# ASC 805-10-25: Business Combinations — Overall — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/10/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:ebfba9431309cac53d524db2fab3aedd5d671673ec06f7bc3df742762be9e403 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/10/#25-recognition) SEC content: no ##### [805-10-25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:bf69d433eae860f86efc29189b6e9e7adb2f342c50a212b9f9081a253ed4890a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall determine whether a transaction or other event is a [business combination](https://asc.understandingaccounting.org/glossary/b/#business-combination "A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity.") by applying the definition in this Subtopic, which requires that the assets acquired and liabilities assumed constitute a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business."). If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition.An entity shall account for each business combination by applying the acquisition method. ##### [805-10-25-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:a389a2482849a79e9f19dff3320106013a853a8dcbbab71c4b87917fa867c886 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4) summarizes the four steps in the acquisition method. This Section establishes the requirements for the following two of the four steps: 1. a Identifying the [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.") 2. b Identifying the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."). ##### [805-10-25-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:21b7685f540351fc0cb0e59735bd4f51d2e09bfa56dc2a7989e46dca6059b01b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section also provides guidance on all of the following: 1. a Particular types of business combinations 2. b The measurement period 3. c Determining what is part of the business combination transaction. #### Identifying the Acquirer ##### [805-10-25-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:747d311e9d01946cfa0d61920a8202227d09cb32712b980d20d409f0c11c5293 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For each business combination, one of the combining entities shall be identified as the acquirer. ##### [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:d3fa111661cc749b4fdbe647eb2791dd1fa715783ed62644421557e9473d5d8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest shall be used to identify the acquirer—the entity that obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of the [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity."). If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in making that determination. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying either the guidance in the General Subsections of that Subtopic, relating to a controlling financial interest, or in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5)The guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest shall be used to identify the acquirer—the entity that obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of the [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity."). If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in making that determination. However, in a business combination in which a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) is acquired, the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of that entity is the acquirer unless the business combination is effected primarily by exchanging equity interests.The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying either the guidance in the General Subsections of that Subtopic, relating to a controlling financial interest, or the guidance in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . For a business combination that is effected primarily by exchanging equity interests in which a VIE is acquired, the factors in paragraphs [805-10-55-12 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) shall be considered in determining which entity is the accounting acquirer. #### Identifying the Acquisition Date ##### [805-10-25-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:fc2189d85b89c67439afd349692907dac8aa11c97ca2071a269a9abb6b669d80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall identify the acquisition date, which is the date on which it obtains control of the acquiree. ##### [805-10-25-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:553b774b44aaba49391369896ceaf15b46c0309ae8a111ae623d3027d6089042 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The date on which the acquirer obtains control of the acquiree generally is the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree—the closing date. However, the acquirer might obtain control on a date that is either earlier or later than the closing date. For example, the acquisition date precedes the closing date if a written agreement provides that the acquirer obtains control of the acquiree on a date before the closing date. An acquirer shall consider all pertinent facts and circumstances in identifying the acquisition date. #### Particular Types of Business Combinations ##### [805-10-25-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:1b9c8ce55a7cee26bc6b03d133408871871d55c50be9243af215c7f10a908054 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance describes the accounting for a business combination achieved in stages and a business combination achieved without the transfer of consideration. ##### [805-10-25-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:72cbb872a941b8676175fbca9d8636d328c6020dc20783d1c85e3f2bdc7be7bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer sometimes obtains control of an acquiree in which it held an equity interest immediately before the acquisition date. For example, on December 31, 20X1, Entity A holds a 35 percent noncontrolling equity interest in Entity B. On that date, Entity A purchases an additional 40 percent interest in Entity B, which gives it control of Entity B. This Topic refers to such a transaction as a business combination achieved in stages, sometimes also referred to as a step acquisition. ##### [805-10-25-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:1bba20b9c9971ea6a27338d639ebef0b7b4053e9927dff391677de82550da001 