Good merger and acquisition (M & A) deals should have nothing to fear from the proposals expected in Phase 2 of the International Accounting Standards Board's business combinations project.

An exposure draft, which is expected to be published in a few weeks' time, and which is being issued jointly with the US Financial Accounting Standards Board, will no longer permit the pooling of interests. All business combinations will be accounted for by a single method - the purchase method.

It will also require intangible assets with finite lives (such as technology) to be amortised and those with indefinite lives (eg, brands) to be subject to an annual impairment test. Goodwill will also be tested for impairment at least annually.

According to KPMG corporate finance partner Doug McPhee: 'The requirements should focus management on what they're actually buying. This is good from a commercial standpoint in that it focuses management attention on what they're really paying for in a deal.'

However, there are still concerns about the changes, particularly the potential to manipulate share price, through manipulating the amortisation process, according to McPhee.

'A good deal should be fine, no matter how you account for it,' he said, 'but there will be better transparency under the new rules.'