合并财务报表.doc

Consolidated Financial Statements Michael Davis and James Alargay IIIThe procedural aspects of consolidated financial statements have gone practically unchanged for almost 50 years, with the exception of accounting changes related to goodwill and the pooling-of-interests method. The well-accepted methodology behind consolidated entities will change dramatically when new FASB standards become effective for periods beginning on or after December 15, 2008. The resulting consolidated statements may look much the same, but the behind-the-scenes mechanics and processes will be significantly different. Some reported amountsand their interpretationwill diverge from their traditional meanings.CPAs and financial executives should prepare themselves for major changes in preparing consolidated financial statements. What finally emerged from FASBs red deliberation is complex, so an overview of the concepts can help professionals quickly digest the changes in the final standards.New Standards Based on Two Exposure DraftThe new Statements of Financial Accounting StandardsSFASs 141(R),Business Combinations,and 160,No controlling Interests in Consolidated Financial Statementsemerged in December 2007 from the extensive red deliberation of two FASB exposure drafts (ED) issued in June 2005. As the first major joint project between FASB and the International Accounting Standards Board (IASB), the business combinations project sought to demonstrate that the two standards-setting bodies can work together. Given the extent of the changes, evaluating the success of those endeavors may take time. In this case, International Financial Reporting Standard (IFRS) 3 (revised in 2007), which is the IASBs companion statement on business combinations, reflects most of the changes in SFAS 141(R). In a nutshell, the purchase method, now to be known as the acquisitionmethod, has been further modified such that, in many mergers, it will no longer rely on historical costs. Combinations involving either an acquisition of less than 100%, or control that is achieved in steps, will see traditional cost-based purchase accounting replaced by estimates of the acquired companys fair value. The estimated fair value of contingent consideration agreements becomes part of the consideration that is recordedat the acquisition date, with subsequent changes in its fair valuereported in current earnings, not as purchase-price adjustments. Additional contingent assets and liabilities will likely be recognized, and acquired in-process research and development (R&D)will no longer be expensedas if it was internally developed R&D, but instead it will be capitalized and initially subjected to periodic impairment testing.The major changes incorporated in SFASs 141(R) and 160 can be divided into six categories, which also include some lesser changes. When appropriate, excerpts from respondent comments to the EDs are provided below.Broader Definition of a BusinessSFAS 141(R)s broader definition of a business brings mutual entities within its scope for the first time, according to the definitions in para. 3. This means that mutual entities can no longer use pooling-of-interests accounting when they merge. This seemingly innocuous change elicited a majority of negative responses arguing that combinations of mutual entities are true mergersnot acquisitionswith no consideration exchanged. One respondent to the ED noted: “With no consideration in a transaction, it is not practical to determine an accurate fair value of the acquired company to the acquirer. We are concerned the results may be misleading primarily because they do not reflect the combinations true economics.”Acquisitions Recorded at Full Fair Value“Full fair value,” now referred to as the measurement principle, is the most controversial issue in the joint FASB-IASB business combinations project. Any “partial” controlling acquisition (less than 100%) will be reported not at the price paid, but at the acquirers estimated full fair value for the company as a whole. For example, an $8 billion acquisition