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") and recognize the resulting gain or loss, if any, in earnings. In prior reporting periods, with respect to its previously held equity method investment, the acquirer may have recognized amounts in other comprehensive income in accordance with paragraph [323-10-35-18](https://asc.understandingaccounting.org/asc/323/10/#323-10-35-18). If so, the amount that was recognized in other comprehensive income shall be reclassified and included in the calculation of gain or loss as of the acquisition date. If the business combination achieved in stages relates to a previously held equity method investment that is a [foreign entity](https://asc.understandingaccounting.org/glossary/f/#foreign-entity "An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both: Prepared in a currency other than the reporting currency of the reporting entity Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting entity."), the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that previously held investment. For guidance on derecognizing foreign currency translation adjustments recorded in accumulated other comprehensive income, see Section 830-30-40. ##### [805-10-25-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:c521ee061f232f082699b9ff6c2bceaf23e0f5b251bdfbc7158ad005b61b370c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer sometimes obtains control of an acquiree without transferring consideration. The acquisition method of accounting for a business combination applies to those combinations. Such circumstances include any of the following: 1. a The acquiree repurchases a sufficient number of its own shares for an existing investor (the acquirer) to obtain control. 2. b Minority veto rights lapse that previously kept the acquirer from controlling an acquiree in which the acquirer held the majority voting interest. 3. c The acquirer and acquiree agree to combine their businesses by contract alone. The acquirer transfers no consideration in exchange for control of an acquiree and holds no [equity interests](https://asc.understandingaccounting.org/glossary/e/#equity-interests "Used broadly to mean ownership interests of investor-owned entities; owner, member, or participant interests of mutual entities; and owner or member interests in the net assets of not-for-profit entities.") in the acquiree, either on the acquisition date or previously. Examples of business combinations achieved by contract alone include bringing two businesses together in a stapling arrangement or forming a dual-listed corporation. ##### [805-10-25-12](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:d23b6bb1ab65e763aeb2c8de9528c186fa93004a6381a34ebceb86d335e174a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination achieved by contract alone, the acquirer shall attribute to the equity holders of the acquiree the amount of the acquiree's net assets recognized in accordance with the requirements of this Topic. In other words, the equity interests in the acquiree held by parties other than the acquirer are a [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") in the acquirer's postcombination financial statements even if the result is that all of the equity interests in the acquiree are attributed to the noncontrolling interest. #### The Measurement Period ##### [805-10-25-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:5fd64b45292ee3d4a0153405bc1ed01e9a18922bdcbc44a2e3c3c768c6592fc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, in accordance with paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17), the acquirer shall adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. ##### [805-10-25-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:ffed6ff74c3be4494e4655ff2a8bd16e1d1d315dd55227c4b313dffdd1adeddd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the measurement period, the acquirer also shall recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. However, the measurement period shall not exceed one year from the acquisition date. ##### [805-10-25-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:18258ad3ef602a8606fd40de01d9b652f72ee6439d76a2309bd26e7a5d0da34a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The measurement period is the period after the acquisition date during which the acquirer may adjust the provisional amounts recognized for a business combination. The measurement period provides the acquirer with a reasonable time to obtain the information necessary to identify and measure any of the following as of the acquisition date in accordance with the requirements of this Topic: 1. a The [identifiable](https://asc.understandingaccounting.org/glossary/i/#identifiable "An asset is identifiable if it meets either of the following criteria: It is separable, that is, capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability, regardless of whether the entity intends to do so. It arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.") assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree (see Subtopic 805-20) 2. b The consideration transferred for the acquiree (or the other amount used in measuring [goodwill](https://asc.understandingaccounting.org/glossary/g/#goodwill "An asset representing the future economic benefits arising from other assets acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation that are not individually identified and separately recognized. For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph 958-805-25-29.") in accordance with paragraphs [805-30-30-1 through 30-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) ) 3. c In a business combination achieved in stages, the equity interest in the acquiree previously held by the acquirer (see paragraph [805-30-30-1(a)(3)](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1)) 4. d The resulting goodwill recognized in accordance with paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) or the gain on a bargain purchase recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2). ##### [805-10-25-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:a73a8760d18ced4e157fb05b9000d72d462b609d001e263462d86fbb7dee8dcd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer