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Accounting
Jeter Chaney

Introduction to Business
Combinations and the
Conceptual Framework

Prepared by Sheila Ammons, Austin Community College

Learning Objectives
Describe historical trends in types of business
combinations.
Identify the major reasons firms combine.
Identify the factors that managers should consider in
exercising due diligence in business combinations.
Identify defensive tactics used to attempt to block
business combinations.
Distinguish between an asset and a stock acquisition.

2
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Learning Objectives (continued)


Indicate the factors used to determine the price and the method of
payment for a business combination.
Calculate an estimate of the value of goodwill to be included in an
offering price by discounting expected future excess earnings
over some period of years.
Describe the two alternative views of consolidated financial
statements: the economic entity and the parent company concepts.
Discuss the Statements of Financial Accounting Concepts (SFAC).
Describe some of the current joint projects of the FASB and the
International Accounting Standards Board (IASB), and their
primary objectives.
3
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Introduction
On December 4, 2007, FASB released two new standards,
FASB Statement No. 141 R, Business Combinations, and
FASB Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements.
FASB ASC 805, Business Combinations and FASB ASC 810,
Consolidations.
These standards
Became effective for years beginning after December 15, 2008, and
Are intended to improve the relevance, comparability and
transparency of financial information related to business
combinations, and to facilitate the convergence with international
standards.
4
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Nature of the Combination


Business Combination - operations of two or more
companies are brought under common control.
A business combination may be:
Friendly - the boards of directors of the potential
combining companies negotiate mutually
agreeable terms of a proposed combination.
Unfriendly (hostile) - the board of directors of a
company targeted for acquisition resists the
combination.
5
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Nature of the Combination


Defensive Tactics
Poison pill: Issuing stock rights to existing shareholders;
exercisable only in the event of a potential takeover.
Greenmail: Purchasing shares held by the would-be
acquiring company at a price substantially in excess of
fair value.
White knight: Encouraging a third firm, more
acceptable to the target company management, to
acquire or merge with the target company.

LO 4 Defensive tactics are used


6
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Nature of the Combination


Defensive Tactics (continued)
Pac-man defense: Attempting an unfriendly
takeover of the would-be acquiring company.
Selling the crown jewels: Selling valuable assets to
make the firm less attractive to the would-be acquirer.
Leveraged buyouts: Purchasing a controlling
interest in the target firm by its managers and thirdparty investors, who usually incur substantial debt
and subsequently take the firm private.
LO 4 Defensive tactics are used.
7
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Nature of the Combination


Review Question
The defense tactic that involves purchasing shares held by the
would-be acquiring company at a price substantially in excess
of their fair value is called
a. poison pill.
b. pac-man defense.
c. greenmail.
d. white knight.
LO 4 Defensive tactics are used.
8
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Business Combinations: Why? Why


Not?
Advantages of External Expansion
Rapid expansion
Operating synergies
International marketplace
Financial synergy
Diversification
Divestitures

9
LO 2 Reasons firms combine.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Business Combinations: Historical


Perspective
Three distinct periods:
1880 through 1904: Huge holding companies, or
trusts, were created to establish monopoly control
over certain industries (horizontal integration).
1905 through 1930: To bolster the war effort, the
government encouraged business combinations to
obtain greater standardization of materials and parts
and to discourage price competition (vertical
integration).
10
LO 1 Historical trends in types of M&A.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Business Combinations: Historical


Perspective
Three distinct periods (continued)
1945 to the present:
This period started after World War II and has exhibited
rapid growth in merger activity since the mid-1960s.
There was even more rapid growth since the 1980s.
By 1996, the number of yearly mergers completed was
nearly 7,000, giving rise to the term merger mania.
Most agreed that the mania had ending by mid-2002.
By 2006, merger activity was soaring once more.
11
LO 1 Historical trends in types of M&A.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Business Combinations: Historical


Perspective
Three distinct periods (continued):
1945 to the present: Many of the mergers that occurred from the
1950s through the 1970s were conglomerate mergers.
The primary motivation was often to diversify
business
risk.
In contrast, the 1980s were characterized by a relaxation in
antitrust enforcement and by the emergence of high-yield
junk
bonds to finance acquisitions.
Deregulation undoubtedly played a role in the popularity of
combinations in the 1990s.
12
LO 1 Historical trends in types of M&A.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Terminology and Types of


Combinations
What Is Acquired?
Net assets of S Company
(Assets and Liabilities)
Common Stock
of S Company

What Is Given Up?


