The need for a better standard and guideline arose when the management of companies and the users of financial statements like research analysts pointed out the importance of intangible assets as a significant financial resource for many organizations and the fact that these intangible assets have an integral part in the acquired assets. It was also noted that the amortization expense of these intangible assets was not considered important in the analysis of investments (Financial Accounting Standards Board).
SFAS 142 is related to the accounting treatment of acquired goodwill and other intangible assets and replaces Opinion No.17 of the Accounting Principles Board. The statement sets the standard on how to record and treat goodwill or other intangible assets which are acquired separately or with a group of other assets. This acquisition does not cover those intangible assets which are acquired in business combinations such as mergers and acquisitions (Financial Accounting Standards Board).
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