recognizes an increase (decrease) in the provisional amount recognized for an identifiable asset (liability) by means of a decrease (increase) in goodwill. However, new information obtained during the measurement period sometimes may result in an adjustment to the provisional amount of more than one asset or liability. For example, the acquirer might have assumed a liability to pay damages related to an accident in one of the acquiree's facilities, part or all of which are covered by the acquiree's liability insurance policy. If the acquirer obtains new information during the measurement period about the acquisition-date fair value of that liability, the adjustment to goodwill resulting from a change to the provisional amount recognized for the liability would be offset (in whole or in part) by a corresponding adjustment to goodwill resulting from a change to the provisional amount recognized for the claim receivable from the insurer. ##### [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:7ec0bf424d31937b02b51c451b53b2a076e3ce53da0d7a8a7386dcf958d9d878 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the measurement period, the acquirer shall recognize adjustments to the provisional amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined. Thus, the acquirer shall adjust its financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. Paragraph [805-10-55-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-16) and Example 1 (see paragraph [805-10-55-27](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-27)) provide additional guidance. ##### [805-10-25-18](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:dc38be7be5679ca3909c1e8ef05ef9a09272a7d02f005627747468ca8210000f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-30-2 through 30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-2) require consideration of all pertinent factors in determining whether information obtained after the acquisition date should result in an adjustment to the provisional amounts recognized or whether that information results from events that occurred after the acquisition date. ##### [805-10-25-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:3720de9578b1cc95692d85745c717552ade13f142a42ea0da58895f4ef8d9fb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the measurement period ends, the acquirer shall revise the accounting for a business combination only to correct an error in accordance with Topic 250. #### Determining What Is Part of the Business Combination Transaction ##### [805-10-25-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:960c7eb1c24e42821fdd88c8c99c86b1ff06a5b78ada6c80e747dbb9f7397481 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer and the acquiree may have a preexisting relationship or other arrangement before negotiations for the business combination began, or they may enter into an arrangement during the negotiations that is separate from the business combination. In either situation, the acquirer shall identify any amounts that are not part of what the acquirer and the acquiree (or its former [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.")) exchanged in the business combination, that is, amounts that are not part of the exchange for the acquiree. The acquirer shall recognize as part of applying the acquisition method only the consideration transferred for the acquiree and the assets acquired and liabilities assumed in the exchange for the acquiree. Separate transactions shall be accounted for in accordance with the relevant generally accepted accounting principles (GAAP). ##### [805-10-25-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:c9f0ed6c5f9bfaf456fa39d4b12438f02963878446b38ab3c40b09ec9926b52e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transaction entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer or the combined entity, rather than primarily for the benefit of the acquiree (or its former owners) before the combination, is likely to be a separate transaction. The following are examples of separate transactions that are not to be included in applying the acquisition method: 1. a A transaction that in effect settles preexisting relationships between the acquirer and acquiree (see paragraphs [805-10-55-20 through 55-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) ) 2. b A transaction that compensates employees or former owners of the acquiree for future services (see paragraphs [805-10-55-24 through 55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) ) 3. c A transaction that reimburses the acquiree or its former owners for paying the acquirer's acquisition-related costs (see paragraph [805-10-25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-23)). ##### [805-10-25-22](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:c5d2cac416124b01e56088307cf5ce4c5ecc8c731595752a520e7f1d4155736d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-55-18 through 55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-18) , [805-30-55-6 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) , [805-740-25-10 through 25-11](https://asc.understandingaccounting.org/asc/740/805/#740-805-25-10) , [805-740-45-5 through 45-6](https://asc.understandingaccounting.org/asc/740/805/#740-805-45-5) , and Example 2 (see paragraph [805-10-55-30](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30)) provide additional guidance for determining whether a transaction is separate from the business combination transaction. #### Acquisition-Related Costs ##### [805-10-25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:36530d7a4755e914f64761b130ea09ab2c1e37998dd7573bc9897eb88a5925b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition-related costs are costs the acquirer incurs to effect a business combination. Those costs include finder's fees; advisory, legal, accounting, valuation, and other professional or consulting fees; general administrative costs, including the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. The acquirer shall account for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received, with one exception. The costs to issue debt or equity securities shall be recognized in accordance with other applicable GAAP.