of 80% of a company could be reported at $9.5 billion if that is the entitys estimated fair value. Not only are all identifiable assets and liabilities consolidated at their full fair values, SFAS 141(R) bases goodwill on the excess of the total entitys fair value over the fair value of the identifiable net assets. FASB board member Leslie Seidmans wide-ranging dissent to SFASs 141(R) and 160 cites her objection to attributing goodwill to the minority, or no controlling, interest.Thus, the no controlling interest will also be reported at its full fair value upon acquisition. FASB is adopting the entity, or economic-unit, theory of consolidations, and discarding the parent theory, with its long history of focusing on the cost of the ownership percentage purchased.Consequences of the full-fair-value approach. Most respondents to the ED agreed with recording identifiable assets and liabilities at fair value, but not goodwill; unlike identifiable assets, goodwill cannot be measured directly. In addition, the acquirers total fair value cannot be reliably measured when less than 100% is purchased and a “control premium” exists.Although SFAS 141(R) promotes more comprehensive and consistent accounting across firms, Exhibit 2shows how financial ratios that use the new financial statement data are not comparable to previous measures, and they will likely be less reliable due to the concerns about estimation noted earlier. Consistent with the full-fair-value approach to valuation, SFAS 160 redefines “consolidated net income” as “group income” under current GAAP, before any subtraction for minority interest. Comparing the redefined consolidated net income with current GAAPs “controlling interests share of the group income” should be done with care.Respondents comments and other issues.Respondents generally opposed the proposal to record the fair value of contingent consideration liabilities at the acquisition date, and to record subsequent changes in their fair value in earnings. One practical reason for the opposition appeared in FASBs “Comment Letter Summary”:Contingent consideration cannot be measured reliably at the acquisition date. Contingent consideration occurs because the buyer and seller are not able to agree upon the fair value of the acquirer; therefore, reliably estimating the fair value of the contingent consideration is by definition impossible emphasis added.Another reason for the opposition alludes to the possibility of manipulation; respondents views were summarized as follows:The proposal might motivate acquirers to overestimate the acquisition-date fair value of contingent consideration so that the reversal of those liabilities results in income in future periods.One hopes that such manipulation using so-called cookie-jar reserves will not proliferate. However, recent high-profile company financial reporting frauds suggest that such manipulation will compound the practical measurement concerns that make the reliability of contingent consideration estimates inherently suspect. Two other aspects of SFAS 141(R) that bear on the full-fair-value approach to business combinations are as follows: Acquisition-date (or pre-acquisition) contingencies have been recognized at fair value for some time, generally in accordance with the “probable” test in SFAS 5,Accounting for Contingencies. SFAS 141 (R), however, requires recognition of all contractual rights and obligations, and of no contractual contingencies that more likely than not meet the definition of an asset or liability under FASB Concepts Statement 6. Contingencies not recognized at acquisition will be accounted for under other applicable GAAP, such as SFAS 5. Thus, many more pre-acquisition contingent liabilities and assets will be recognized up front, primarily because “more likely than not” creates a lower recognition threshold than “probable.” Planned post-acquisition restructuring costs must be expensed, rather than added to the cost of the investment or considered in the carrying amounts assigned to identifiable assets and liabilities.Step