Companies are more reluctant to overpay

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Reference no: EM131551124

An important unintended consequence of Financial Accounting Standard 142 has to do with mergers and acquisitions. Because of that Accounting Standard, companies are more reluctant to "overpay" to buy another company because:

a. Standard 142 will require a company to write down its assets under goodwill impairment if it pays more than fair value.

b. Standard 142 gives the Financial Accounting Standards Board the authority to fine companies that buy another company for more than its fair value.

c. The Standard 142 prohibits buying another company for more than fair value.

d. Financial Accounting Standard 142 has no effect on the desirability of a company to buy another company, regardless of how much is paid to buy it.

Reference no: EM131551124

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