ASC 805 gives the management of an acquiring firm flexibility in valuation and the possibility of recognizing day one bargain purchase gains (BPG). BPG acquisitions occurred frequently in the financial services industry during the crisis of 2008 and some of these acquisitions were assisted by...

During the financial crisis of 2008, the debate on the accounting profession's role has focused mostly on mark-to-market accounting rules. We argue that there are other weaknesses in the accounting rules as applied to securitizations that pre-date the current crisis. The accrual system that...