# ASC 805-10: Business Combinations — Overall Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/10/) 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): 2026-09-10T01:22:15.852Z to 2026-09-10T01:23:02.215Z Record version: sha256:e654801785c4a8062f81e48cf3ef91b68058017fb4f10bba119427194ec11368 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10: Business Combinations — Overall ### Machine-generated study aids ```json { "summary": "ASC 805-10 is the Overall subtopic of Business Combinations: it sets the scope of the Topic and governs two of the four steps of the acquisition method — identifying the acquirer and determining the acquisition date — plus the definition of a business, the measurement period, and deciding what is (and is not) part of the business combination exchange. Every transaction meeting the definition of a business combination must be accounted for by the acquisition method (805-10-25-1); if the acquired set is not a business, it is an asset acquisition. It also sets the disclosure objectives and requirements enabling users to evaluate the nature and financial effects of a combination.", "key_points": [ "A business combination must be accounted for using the acquisition method, whose four steps are identifying the acquirer, determining the acquisition date, recognizing/measuring identifiable assets acquired, liabilities assumed and any noncontrolling interest, and recognizing/measuring goodwill or a bargain purchase gain (805-10-05-4; 805-10-25-1); the Topic does not apply to asset acquisitions, common-control combinations, or joint venture formations (805-10-15-4).", "The acquirer is the entity that obtains control, identified using the controlling financial interest guidance in the General Subsections of Subtopic 810-10; if that is not clear, the factors in 805-10-55-11 through 55-15 apply, and for an acquired VIE the primary beneficiary is the acquirer (805-10-25-5).", "The acquisition date is the date the acquirer obtains control, generally the closing date, but may be earlier or later based on all pertinent facts and circumstances (805-10-25-6 through 25-7).", "A set is a business only if it includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output; if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business (805-10-55-5 through 55-5C).", "In a step acquisition the acquirer remeasures its previously held equity interest at acquisition-date fair value with the gain or loss in earnings, reclassifying related amounts (including cumulative translation adjustment) out of OCI (805-10-25-10).", "Provisional amounts may be adjusted during the measurement period — which ends when the information is obtained or is unobtainable, but never exceeds one year from the acquisition date — with a corresponding adjustment to goodwill recognized in the period the adjustment is determined; after that, changes are error corrections under Topic 250 (805-10-25-13 through 25-19).", "Transactions separate from the exchange for the acquiree (settlement of preexisting relationships, compensation for future services, reimbursement of acquisition costs) are accounted for under other GAAP, and acquisition-related costs are expensed as incurred except debt/equity issuance costs (805-10-25-20 through 25-23)." ], "categories": [ "Business combinations", "Recognition", "Initial measurement", "Disclosure" ], "audience_level": "intermediate", "student_note": "This is the gateway subtopic: exams test whether a transaction is a business combination versus an asset acquisition (the concentration screen and the input/substantive process framework) and who the accounting acquirer is in a reverse acquisition. A common misunderstanding is that measurement-period adjustments are retrospectively restated — under current guidance they are recorded in the period determined, with the cumulative earnings effect (e.g., catch-up depreciation) recognized in current earnings.", "related_topics": [ "805-20", "805-30", "805-40", "805-50", "805-60", "810-10" ], "key_concepts": [ "acquisition method", "definition of a business", "identifying the acquirer", "acquisition date", "measurement period", "step acquisition", "acquisition-related costs", "preexisting relationship settlement" ] } ``` Source downloaded (UTC): 2026-09-10T01:22:15.852Z to 2026-09-10T01:22:15.852Z Record version: sha256:ab7afe7c1e60351743e949e5484e2480e447f955fa85fa92a06d049221bbafc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/10/#00-status) SEC content: no ##### [805-10-00-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:15.852Z to 2026-09-10T01:22:15.852Z Record version: sha256:d1e4a640d0b03f63cf7e065074aea9983b43d92e887955cc93ab804983820016 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
AcquireeAmendedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Beneficial InterestsAddedAccounting Standards Update No. 2014-1308/05/2014
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
Collateralized Financing EntityAddedAccounting Standards Update No. 2014-1308/05/2014
