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Disclosure Checklist– FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
The following disclosure checklist is designed to ensure that all parties developing information for the financial
statements, or auditing the financial statements are making complete disclosures in accordance with FASB
Statements 141 & 142. In addition, a column related to valuation issues (VAL) has been included to identify the
items that also need to be reconciled to the work papers of the independent valuation firm.
FASB Statement 141
The following are taken from Paragraphs 51 through 58 of FASB Statement 141.
Disclosed
Y N N/A VAL
Disclosures in Financial Statements
51. The notes to the financial statements of a combined entity shall disclose the
following information in the period in which a material business combination is
completed:
___ ___ ___ a. The name and a brief description of the acquired entity and the percentage of
voting equity interests acquired.
___ ___ ___ √ b. The primary reasons for the acquisition, including a description of the factors
that contributed to a purchase price that results in
recognition of goodwill.
___ ___ ___ c. The period for which the results of operations of the acquired entity are
included in the income statement of the combined
entity.
___ ___ ___ √ d. The cost of the acquired entity and, if applicable, the number of shares of
equity interests (such as common shares, preferred shares, or partnership
interests) issued or issuable, the value assigned to those interests, and the basis
for determining that value.
___ ___ ___ √ e. A condensed balance sheet disclosing the amount assigned to each major asset
and liability caption of the acquired entity at the acquisition date.
___ ___ ___ f. Contingent payments, options, or commitments specified in the acquisition
agreement and the accounting treatment that will be followed should any such
contingency occur.
___ ___ ___ √ g. The amount of purchased research and development assets
acquired and written off in the period (refer to Paragraph 42) and
the line item in the income statement in which the amounts
written off are aggregated.
The Financial Valuation Group Page 1 of 8
www.fvginternational.com Revised, January 28, 2002
Disclosure Checklist – FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
Disclosed
Y N N/A VAL
___ ___ ___ √ h. For any purchase price allocation that has not been finalized, that
fact and the reasons therefor. In subsequent periods, the nature
and amount of any material adjustments made to the initial
allocation of the purchase price shall be disclosed.
52. The notes to the financial statements also shall disclose the
following information in the period in which a material business
combination is completed if the amounts assigned to goodwill or to
other intangible assets acquired are significant in relation to the
total cost of the acquired entity:
a. For intangible assets subject to amortization:
___ ___ ___ √ (1) The total amount assigned and the amount assigned to any
major intangible asset class.
___ ___ ___ √ (2) The amount of any significant residual value, in total and
by major intangible asset class.
___ ___ ___ (3) The weighted-average amortization period, in total and by
major intangible asset class.
___ ___ ___ √ b. For intangible assets not subject to amortization, the total amount
assigned and the amount assigned to any major intangible asset
class.
c. For goodwill:
___ ___ ___ √ (1) The total amount of goodwill and the amount that is expected
to be deductible for tax purposes.
___ ___ ___ √ (2) The amount of goodwill by reportable segment (if the
combined entity is required to disclose segment information
in accordance with FASB Statement 131, Disclosures
about Segments of an Enterprise and Related Information),
unless not practicable.1
53. The notes to the financial statements shall disclose the following
information if a series of individually immaterial business
combinations completed during the period are material in the
aggregate:
___ ___ ___ √ a. The number of entities acquired and a brief description of
those entities.
1
For example, it would not be practicable to disclose this information if the assignment of goodwill to reporting units
(as required by Statement 142) has not been completed as of the date the financial statements are issued.
The Financial Valuation Group Page 2 of 8
www.fvginternational.com Revised, January 28, 2002
Disclosure Checklist – FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
Disclosed
Y N N/A VAL
___ ___ ___ √ b. The aggregate cost of the acquired entities, the number of
equity interests (such as common shares, preferred shares,
or partnership interests) issued or issuable, and the value
assigned to those interests.
___ ___ ___ c. The aggregate amount of any contingent payments, options, or
commitments and the accounting treatment that will be followed
should any such contingency occur (if potentially significant in
relation to the aggregate cost of the acquired entities).
___ ___ ___ √ d. The information described in Paragraph 52 if the aggregate
amount assigned to goodwill or to other intangible assets
acquired is significant in relation to the aggregate cost of the
acquired entities.
54. If the combined entity is a public business enterprise, the notes to the
financial statements shall include the following supplemental
information on a pro forma basis for the period in which a material
business combination occurs (or for the period in which a series of
individually immaterial business combinations occur that are
material in the aggregate):
___ ___ ___ a. Results of operations for the current period as though the
business combination or combinations had been completed at the
beginning of the period, unless the acquisition was at or near the
beginning of the period.
___ ___ ___ b. Results of operations for the comparable prior period as though
the business combination or combinations had been completed at
the beginning of that period if comparative financial statements
are presented.
55. The supplemental pro forma information shall display:
___ ___ ___ a. At a minimum, revenue, income before extraordinary items and
the cumulative effect of accounting changes, net income, and
earnings per share.
