Reporting Alternatives and International Harmonization
Accounting procedures for business combinations historically have differed across countries. Pool- ing of interests, for many years a preferred method in the United States, was not acceptable in most countries. In some countries, accounting standards permit goodwill to be written off directly against stockholders' equity at the time of a business combination.
Required
a. Over the years, many U.S. companies complained they were at a disadvantage when competing against foreign companies in purchasing other business enterprises because, unlike U.S. companies, many foreign companies either did not have to capitalize goodwill or could write it off immediately against stockholders' equity. Historically, why were U.S. companies opposed to capitalizing goodwill? What happened during the past decade to improve the situation from the perspective of U.S. companies?
b. Should U.S. companies care about accounting standards other than those that are generally accepted in the United States? Explain.
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