AcquisitionsTwo facets of this issue stand out. First, when obtaining control in a series of purchases or steps, SFAS 141(R) requires restating all previous purchases to fair value as of the date control is achieved, and reporting any gain or loss in income. This approach sharply contrasts with the current “cost accumulation” or “purchase method” that accounts for each purchase separately: Different prices paid for several blocks of stock acquired result in reporting portions of the identifiable net assets at different fair values, and produce layers of goodwill.To illustrate SFAS 141(R)s accounting, suppose the acquirer carries its 40% share of the targets stock at $120 million. When it obtains control by purchasing another 20% for $75 million, the acquirer revalues the previous 40% to $150 million and reports a $30 million gain in income. Thus, the entire 60% position will be carried at $225 million, compared with $195 million under current GAAP. Most respondents to the exposure draft agreed with 141(R)s approach but favored reporting any gain or loss in other comprehensive income, because of its similarity to unrealized gains or losses on available-for-sale securities.Second, when changes in ownership interests occur after control is obtained, perhaps by increasing ownership from 60% to 70% by purchase in the open market or decreasing ownership from 70% to 60% by sale in the open market, the difference between the amount paid (or received) and the carrying value of that ownership interest is reflected in additional paid-in capital. Such transactions will now effectively be treated as treasury stock transactions. Current GAAP records increases in ownership using the purchase method approach described here. SFAS 160 augments the straight purchase approach by comparing the price paid with the carrying value of the no controlling interest acquired, and recording any gain or loss in additional paid-in capital.Exhibit 3illustrates the differences. BDO Seidman captured the majority view in its comment letter:This particular part of the proposal is the most troublesome to us, because it fails to hold management accountable for the costs incurred in acquiring a business and requires part of the cost, as well as part of the gain or loss on disposal, to permanently bypass the income statement.Expensing Acquisition CostsSFAS 141(R) requires the expensing of all acquisition costs, contrary to longstanding practice and, as noted by most respondents to the ED, contrary to the treatment of transaction costs in other settings. For example, just as companies capitalize transportation or installation costs for new equipment, respondents argued that acquisition transaction costs are an integral part of the purchase price. Because, in the words of one respondent: “Every acquirer considers transaction costs in determining what they are willing to pay for an acquirer; they form part of the consideration transferred and part of the fair value of the acquirer.” (Unchanged under the new rules is the treatment of costs of registering and issuing equity and debt securities in the business combination.)Capitalization of Purchased In-Process R&DIn a major departure from the old SFAS 141 issued in 2001, which followed SFAS 2 and FASB Interpretation (FIN) 4 rules that require the expensing of all R&D expenditures, SFAS 141(R) requires capitalizing purchased in-process R&D (IPRD) as an indefinite-life intangible asset until completion or abandonment, although subsequent expenditures will be expensed. The new rules specify that IPRD be neither immediately written off nor amortized, but instead be subject to annual impairment testing, similar to the treatment of goodwill.The support for capitalizing is fairly straightforwardthe acquirer pays to obtain some amount of future benefitwhereas the argument against capitalizing centers on the inability to reliably measure IPRD or the benefit period. Unlike its internally generated counterpart, though, an external purchase price lies behind the capitalization of purchased IPRD. Even so, some argue that