___ ___ ___ b. In determining the pro forma amounts, income taxes, interest
expense, preferred share dividends, and depreciation and
amortization of assets shall be adjusted to the accounting base
recognized for each in recording the combination.
___ ___ ___ c. Pro forma information related to results of operations of periods
prior to the combination shall be limited to the results of
operations for the immediately preceding period.
The Financial Valuation Group Page 3 of 8
www.fvginternational.com Revised, January 28, 2002
Disclosure Checklist – FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
Disclosed
Y N N/A VAL
___ ___ ___ d. Disclosure also shall be made of the nature and amount of any
material, nonrecurring items included in the reported pro forma
results of operations.
56. In regards to extraordinary gains:
___ ___ ___ a. In the period in which an extraordinary gain is recognized related
to a business combination (Paragraphs 45 and 46), the following
main captions should appear in an income statement:
Extraordinary items (less applicable income taxes of $ --- ) (Note --- )
Net income
___ ___ ___ b. The caption “extraordinary items” should be used to identify
separately the effects of events and transactions, other than the
disposal of a segment of a business, that meet the criteria for
classification as extraordinary.
___ ___ ___ c. Descriptive captions and the amounts for individual
extraordinary events or transactions should be presented,
preferably on the face of the income statement, if practicable;
otherwise disclosure in related notes is acceptable.
___ ___ ___ d. The nature of an extraordinary event or transaction and the
principal items entering into the determination of an
extraordinary gain or loss should be described.
___ ___ ___ e. The income taxes applicable to extraordinary items should be
disclosed on the face of the income statement; alternatively,
disclosure in the related notes is acceptable (paragraph 11 of
APB Opinion 30).
___ ___ ___ √ 57. The notes to the financial statements also shall disclose the
information required by Paragraphs 51 and 52 if a material business
combination is completed after the balance sheet date but before the
financial statements are issued (unless not practicable).
Disclosures in Interim Financial Information
58. The summarized interim financial information of a public business
enterprise shall disclose the following information if a material
business combination is completed during the current year up to the
date of the most recent interim statement of financial position
presented:
___ ___ ___ a. The information described in Paragraph 51(a)–(d).
The Financial Valuation Group Page 4 of 8
www.fvginternational.com Revised, January 28, 2002
Disclosure Checklist – FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
Disclosed
Y N N/A VAL
___ ___ ___ b. Supplemental pro forma information that discloses the results of
operations for the current interim period and the current year up
to the date of the most recent interim statement of financial
position presented (and for the corresponding periods in the
preceding year) as though the business combination had been
completed as of the beginning of the period being reported on.
That pro forma information shall display, at a minimum, revenue, income
before extraordinary items and the cumulative effect of accounting changes
(including those on an interim basis), net income, and earnings per share.
___ ___ ___ c. The nature and amount of any material, nonrecurring items
included in the reported pro forma results of operations.
FASB Statement 142 Disclosures
The following are taken from Paragraphs 42 through 47 and 60 through 61 of FASB
Statement 142.
42. Intangible Assets
___ ___ ___ √ a. Intangible assets presented as a separate line item(s) in the
statement of financial position.
___ ___ ___ √ b. Amortization expense and impairment losses for intangible assets
presented within continuing operations line items in the income
statement.
43. Goodwill
___ ___ ___ √ a. The aggregate amount of goodwill presented as a separate line
item in the statement of financial position.
___ ___ ___ √ b. The aggregate amount of impairment losses presented as a
separate line item in the income statement within income from
continuing operations, unless a goodwill impairment loss is
associated with a discontinued operation.
___ ___ ___ √ c. A goodwill impairment loss associated with a discontinued
operation should be included on a net-of-tax basis within the
results of discontinued operations.
Disclosures in Financial Statements in the Period of Acquisition
44. For intangible assets acquired either individually or with a group of
assets, the following information shall be disclosed in the notes to the
financial statements in the period of acquisition:
The Financial Valuation Group Page 5 of 8
www.fvginternational.com Revised, January 28, 2002
Disclosure Checklist – FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
Disclosed
Y N N/A VAL
a. For intangible assets subject to amortization:
___ ___ ___ √ (1) The total amount assigned and the amount assigned to any
major intangible asset class.
___ ___ ___ √ (2) The amount of any significant residual value, in total and by
major intangible asset class.
___ ___ ___ (3) The weighted-average amortization period, in total and by
major intangible asset class.
___ ___ ___ √ b. For intangible assets not subject to amortization, the total amount
assigned and the amount assigned to any major intangible asset
class.
___ ___ ___ √ c. The amount of research and development assets acquired and
written off in the period and the line item in the income statement
in which the amounts written off are aggregated.
Disclosures in Financial Statements for Each Period Presented
45. The following information shall be disclosed in the financial
statements or the notes to the financial statements for each period for
which a statement of financial position is presented:
a. For intangible assets subject to amortization:
___ ___ ___ √ (1) The gross carrying amount and accumulated amortization,
in total and by major intangible asset class.
