合并财务报表外文翻译.docx

合并财务报表外文翻译.docx

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合并财务报表外文翻译

ConsolidatedFinancialStatements

MichaelDavisandJamesAlargayIII

Theproceduralaspectsofconsolidatedfinancialstatementshavegonepracticallyunchangedforalmost50years,withtheexceptionofaccountingchangesrelatedtogoodwillandthepooling-of-interestsmethod.Thewell-acceptedmethodologybehindconsolidatedentitieswillchangedramaticallywhennewFASBstandardsbecomeeffectiveforperiodsbeginningonorafterDecember15,2008.Theresultingconsolidatedstatementsmaylookmuchthesame,butthebehind-the-scenesmechanicsandprocesseswillbesignificantlydifferent.Somereportedamounts—andtheirinterpretation—willdivergefromtheirtraditionalmeanings.

CPAsandfinancialexecutivesshouldpreparethemselvesformajorchangesinpreparingconsolidatedfinancialstatements.WhatfinallyemergedfromFASB’sreddeliberationiscomplex,soanoverviewoftheconceptscanhelpprofessionalsquicklydigestthechangesinthefinalstandards.

NewStandardsBasedonTwoExposureDraft

ThenewStatementsofFinancialAccountingStandards—SFAS’s141（R）, BusinessCombinations, and160, NocontrollingInterestsinConsolidatedFinancialStatements—emergedinDecember2007fromtheextensivereddeliberationoftwoFASBexposuredrafts（ED）issuedinJune2005.AsthefirstmajorjointprojectbetweenFASBandtheInternationalAccountingStandardsBoard（IASB）,thebusinesscombinationsprojectsoughttodemonstratethatthetwostandards-settingbodiescanworktogether.Giventheextentofthechanges,evaluatingthesuccessofthoseendeavorsmaytaketime.Inthiscase,InternationalFinancialReportingStandard（IFRS）3（revisedin2007）,whichistheIASB’scompanionstatementonbusinesscombinations,reflectsmostofthechangesinSFAS141（R）.

Inanutshell,thepurchasemethod,nowtobeknownastheacquisition method,hasbeenfurthermodifiedsuchthat,inmanymergers,itwillnolongerrelyonhistoricalcosts.Combinationsinvolvingeitheranacquisitionoflessthan100%,orcontrolthatisachievedinsteps,willseetraditionalcost-basedpurchaseaccountingreplacedbyestimatesoftheacquiredcompany’sfairvalue.Theestimatedfairvalueofcontingentconsiderationagreementsbecomespartoftheconsiderationthatisrecorded attheacquisitiondate,withsubsequentchangesinitsfairvalue reportedincurrentearnings,notaspurchase-priceadjustments.Additionalcontingentassetsandliabilitieswilllikelyberecognized,andacquiredin-processresearchanddevelopment（R&D） willnolongerbeexpensed asifitwasinternallydevelopedR&D,butinsteaditwillbecapitalizedandinitiallysubjectedtoperiodicimpairmenttesting.

ThemajorchangesincorporatedinSFAS’s141（R）and160canbedividedintosixcategories,whichalsoincludesomelesserchanges.Whenappropriate,excerptsfromrespondentcommentstotheEDsareprovidedbelow.

BroaderDefinitionofa‘Business’

SFAS‘141（R）’sbroaderdefinitionofabusinessbringsmutualentitieswithinitsscopeforthefirsttime,accordingtothedefinitionsinpara.3.Thismeansthatmutualentitiescannolongerusepooling-of-interestsaccountingwhentheymerge.Thisseeminglyinnocuouschangeelicitedamajorityofnegativeresponsesarguingthatcombinationsofmutualentitiesaretruemergers—notacquisitions—withnoconsiderationexchanged.OnerespondenttotheEDnoted:

“Withnoconsiderationinatransaction,itisnotpracticaltodetermineanaccuratefairvalueoftheacquiredcompanytotheacquirer.Weareconcerned…theresultsmaybemisleading…primarilybecausetheydonotreflectthecombination’strueeconomics.”

AcquisitionsRecordedatFullFairValue

“Fullfairvalue,”nowreferredtoasthemeasurementprinciple,isthemostcontroversialissueinthejointFASB-IASBbusinesscombinationsproject.Any“partial”controllingacquisition（lessthan100%）willbereportednotatthepricepaid,butattheacquirer’sestimatedfullfairvalueforthecompanyasawhole.Forexample,an$8billionacquisitionof80%ofacompanycouldbereportedat$9.5billionifthatistheentity’sestimatedfairvalue.Notonlyareallidentifiableassetsandliabilitiesconsolidatedattheirfullfairvalues,SFAS141（R）basesgoodwillontheexcessofthetotalentity’sfairvalueoverthefairvalueoftheidentifiablenetassets.[FASBboardmemberLeslieSeidman’swide-rangingdissenttoSFAS’s141（R）and160citesherobjectiontoattributinggoodwilltotheminority,ornocontrolling,interest.]

Thus,thenocontrollinginterestwillalsobereportedatitsfullfairvalueuponacquisition.FASBisadoptingtheentity,oreconomic-unit,theoryofconsolidations,anddiscardingtheparenttheory,withitslonghistoryoffocusingonthecostoftheownershippercentagepurchased.

