ACCOUNTING FOR BUSINESS COMBINATIONS: A COMPARATIVE ANALYSIS BETWEEN IFRS AND GAAP

According to the growing importance of merger and acquisition activity the need for more reliable accounting standards became apparent. A major change was made with the issuance of SFAS 141 (2001) and IFRS 3 (2004). According to the process of harmonization between US GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) the revised SFAS 141 (effective from December 2008) and IFRS 3 (effective in July 2009) were issued. The aim of the paper is to analyse the accounting treatment for business combinations, critically examine the major changes that were made with the issuance of the revised standards and to analyse the remaining differences between American GAAP and IFRS. Although the objective of the revised standards was to ensure a harmonized accounting treatment for business combinations, differences between standards still exist. They remain part of a future harmonization project between Boards.