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Statement No. 38
Accounting for Preacquisition Contingencies of Purchased Enterprises-an amendment of APB Opinion No. 16
STATUS
Issue Date: September 1980
Effective Date: For business combinations initiated after December 15, 1980
Affects: Amends APB 16, paragraph 88
Affected by: Paragraph 2 and footnote 2 amended by FAS 96
Paragraphs 2 and 5 amended by FAS 109
Footnote 2 superseded by FAS 109
Other Interpretive Pronouncement: FTB 81-2 (Superseded by FAS 96 and FAS 109)
Issues Discussed by FASB Emerging Issues Task Force (EITF)
Affects: No EITF Issues
Interpreted by: Paragraph 4(a) interpreted by EITF Issue No. 95-3
Paragraph 5 interpreted by EITF Issues No. 90-6 and 93-7
Related Issues: No EITF Issues
Abbreviations for Accounting Pronouncements
FAS - FASB Statements
FIN - FASB Interpretations
FTB - FASB Technical Bulletins
APB - APB Opinions
AIN - AICPA Interpretations
ARB - Accounting Research Bulletins
CON - FASB Concepts
EITF - EITF Issues
Q&A - FASB Implementation Guides
SUMMARY
This Statement specifies how an acquiring enterprise should account for contingencies of an acquired enterprise that were in existence at the purchase date and for subsequent adjustments that result from those contingencies. Amounts that can be reasonably estimated for contingencies that are considered probable are recorded as a part of the allocation of the purchase price. Subsequent adjustments are included in net income when the adjustments are determined except in limited circumstances described in this Statement.
Copyright by Financial Accounting Standards Board. All Rights Reserved. Used by Permission.
©2000 New York State Society
of Certified Public Accountants. Legal Notices.
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