Question & Answer: What are the three departures from SFAS 141 according to SFAS 141(R) Business Combinations? Be specific……

The three departures from SFAS 141 according to SFAS 141(R) Business Combinations are:

1. As per SFAS 141(R), the direct combination costs are charged as expenses as and when incurred whereas, under SFAS 141, the direct combination costs are considered as a part of the investment cost.

2. As per SFAS 141(R), contingent consideration obligations are considered as a part of the purchase price, whereas, under SFAS 141, contingent consideration obligations are are charged as expenses.

3. As per SFAS 141(R), In case of a bargain purchase of asset, the company acquiring the asset measures and recognizes the fair value of the assets and liabilities related to purchase, and are recorded at fair values. The gain on bargain purchase is recognized on the date of the acquisition date. Whereas, under SFAS 141, the acquired assets and liabilities are recorded at their cost.