FASB revised FAS 141 Business Combinations in 2007, resulting in a sea change in a comprehensive shift in the way mergers and acquisitions are accounted for and captured in entities’ financial statements. Below are the key requirements of the new statement as well as the scope and effective date of transition.

Scope

FAS 141(R) applies to all transactions or other events in which an entity obtains control of one or more businesses. Prior to revision, FAS 141 only applied only to business combinations in which control was obtained by transferring consideration. The revised statement covers all mergers with the exception of the following:

-Joint Ventures

-Acquisition of a group of assets that does not constitute a business

-Combination of entities or businesses under common control

-Combination between not-for-profits (NFP) or the acquisition of a for-profit company by a NFP
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