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Under FAS 141(R), the determination of unrecognized tax benefits of the acquired entity as of the acquisition date will be subject to the measurement and recognition provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). Any changes to the unrecognized tax benefits during the measurement period (that do not relate to facts and circumstances that existed as of the acquisition date) and subsequent to the measurement period are recorded as an adjustment to income tax expense. Under prior guidance, any changes in acquired tax contingencies would generally have been an adjustment to goodwill and other intangibles.
ANd remember, the accounting treatment for changes to uncertain tax positions is one exception to the prospective application of FAS 141(R). Regardless of the acquisition date of a business combination, changes in acquired tax uncertainties beyond the measurement period are recorded as adjustments to income tax from continuing operations.
Give this a read, it's excellent: http://www.metrocorpcounsel.com/articles/11501/fas-141r-impact-accounting-income-taxes
Thanks for the article but I need a lot more in-depth analyses including examples on how to treat the contingent liabilities in asset purchase. Appreciate any help you can provide.