Use the Effect of Goodwill Amortization on the Usefulness of EPS to Evaluate the Relationship between SFAS No. 142 and FASB Conceptual Framework

Use the Effect of grace Amortization on the emolument of EPS to label the Relationship between SFAS n unitary 142 and FASB Conceptual textile Abstract In 2001, the Financial score Standards display display board FASB approved significant changes in the way income is determined for combine business entities. In an effort to make good forget and other impalpable assets accounting more(prenominal)(prenominal) transp arent, SFAS no. 142, saving grace and Other Intangible Assets, requires firms to stop saving grace amortization. Obviously, SFAS No. 142 supersedes APB (Accounting Principles Board) faith No. 17, Intangible Assets. My research will focalization on comparing meshing per allocate (EPS) before grace amortization and earnings per share after state of grace amortization as alternative powers of share values for a stochastic examine of listed firms over the period 1993-1998 from S&P 500. I find that EPS before Goodwill amortization is more unblemis hed than EPS after Goodwill amortization as the indicator of share values, and that Goodwill amortization simply adds noise to enthronisation analysis. These results express that SFAS No. 142 matches the FASB conceptual framework better than APB look No. 17. 1.Background Goodwill is the difference between a firms nitty-gritty book interlock assets and the fair-market value of its placeable net assets.

The intangible asset represents the draw of the firm, its reputation, competitive or other intangible advantages or resources that are expected to enable the firm to commit more earnings than normal return by its identifiable net assets . Goodwill may be developed internally by, for example, building customer loyalty, develop! ing human resources, or utilizing assets more efficiently than competitors. Alternatively, Goodwill may be purchased whole when one firm acquires another. The receptive accounting treatment for Goodwill is governed by Accounting Principles Board Opinion No. 17--Intangible Assets. Under APB 17, Goodwill that is developed internally is not recognized as an asset. In contrast, the cost... If you want to charter a full essay, order it on our website: OrderEssay.net

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