Norwalk, Ct. - The Financial Accounting Standards Board has released guidance aimed at clarifying the definition of a "business" for purposes of the accounting rules. The new accounting standards update affects any company or reporting organization that needs to determine whether it has acquired or sold a business. The definition of a business can have an impact on many areas of accounting, such as acquisitions, disposals, consolidations and goodwill. The new standard should provide more assistance to companies and other types of organizations in deciding whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in the update offer a framework that accountants can use for weighing when a set of assets and activities actually constitutes a business. The changes come in response to demand from FASB constituents who asked for further clarification on the definition, especially in terms of how to account for acquisitions.
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