1. Cash

Illustration 1-3

2. Debt
3. Stock
4. Combination of Above

Asset acquisition, a firm must acquire 100% of the assets of the other
firm.
Stock acquisition, control may be obtained by purchasing 50% or more
of the voting common stock (or possibly less).
13
LO 5 Stock versus asset acquisitions.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Terminology and Types of


Combinations
Possible Advantages of Stock Acquisition
Lower total cost in many cases.
Direct formal negotiations with the acquired firms
management may be avoided.
Maintaining the acquired firm as a separate legal entity.
Liability limited to the assets of the individual corporation.
Greater flexibility in filing individual or consolidated tax
returns.
Regulations pertaining to one of the firms do not
automatically extend to the entire merged entity.
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LO 5 Stock versus asset acquisition.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Terminology and Types of


Combinations
Classification by Method of Acquisition
Statutory Merger
A Company

B Company

A Company

One company acquires all the net assets of another company.


The acquiring company survives, whereas the acquired
company ceases to exist as a separate legal entity.
15
LO 5 Stock versus asset acquisitions.

Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Terminology and Types of


Combinations
Classification by Method of Acquisition

Statutory Consolidation
A Company

B Company

C Company

A new corporation is formed to acquire two or more other


corporations through an exchange of voting stock; the acquired
corporations then cease to exist as separate legal entities.
Stockholders of the acquired companies (A and B) become
stockholders in the new entity (C).
16
LO 5 Stock versus asset acquisitions.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Terminology and Types of


Combinations
Classification by Method of Acquisition
Consolidated Financial Statements
Financial
Statements of A
Company

Financial
Statements of B
Company

Consolidated
Financial
Statements of A
Company and B
Company

When a company acquires a controlling interest in the voting


stock of another company, a parentsubsidiary relationship
results.
17
LO 5 Stock versus asset acquisitions.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Terminology and Types of


Combinations
Review Question
When a new corporation is formed to acquire two or more
other corporations and the acquired corporations cease to
exist as separate legal entities, the result is a statutory
a. acquisition.
b.consolidation.
c. combination.
d.merger
18
LO 5 Stock versus asset acquisitions.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Takeover Premiums
Takeover Premium the excess amount offered, or agreed upon, in
an acquisition over the prior stock price of the acquired firm.
Possible reasons for the premiums:
Acquirers stock prices may be at a level which makes it
attractive to issue stock (rather than cash) in the acquisition.
Credit may be generous for mergers and acquisitions.
Bidders may believe target firm is worth more than its current
market value or has assets not reported on the balance sheet.
Acquirer may believe growth by acquisitions is essential and
competition necessitates a premium.
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LO 5 Stock versus asset acquisitions.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Avoiding the Pitfalls Before the


Deal
Beware of the following factors:
Be cautious in interpreting any percentages.
Do not neglect to include assumed liabilities in the assessment of
the cost of the merger.
Watch out for the impact on earnings of the allocation of expenses
and the effects of production increases, standard cost variances,
LIFO liquidations, and byproduct sales.
Note any nonrecurring items that may have artificially or
temporarily boosted earnings.
Look for recent changes in estimates, accrual levels, and
methods.
Be careful of CEO egos.
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LO 3 Factors to be considered in due diligence.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Avoiding the Pitfalls Before the


Deal
Review Question
When an acquiring company exercises due diligence in
attempting a business combination, it should:
a. be skeptical about accepting the target companys stated
percentages
b.analyze the target company for assumed liabilities as
well as assets
c. look for nonrecurring items such as changes in estimates
d.all the above
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LO 3 Factors to be considered in due diligence.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of Payment in Business Combinations

When a business combination is effected by a stock swap,


or exchange of securities, both price and method of
payment problems arise.
The price is expressed as a stock exchange ratio
(generally defined as the number of shares of the
acquiring company to be exchanged for each share of
the acquired company).
Each constituent makes two kinds of contributions to
the new entitynet assets and future earnings.
22
LO 6 Factors affecting price and method of payment.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of Payment in Business Combinations

Net Asset and Future Earnings Contributions


Determination of an equitable price for each constituent
company requires:
The valuation of each companys
net assets and
expected contribution to the future earnings of the
new entity.

