Archive for June 4th, 2010

M&A – allocating price to intangible assets

Entrance to a snow covered shrine in Hirotaka, Northern Japan

This post reviews principles behind allocating cost to intangible assets under Japanese purchase accounting for business combinations.

As part of Japan’s convergence with International Financial Reporting Standards (IFRS) Japanese  merger accounting (持分プーリング in Japanese, best translated as “pooling of interests”) is no longer available from 1 April 2010.  Also the Japanese Accounting Standards Board (‘JASB’) intends examining in Step 2 of its IFRS convergence process whether Japan’s current approach – amortisation of goodwill over a set period – should be brought closer to the IFRS approach (namely separately identifying intangible assets and goodwill and then periodically reviewing the value of such goodwill).  The JASBs request for public comment on accounting for business combinations is here and the related paper here. Read More