Opinions 16 and 17: a winning combination

Two AICPA Accounting Principles Board (APB) opinions have helped to harmonize the accounting treatment of mergers and acquisitions in the US. Opinion 16, Business Combinations, concludes that only two methods are acceptable for reporting business combinations, pooling of interests, and purchase methods of accounting. Opinion 17, Intangible Assets, requires the cost of intangible assets such as goodwill to be amortized to operating expense, generally under the straight line method. The opinions and their underlying guidance have helped to create a reasonably fair playing field in mergers and acquisitions in the US. Similar opinions for UK accountants would help rationalize the accounting treatment of mergers and acquisitions in the UK.