Use the Effect of Goodwill Amortization on the Usefulness of EPS to Evaluate the Relationship between SFAS No. 142 and FASB Conceptual Framework

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Use the Effect of Goodwill Amortization on the Usefulness of EPS to Evaluate the Relationship between SFAS No. 142 and FASB Conceptual Framework Abstract In 2001, the Financial Accounting Standards Board FASB approved significant changes in the way income is determined for combined business entities. In an effort to make Goodwill and other intangible assets accounting more transparent, SFAS No. 142, Goodwill and Other Intangible Assets, requires firms to stop Goodwill amortization. Obviously, SFAS No. 142 supersedes APB (Accounting Principles Board) Opinion No. 17, Intangible Assets. My research will focus on comparing earnings per share (EPS) before Goodwill amortization and earnings per share after Goodwill amortization as alternative indicators of share values for a random sample of listed firms over the period ...

... R2 (percent of explained variation) for regression (1) to the R2 for regression (2). This research approach is based on two important assumptions. The first one is that EPS is an indicator of share value and its accuracy can contribute to the validation. And the second one is that the random sample from S&P 500 can represent all of the listed firms in the U.S. If these conditions are met, the two EPS measures gathered from the random sample can be compared to determine their relative usefulness as indicators of value. Based on these assumptions, the two types of EPS I examine can be viewed as competing indicators of value, and the type that best explains

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