23
LO 6 Factors affecting price and method of payment.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Excess Earnings Approach to Estimate Goodwill
Step 1:Identify a normal rate of return on assets for
firms similar to the company being targeted.
Step 2: Apply the rate of return (step 1) to the net
assets of the target to approximate normal earnings.
Step 3: Estimate the expected future earnings of the
target. Exclude any nonrecurring gains or losses.
Step 4: Subtract the normal earnings (step 2) from the
expected target earnings (step 3). The difference is
excess earnings.
24
LO 6 Factors affecting price and method of payment.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Excess Earnings Approach to Estimate Goodwill (continued)
Step 5: Compute estimated goodwill from excess earnings.
If the excess earnings are expected to last indefinitely, the
present value may be calculated by dividing the excess
earnings by the discount rate.
For finite time periods, compute the present value of an
annuity.
Step 6: Add the estimated goodwill (step 5) to the fair value of
the firms net identifiable assets to arrive at a possible
offering price.
25
LO 6 Factors affecting price and method of payment.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Review Question
A potential offering price for a company is computed by
adding the estimated goodwill to the
a. book value of the companys net assets.
b. book value of the companys identifiable assets.
c. fair value of the companys net assets.
d. fair value of the companys identifiable net assets.

26
LO 6 Factors affecting price and method of payment.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Exercise 1-1: Plantation Homes Company is considering the
acquisition of Condominiums, Inc. early in 2015. To assess the
amount it might be willing to pay, Plantation Homes makes the
following computations and assumptions.
A. Condominiums, Inc. has identifiable assets with a total fair value
of $15,000,000 and liabilities of $8,800,000. The assets include
office equipment with a fair value approximating book value,
buildings with a fair value 30% higher than book value, and land
with a fair value 75% higher than book value. The remaining lives
of the assets are deemed to be approximately equal to those used by
Condominiums, Inc.
27
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Exercise 1-1: (continued)
B. Condominiums, Inc.s pretax incomes for the years 2012 through
2014 were $1,200,000, $1,500,000, and $950,000, respectively.
Plantation Homes believes that an average of these earnings
represents a fair estimate of annual earnings for the indefinite
future. The following are included in pretax earnings:
Depreciation on buildings (each year) 960,000
Depreciation on equipment (each year)
50,000
Extraordinary loss (year 2014) 300,000
Sales commissions (each year) 250,000
C. The normal rate of return on net assets is 15%.
28
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Exercise 1-1: (continued)
Required:
A. Assume further that Plantation Homes feels that it must
earn a 25% return on its investment and that goodwill is
determined by capitalizing excess earnings. Based on
these assumptions, calculate a reasonable offering price
for Condominiums, Inc. Indicate how much of the price
consists of goodwill. Ignore tax effects.
29
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Exercise 1-1: (Part A)

Excess Earnings Approach

Step 1 Identify a normal rate of return on assets for firms


similar to the company being targeted.

15%

Step 2 Apply the rate of return (step 1) to the net assets of the target to
approximate normal earnings.
Fair value of assets
$15,000,000
Fair value of liabilities
8,800,000
Fair value of net assets
30
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Step 3 Estimate the expected future earnings of the target. Exclude any
nonrecurring gains or losses.

31
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Step 4 Subtract the normal earnings (step 2) from the expected target
earnings (step 3). The difference is excess earnings.

Expected target earnings


$1,028,667
Less: Normal earnings
930,000
Excess earnings, per year
$ 98,667
32
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Step 5

Compute estimated goodwill from excess earnings.

Present value of excess earnings (perpetuity) at 25%:


Excess earnings

$ 98,667
25%

$394,668

Estimated
Goodwill

Step 6 Add the estimated goodwill (step 5) to the fair value of the firms
net identifiable assets to arrive at a possible offering price.
Net assets
$6,200,000
Estimated goodwill
33
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Exercise 1-1 (continued)
Required:
B. Assume that Plantation Homes feels that it must earn a
15% return on its investment, but that average excess
earnings are to be capitalized for three years only. Based
on these assumptions, calculate a reasonable offering price
for Condominiums, Inc. Indicate how much of the price
consists of goodwill. Ignore tax effects.
34
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Determining Price and Method of


