progress is made.
The FASB's full response to the Statement 141(R) PIR report is available on the FASB website. More information on the FAF's PIR process can be found on the FAF website.