___ ___ ___ (2) The aggregate amortization expense for the period.
___ ___ ___ (3) The estimated aggregate amortization expense for each of
the five succeeding fiscal years.
___ ___ ___ √ b. For intangible assets not subject to amortization, the total
carrying amount and the carrying amount for each major
intangible asset class.
c. The changes in the carrying amount of goodwill during the
period including:
___ ___ ___ √ (1) The aggregate amount of goodwill acquired.
___ ___ ___ √ (2) The aggregate amount of impairment losses recognized.
___ ___ ___ √ (3) The amount of goodwill included in the gain or loss on
disposal of all or a portion of a reporting unit.
The Financial Valuation Group Page 6 of 8
www.fvginternational.com Revised, January 28, 2002
Disclosure Checklist – FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
Disclosed
Y N N/A VAL
___ ___ ___ Entities that report segment information in accordance with Statement 131 shall
provide the above information about goodwill in total and for each reportable
segment and shall disclose any significant changes in the allocation of goodwill by
reportable segment. If any portion of goodwill has not yet been allocated to a
reporting unit at the date the financial statements are issued, that unallocated
amount and the reasons for not allocating that amount shall be disclosed.
46. For each impairment loss recognized related to an intangible asset,
the following information shall be disclosed in the notes to the
financial statements that include the period in which the impairment
loss is recognized:
___ ___ ___ √ a. A description of the impaired intangible asset and the facts and
circumstances leading to the impairment.
___ ___ ___ √ b. The amount of the impairment loss and the method for
determining fair value.
___ ___ ___ c. The caption in the income statement or the statement of activities
in which the impairment loss is aggregated.
___ ___ ___ d. If applicable, the segment in which the impaired intangible asset
is reported under Statement 131.
47. For each goodwill impairment loss recognized, the following
information shall be disclosed in the notes to the financial statements
that include the period in which the impairment loss is recognized:
___ ___ ___ √ a. A description of the facts and circumstances leading to the
impairment.
___ ___ ___ √ b. The amount of the impairment loss and the method of
determining the fair value of the associated reporting unit
whether based on quoted market prices, prices of comparable
businesses, a present value or other valuation technique, or a
combination thereof).
___ ___ ___ √ c. If a recognized impairment loss is an estimate that has not yet
been finalized (refer to Paragraph 22), that fact and the reasons
therefore and, in subsequent periods, the nature and amount of
any significant adjustments made to the initial estimate of the
impairment loss.
Transitional Disclosures
___ ___ ___ √ 60. Upon completion of the first step of the transitional goodwill
impairment test, the reportable segment or segments in which an
impairment loss might have to be recognized and the period in which
that potential loss will be measured shall be disclosed in any interim
financial information.
The Financial Valuation Group Page 7 of 8
www.fvginternational.com Revised, January 28, 2002
Disclosure Checklist – FASB Statements 141 and 142
Business Combinations, Goodwill and Intangible Assets
Disclosed
Y N N/A VAL
61. In the period of initial application and thereafter until goodwill and
all other intangible assets have been accounted for in accordance with
this Statement in all periods presented, the following information
shall be displayed either on the face of the income statement or in the
notes to the financial statements:
___ ___ ___ a. Income before extraordinary items and net income for all periods
presented adjusted to exclude amortization expense (including
any related tax effects) recognized in those periods related to
goodwill.
___ ___ ___ √ b Intangible assets that are no longer being amortized.
___ ___ ___ c. Any deferred credit related to an excess over cost (amortized in
accordance with Opinion 16), and equity method goodwill.
___ ___ ___ d. The adjusted income before extraordinary items and net income
also shall reflect any adjustments for changes in amortization
periods for intangible assets that will continue to be amortized as
a result of initially applying this Statement (including any related
tax effects).
___ ___ ___ e. The notes to the financial statements shall disclose a
reconciliation of reported net income to the adjusted net income.
___ ___ ___ f. Adjusted earnings-per-share amounts for all periods presented
may be presented either on the face of the income statement or in
the notes to the financial statements.
Disclosure of Recently Issued Accounting Standards
SEC Staff accounting Bulletin 74 ( SAB Topic 11:M) requires disclosure in
Management’s Discussion and Analysis (MD&A) of the impact recently issued
accounting standards will have on the financial statements when adopted. MD&A and
notes to the financial statements should generally include:
___ ___ ___ 1. A brief description of the new standard, the date that adoption is
required and the date that the registrant plans to adopt, if earlier.
___ ___ ___ 2. A description of the methods of adoption allowed by the standard
and the method expected to be utilized by registrant, if
determined.
___ ___ ___ 3. A discussion of the impact that adoption of the standard is
expected to have on the financial statements of the registrant,
unless not known or reasonably estimable. In that case, a
statement to that effect may be made.
___ ___ ___ 4. Disclosure of the potential impact of other significant matters that
the registrant believes might result from the adoption of the
standard (such as technical violations of debt covenant
agreements, planned or intended changes in business practices,
etc.) is encouraged.
The Financial Valuation Group Page 8 of 8
www.fvginternational.com Revised, January 28, 2002
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