Payment
Part B
Excess earnings of target (same a Part A)
PV factor (ordinary annuity, 3 years, 15%)
Estimated goodwill

$
x

2.28323
$

Fair value of net assets


Implied offering price

98,667
225,279
6,200,000

$ 6,425,279

The types of securities to be issued by the new entity in exchange for those of
the combining companies must be determined. Ultimately, the exchange ratio
is determined by the bargaining ability of the individual parties to the
combination.
35
LO 7 Estimating goodwill.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Alternative Concepts of Consolidated Financial Statements


Parent Company Concept - Primary purpose of consolidated
financial statements is to provide information relevant to the
controlling stockholders. Emphasis is placed on the needs of the
controlling stockholders.
The noncontrolling interest is presented as a liability or as a
separate component before stockholders equity.
Economic Entity Concept - Affiliated companies are a separate,
identifiable economic entity. Both controlling and noncontrolling
stockholders contribute to the economic units capital.
The noncontrolling interest presented as a component of
stockholders equity.
36
LO 8 Economic entity and parent company concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Alternative Concepts
Consolidated Net Income
Parent Company Concept: Consolidated net income
consists of the realized combined income of the parent
company and its subsidiaries after deducting the
noncontrolling interest in income (noncontrolling interest in
income is an expense item).
Economic Entity Concept: Consolidated net income
consists of the total realized combined income of the parent
company and its subsidiaries. Total combined income is then
allocated proportionately to the noncontrolling interest and
the controlling interest.
37
LO 8 Economic entity and parent company concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Alternative Concepts
Consolidated Balance Sheet Values
Parent Company Concept: The net assets of the
subsidiary are included in the consolidated financial
statements at their book value plus the parent companys
share of the difference between fair value and book value
on the date of acquisition.
Economic Entity Concept: On the date of acquisition, the
net assets of the subsidiary are included in the consolidated
financial statements at their book value plus the entire
difference between their fair value and their book value.
38
LO 8 Economic entity and parent company concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Alternative Concepts
Review Question
According to the economic unit concept, the primary
purpose of consolidated financial statements is to provide
information that is relevant to
a. majority stockholders.
b.minority stockholders.
c. creditors.
d.both majority and minority stockholders.
39
LO 8 Economic entity and parent company concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Alternative Concepts
Intercompany Profit
Two alternative points of view:
Total (100%) elimination.
Partial elimination.
Under total elimination, the entire amount of
unconfirmed intercompany profit is eliminated from
combined income and the related asset balance.
Under partial elimination, only the parent companys
share of the unconfirmed intercompany profit is
eliminated.
40
LO 8 Economic entity and parent company concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

Conceptual Framework
Illustration 1- 5
Conceptual
Framework for
Financial
Accounting and
Reporting

41
LO 8 Economic entity and parent company concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASBs Conceptual Framework


Economic Entity vs. Parent Concept and the Conceptual
Framework
The parent concept is tied to the historical cost
principle, which would suggest that the net assets related
to the noncontrolling interest remain at their previous
book values.
This approach might be argued to produce more
reliable or representationally faithful values (SFAC
No. 8).
LO 8 Economic entity and parent company concepts.
LO 9 Statements of Financial Accounting Concepts.
42

Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASBs Conceptual Framework


Economic Entity vs. Parent Concept and the Conceptual
Framework
The economic entity assumption
views a parent and its subsidiaries as one economic entity.
can be argued to produce more relevant, if not necessarily reliable,
information for users.
is an integral part of the FASBs conceptual framework (named in
SFAC No. 5 as one of the basic assumptions in accounting).
The recent shift to the economic entity concept seems to be
entirely consistent with the assumptions laid out by the FASB for
GAAP.
LO 8 Economic entity and parent company concepts.
LO 9 Statements of Financial Accounting Concepts.
43

Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASBs Conceptual Framework


Overview of FASBs Conceptual Framework (SFAC)
The Statements of Financial Accounting Concepts issued by the FASB
include:
No.4 Objectives of Financial Reporting by Nonbusiness Organizations
No.5 Recognition and Measurement in Financial Statements of
Business Enterprises
No.6 Elements of Financial Statements (replaces SFAC No. 3)
No.7 Using Cash Flow Information and Present Value in Accounting
Measurements
No.8 The Objective of General Purpose Financial Reporting and
Qualitative Characteristics of Useful Information (replaces SFAC No. 1
and No. 2)
44
LO 9 Statements of Financial Accounting Concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASBs Conceptual Framework


