Consolidated Financial Statements - Date of Acquisition

Chapter 3

CONSOLIDATED FINANCIAL STATEMENTS - DATE OF ACQUISITION

At the top of page 76, at the end of the first full sentence on the page, note the following clarification:

The Board planned to issue a final statement in the second quarter of 2001, but determined that there was insufficient Board member support to do so. Although the Board has indicated that the issues will continue to be pursued, it is unclear whether the conclusions will ultimately be similar or dissimilar to the revised Exposure Draft.

Then, in Appendix A, page 98, note the following update:

Status of Proposed Changes

In this appendix, we summarize the proposed FASB Statement on the purpose and policy of consolidated financial statements. However, we note that in January 2001, the FASB indicated that there was not enough Board member support to move forward at that time with the proposed changes. The Board also indicated an intent to continue to develop guidance for situations where control exists but is not apparent based on the form of the arrangement, and its opinion that an effort to redefine “control” should continue.

In the News:

In its update of January 2001, the FASB included the following statements: Several FASB Board members are concerned about the appropriateness of determining that nonshared decision-making ability can exist based on the anticipated nonaction by other holders of voting rights. They also are concerned about whether the proposed treatment of convertible and option instruments that give the ability to obtain voting rights is effective as well as the operationality of certain other provisions.”

On page 77, just above “Reasons for Subsidiary Company,” a paragraph discusses the ongoing FASB project. This paragraph can be revised to read as follows:

The FASB has an ongoing project on consolidations and related matters. Issues still being considered by the Board are summarized in Appendix A to this chapter. Chapter 2 discussed other changes that were finalized in 2001. (Note that the new version of Chapter 2 should be available on the Web.)

End of Chapter 3 Exercises: Omit Exercise 3-12.