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Economic Consequences and Loss Contingency

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If you should look at FAS No. 142: Goodwill and Other Intangible Assets, represents a significant expansion of business valuation into the financial reporting framework. It is currently implemented in conjunction with FAS No. 141: Business Combinations. Finance and accounting professionals in reporting and non-reporting companies that adopt SFAF No. 142 must understand many of the principles, methods, and techniques of business valuation.

REQUIRED:
(1) What are the points of examination of how the economic consequences have influenced the shaping of SFAS No. 141 and 142.
(2) What are the points of examination of how the two basic requirements for accrual of a loss contingency relate to the concepts of periodicity, measurement, objectivity, and relevance hide problem

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This solution discusses economic consequences and requirements for loss contingency.

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Financial/Accounting

If you should look at FAS No. 142: Goodwill and Other Intangible Assets, represents a significant expansion of business valuation into the financial reporting framework. It is currently implemented in conjunction with FAS No. 141: Business Combinations. Finance and accounting professionals in reporting and non-reporting companies that adopt SFAF No. 142 must understand many of the principles, methods, and techniques of business valuation.

(1). What are the points of examination of how the economic consequences have influenced the shaping of SFAS No. 141 and 142.

Economic consequences have influenced the shaping of SFAS No. 141 and 142 in several ways, particularly for merger and acquisitions. With the release of SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, the FASB attempted to improve the transparency of accounting and reporting of business combinations. According to CPEasy, "Under SFAS 141, all business entities or combinations must now be accounted for using the purchase method, based on the values of the assets exchanged. Under SFAS 142, goodwill and indefinite-lived intangibles are no longer amortized. Additionally, ...

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