Distinguishing Between Earnings and Comprehensive
Income
Earnings is essentially revenues and gains minus expenses
and losses, with the exception of any losses or gains that
bypass earnings and, instead, are reported as a component of
other comprehensive income.
SFAC No. 5 describes these gains and losses as principally
certain holding gains or losses that are recognized in the
period but are excluded from earnings such as some changes
in market values of investments... and foreign currency
translation adjustments.
45
LO 9 Statements of Financial Accounting Concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASBs Conceptual Framework


Asset Impairment and the Conceptual Framework
SFAC No. 5 provides guidance with respect to expenses and losses:
Consumption of benefit. Earnings are generally recognized when an
entitys economic benefits are consumed in revenue earnings activities
(or matched to the period incurred or allocated systematically).
Example: amortization of limited-life intangibles. OR
Loss or lack of benefit. Expenses or losses are recognized if it
becomes evident that previously recognized future economic benefits
of assets have been reduced or eliminated, or that liabilities have
increased, without associated benefits.
Example: review for impairment for indefinite-life intangibles.

46
LO 9 Statements of Financial Accounting Concepts.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASB Codification (Source of


GAAP)
On July 1, 2009, the FASB launched the FASB Accounting
Standards Codification.
Single source of authoritative nongovernmental U.S.
GAAP, effective for interim and annual periods ending after
September 15, 2009.
All existing accounting standards documents are
superseded as described in FASB Statement No. 168, The
FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles.
All other accounting literature not included in the
Codification is nonauthoritative.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASB Codification (Source of


GAAP)
The Codification
Is intended to simplify the classification of existing and
future standards by restructuring all authoritative U.S.
GAAP (other than that for governmental entities) into
one online database under a common referencing
system.
Replaces the GAAP hierarchy.
Authoritative
Nonauthoritative
48
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASB Codification (Source of


GAAP)
Structure of the Codification
Roughly 90 accounting topics
Contains four groupings of numbers:
topic, subtopic, section, and paragraph
The code 450-20-25-2 refers to topic 450
(contingencies); subtopic 20 ( loss
contingencies); section 25 (recognition); and 2
(second paragraph).
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASB Codification (Source of


GAAP)
a. Financial Accounting Standards Board (FASB)
1. Statements (FAS)
2. Interpretations (FIN)
3. Technical Bulletins (FTB)
4. Staff Positions (FSP)
5. Staff Implementation Guides (Q&A)
6. Statement No. 138 Examples
b. Emerging Issues Task Force (EITF)
1. Abstracts
2. Topic D
c. Derivative Implementation Group (DIG) Issues
d. Accounting Principles Board (APB) Opinions
e. Accounting Research Bulletins (ARB)
f. Accounting Interpretations (AIN)
g. American Institute of Certified Public Accountants (AICPA)
1. Statements of Position (SOP)
2. Audit and Accounting Guides (AAG)only incremental accounting guidance
3. Practice Bulletins (PB), including the Notices to Practitioners elevated to Practice
Bulletin status by Practice Bulletin 1
4. Technical Inquiry Service (TIS)only for Software Revenue Recognition

Literature
included in the
Codification

50
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASB Codification (Source of


GAAP)
Standards issued by the SEC
To increase the utility of the Codification for public companies,
relevant portions of authoritative content issued by the SEC and
selected SEC staff interpretation and administrative guidance have
been included for reference in the Codification, such as:
Regulation S-X (SX)
Financial Reporting Releases (FRR)/Accounting Series
Releases (ASR)
Interpretive Releases (IR)
SEC Staff guidance in
Staff Accounting Bulletins (SAB)
EITF Topic D and SEC Staff Observer comments.
Copyright 2015. John Wiley & Sons, Inc. All rights reserved.

FASB Codification (Source of


GAAP)
Changes to GAAP: Updating the FASB Standards
Updates to the Codification are called Accounting
Standards Updates and are referenced as ASU YYYYxx, where
Ys indicate the year the update was approved and
xx represents the number of the update for that year.

52
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