Consequencesofthefull-fair-valueapproach.

MostrespondentstotheEDagreedwithrecordingidentifiableassetsandliabilitiesatfairvalue,butnotgoodwill;unlikeidentifiableassets,goodwillcannotbemeasureddirectly.Inaddition,theacquirer’stotalfairvaluecannotbereliablymeasuredwhenlessthan100%ispurchasedanda“controlpremium”exists.

AlthoughSFAS141（R）promotesmorecomprehensiveandconsistentaccountingacrossfirms,Exhibit2 showshowfinancialratiosthatusethenewfinancialstatementdataarenotcomparabletopreviousmeasures,andtheywilllikelybelessreliableduetotheconcernsaboutestimationnotedearlier.Consistentwiththefull-fair-valueapproachtovaluation,SFAS160redefines“consolidatednetincome”as“groupincome”undercurrentGAAP,beforeanysubtractionforminorityinterest.ComparingtheredefinedconsolidatednetincomewithcurrentGAAP’s“controllinginterest’sshareofthegroupincome”shouldbedonewithcare.

Respondents’commentsandotherissues. 

Respondentsgenerallyopposedtheproposaltorecordthefairvalueofcontingentconsiderationliabilitiesattheacquisitiondate,andtorecordsubsequentchangesintheirfairvalueinearnings.OnepracticalreasonfortheoppositionappearedinFASB’s“CommentLetterSummary”:

Contingentconsiderationcannotbemeasuredreliablyattheacquisitiondate.Contingentconsiderationoccursbecausethebuyerandsellerarenotabletoagreeuponthefairvalueoftheacquirer;therefore,reliablyestimatingthefairvalueofthecontingentconsiderationisbydefinitionimpossibleemphasisadded.

Anotherreasonfortheoppositionalludestothepossibilityofmanipulation;respondents’viewsweresummarizedasfollows:

Theproposalmightmotivateacquirerstooverestimatetheacquisition-datefairvalueofcontingentconsiderationsothatthereversalofthoseliabilitiesresultsinincomeinfutureperiods.

Onehopesthatsuchmanipulationusingso-calledcookie-jarreserveswillnotproliferate.However,recenthigh-profinancialreportingfraudssuggestthatsuchmanipulationwillcompoundthepracticalmeasurementconcernsthatmakethereliabilityofcontingentconsiderationestimatesinherentlysuspect.TwootheraspectsofSFAS141（R）thatbearonthefull-fair-valueapproachtobusinesscombinationsareasfollows:

▪Acquisition-date（orpre-acquisition）contingencieshavebeenrecognizedatfairvalueforsometime,generallyinaccordancewiththe“probable”testinSFAS5, AccountingforContingencies.SFAS141（R）,however,requiresrecognitionofallcontractualrightsandobligations,andofnocontractualcontingenciesthatmorelikelythannotmeetthedefinitionofanassetorliabilityunderFASBConceptsStatement6.ContingenciesnotrecognizedatacquisitionwillbeaccountedforunderotherapplicableGAAP,suchasSFAS5.Thus,manymorepre-acquisitioncontingentliabilitiesandassetswillberecognizedupfront,primarilybecause“morelikelythannot”createsalowerrecognitionthresholdthan“probable.”

▪Plannedpost-acquisitionrestructuringcostsmustbeexpensed,ratherthanaddedtothecostoftheinvestmentorconsideredinthecarryingamountsassignedtoidentifiableassetsandliabilities.

StepAcquisitions

Twofacetsofthisissuestandout.First,whenobtainingcontrolinaseriesofpurchasesorsteps,SFAS141（R）requiresrestatingallpreviouspurchasestofairvalueasofthedatecontrolisachieved,andreportinganygainorlossinincome.Thisapproachsharplycontrastswiththecurrent“costaccumulation”or“purchasemethod”thataccountsforeachpurchaseseparately:

Differentpricespaidforseveralblocksofstockacquiredresultinreportingportionsoftheidentifiablenetassetsatdifferentfairvalues,andproducelayersofgoodwill.

ToillustrateSFAS141（R）’saccounting,supposetheacquirercarriesits40%shareofthetarget’sstockat$120million.Whenitobtainscontrolbypurchasinganother20%for$75million,theacquirerrevaluestheprevious40%to$150millionandreportsa$30milliongaininincome.Thus,theentire60%positionwillbecarriedat$225million,comparedwith$195millionundercurrentGAAP.Mostrespondentstotheexposuredraftagreedwith141（R）’sapproachbutfavoredreportinganygainorlossinothercomprehensiveincome,becauseofitssimilaritytounrealizedgainsorlossesonavailable-for-salesecurities.

Second,whenchangesinownershipinterestsoccuraftercontrolisobtained,perhapsbyincreasingownershipfrom60%to70%bypurchaseintheopenmarketordecreasingownershipfrom70%to60%bysaleintheopenmarket,thedifferencebetweentheamountpaid（orreceived）andthecarryingvalueofthatownershipinterestisreflectedinadditionalpaid-incapital.Suchtransactionswillnoweffectivelybetreatedastreasurystocktransactions.CurrentGAAPrecordsincreasesinownershipusingthepurchasemethodapproachdescribedhere.SFAS160a