IPRD does not meet the definition of an asset when its low likelihood of success fails to signal probable future economic benefits.Significance of the ChangesThe changes discussed above are significant, represent major departures from longstanding practice, and were the result of a lengthy red deliberation process. Because this is FASBs first truly joint project with the IASBand “final standards” were in process for a long time due to coordinating with the IASBthe authors believe that these significant changes to business combinations and consolidation methodology signal growing cooperation between the two boards. Given the move toward fair-value accounting, adoption of the economic-unit concept was expected, at least to some degree. Nevertheless, estimating total goodwill in acquisitions of less than 100% may become too problematic no matter how strongly FASB desires to adopt the full economic-unit approach to consolidated statements. But it rejected limiting goodwill to the amount purchased, a partial economic-unit approach. Possibly more contentious, SFAS 141(R)s allowance of special treatment for purchased IPRD without addressing the entire R&D question could create troublesome inconsistencies, especially given the measurement difficulties.Now that the standards have been adopted, CPAs and businesses have several months to prepare for the dramatic changes in accounting for controlled entities. Not only are more fair values entering financial reporting, new inconsistencies are being introduced into the mix, because SFAS 141(R)s treatment of acquisition costs and of purchased in-process R&D represents a break from longstanding GAAP. Reliability issues aside, users will need to carefully adjust their interpretation of financial performance, especially when comparing to prior periods.“Consolidated financial Statements” the CPA journal; February.2008合并财务报表Michael Davis and James Alargay III除了会计变更相关的商誉和权益法，合并财务报表的程序方面已经将近有50年不变。当新会计准则委员会的标准在2008年10月15日前后生效时，在合并实体方法的后面，会看到普遍接受的方法发生戏剧性的变化。由此产生的合并报表看起来是一样的，但幕后的技巧和过程将明显不同。一些报道金额和他们的解释将偏离其传统意义。对于在编制合并财务报表的重大变化，注册会计师和财务主管应该做好准备。最后出现在财务会计标准委员会的红色审议是复杂的，所以这样的概述概念可以帮助专业人士迅速消化最终标准的变化。基于两种征求意见稿的新标准财务会计标准的新准则-财务会计准则第141条，企业合并第160条在没有控股权的合并财务报表-出现在2007年12月来自2005年5月发行的进过广泛讨论的财务会计准则委员会意见征求稿曝光草稿。作为财务会计准则委员会和国际会计准则委员会第一个重大合资项目，企业合并项目将力求证明这两个标准制定机构可以一起工作。对于这种程度的变化，评估这些努力的成功需要一段时间。在这种情况下，国际财务报告标准 (2007年修订)，是国际会计准则委员会合并同伴的共同声明，反映了大部分的变革成果。简而言之，购买法，现在被称为收购法，得到进一步修改。例如，在许多合并中，它将不再依赖于历史成本。合并涉及要么是小于100%雇员的收购，要么是控制实现步骤，我们将看到传统购买会计成本的采购会被收购公司的公允价值所取代。在对价协议中的估计公允价值或将成为部分审议，会在收购日期中记录。随后关于在当前收益报告中它的公允价值变化，不再作为购买价格的调整。额外的或有资产和负债可能会被确认，收购过程以及发展的研究就好像内部开发的研发，将不再计入当期损益，而是将它资本化，定期进行减值测试。纳入重大变化的财务会计准则的第141条和第160条将会分为六类，还包括一些较小的变化，包括在适当的时候，把受访者的意见摘录到目录下面。“企业”更广泛的定义财务会计准则的第141条对于企业有更广泛的定义，根据定义在它的合并范围内首次提到共同实体，这意味着共同实体可以在他们合并时不再使用共享利益法。这个看似无害的变化引起了多数关于共同实体没有考虑交换的合并，真正的合并不收购而不是收购的负面争论。一位被调查者对教育署指出:“由于没有考虑交易，对收购方来说，它不是实际的决定。我们担心结果可能会误导人们的决策，主要是因为他们不能反映真正的经济学。”以完全公允价值入账的收购“完全公允价值”现在被称为测量原理，是财务会计准则委员会和国际会计准则委员会在企业合并项目中最具争议性的问题。任何“部分”控制收购(小于100%)将会被报道没有支付的价格，但在收购方公司却会作为一个整体，充分的考虑其公允价值。例如，如果是实体的估计公允价值，一个80亿美元收购的80%的公司将会报价在95亿美元。不仅是所有的可识别资产和综合负债的公允价值， 财务会计准则的第141条基于商誉总实体的公允价值的差额以及以上的可识别净资产的公允价值。(财务会计准则委员会董事会成员莱斯利塞德曼反对财务会计准则的第141条和第160条。)因此，他在收购时没有控股权的公允价值也将被布。财务会计准则委员凭借持股比例购买成本为重点的悠久历史，采用实体或经济单位的合并理论，通过理论的整合，丢弃母公司理论。完全公允价值的方法的后果大多数受访者对同意教育署按公允价值记录可识别资产和负债，但除了商誉，因为他不像可识别资产，商誉不能直接测量。此外，当少于100%是购买和控制溢价的真实存在，收购方的总公允价值则不能可靠计量。虽然财务会计准则第141条促进不同企业更加全面一致，但是它反应使用新财务报表数据财务比率是比不上之前的措施，他们可能会由于担心不可靠的估计而提前受到关注。符合完全公允价值估值方法，财务会计准则的第160条重新定义“合并净收益”作为“集团收益”，对少数股权提前进行扣除。综合比较，在当前公认会计准则的“控股权益份额占集团收入”重新定义合并净利润应该慎之又慎。受访者的评论和其他问题受访者普遍反对该提案，即收购日记录或有负债的公允价值，并记录他们后续的公允价值变动收益。一个实际的原因出现在反对财务会计准则委员会的“意见函摘要”中：或有事项在收购日期中不能可靠地计量。或有事项的产生因为买方和卖方不能够在公允价值上达成一致。因此，强调通过定义可靠地估计或有事项的公允价值是不可能的。另一个反对的理由是提到暗中操作的可能性，受访者的观点总结如下:这项提议可能会激励收购者高估收购日期或有事项的公允价值，这样在未来的时期这些负债会导致收入的逆转。人们希望这这种使用所谓的Cookie罐子的操作数量不会激增。然而，最近备受瞩目的公司财务报告欺诈行为表明，这样的操作将复合实际测量问题的或有事项的可靠性得到怀疑担忧。财务会计准则的其他两个方面承担对完全公允价值方法的组合如下:1、根据一般可能性测试，收购日已经有一段时间来确认公允价值的突发事件，大体上来说，要求对全部合同的权利和义务有正确的认识，突发事件的任何合同，没有突发情况的可能性不符合财务会计准则委员会对资产或负债的定义。根据其它的会计准则，或有事项不计入收购，参考财务会计准则第5条。因此，许多更有效或有负债和资产将被得到承认，主要是因为“有可能”