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Senior financial executives are facing some thorny problems in implementing the Financial Accounting Standards Board's rules for purchase accounting. Under the FASB regulations (Financial Accounting Statement 141, Business Combinations, and FAS 142, Goodwill and Other Intangible Assets), companies are required to stop amortizing goodwill at the start of their fiscal year and instead perform a complex impairment test. Challenges include identifying reporting units and determining their fair value, as well as valuing certain intangibles separate from goodwill.
In this special report, we examine how finance executives at a number of early-adopting companies are coping with FAS 141 and FAS 142. Most public companies will adopt the new standards officially on January 1, 2002 and are watching how peers will interpret them first, lest theyprovoke an SEC inquiry. Moreover, our report
investigates what investors will likely make of the huge goodwill write-downs early next year.
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