Conduit Debt SecurityAddedMaintenance Update 2014-20 (PDF)09/29/2014
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Control of a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Equity InterestsAmendedAccounting Standards Update No. 2010-0701/28/2010
Financial Asset (2nd def.)AmendedAccounting Standards Update No. 2016-1912/14/2016
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAmendedAccounting Standards Update No. 2010-0701/28/2010
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Merger of Not-for-Profit EntitiesAddedAccounting Standards Update No. 2010-0701/28/2010
Nonfinancial AssetAddedAccounting Standards Update No. 2014-1308/05/2014
Nonprofit ActivityAddedAccounting Standards Update No. 2010-0701/28/2010
Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
OwnersAmendedAccounting Standards Update No. 2010-0701/28/2010
Primary BeneficiaryAddedAccounting Standards Update No. 2025-0305/12/2025
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Public Business EntityAddedAccounting Standards Update No. 2015-1609/25/2015
Public EntityAmendedMaintenance Update 2014-20 (PDF)09/29/2014
Public EntityAmendedAccounting Standards Update No. 2010-0701/28/2010
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
805-10-05-1AmendedAccounting Standards Update No. 2023-0508/23/2023
805-10-15-1AmendedAccounting Standards Update No. 2023-0508/23/2023
805-10-15-3AmendedAccounting Standards Update No. 2010-0701/28/2010
805-10-15-4AmendedAccounting Standards Update No. 2023-0508/23/2023
805-10-15-4AmendedAccounting Standards Update No. 2016-1912/14/2016
805-10-15-4AmendedAccounting Standards Update No. 2014-1308/05/2014
805-10-15-4AmendedAccounting Standards Update No. 2010-0701/28/2010
805-10-25-5AmendedAccounting Standards Update No. 2025-0305/12/2025
805-10-25-10AmendedAccounting Standards Update No. 2016-0101/05/2016
805-10-25-10AmendedAccounting Standards Update No. 2013-0503/04/2013
805-10-25-13AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-25-17AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-50-1 through 50-5
AmendedAccounting Standards Update No. 2025-1112/08/2025
805-10-50-2AmendedMaintenance Update 2016-05 (PDF)04/12/2016
805-10-50-2AmendedAccounting Standards Update No. 2010-0201/06/2010
805-10-50-2AmendedAccounting Standards Update No. 2010-2912/21/2010
805-10-50-6SupersededAccounting Standards Update No. 2015-1006/12/2015
805-10-50-7AmendedAccounting Standards Update No. 2025-1112/08/2025
805-10-55-3AAddedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-4AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-5AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-5A through 55-5F
AddedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-6AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-7SupersededAccounting Standards Update No. 2017-0101/05/2017
805-10-55-8AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-9AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-10AmendedAccounting Standards Update No. 2025-0305/12/2025
805-10-55-10AmendedMaintenance Update 2018-02 (PDF)02/02/2018
805-10-55-16AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-55-27 through 55-29
AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-55-37AmendedMaintenance Update 2016-11 (PDF)06/27/2016
805-10-55-44AmendedAccounting Standards Update No. 2016-0202/25/2016
805-10-55-45AmendedMaintenance Update No. 2025-05 (PDF)06/20/2025
805-10-55-47AmendedAccounting Standards Update No. 2011-0405/12/2011
805-10-55-49AmendedAccounting Standards Update No. 2010-2912/21/2010
805-10-55-50AddedAccounting Standards Update No. 2010-2912/21/2010
805-10-55-51 through 55-96
AddedAccounting Standards Update No. 2017-0101/05/2017
805-10-65-1AmendedAccounting Standards Update No. 2010-0701/28/2010
805-10-65-2AddedAccounting Standards Update No. 2010-2912/21/2010
805-10-65-3AddedAccounting Standards Update No. 2015-1609/25/2015
805-10-65-4AddedAccounting Standards Update No. 2017-0101/05/2017
805-10-65-5AddedAccounting Standards Update No. 2025-0305/12/2025
Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:e66fc8ead34cf1c4bf4043061c3d11d22b25cd4c45390e53bd4245d869df3985 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/10/#05-overview-and-background) SEC content: no ##### [805-10-05-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:e0898cd55938aff8e22e82157c926361b2544cdc9f4ce14efbd2e2ad63fe3405 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Business Combinations Topic provides guidance on the accounting and reporting for transactions that represent [business combinations](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.") to be accounted for under the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4)). In addition, the Topic includes Subtopic 805-50, which provides guidance on transactions sometimes associated with business combinations but that do not meet the requirements to be accounted for as business combinations under the acquisition method, and Subtopic 805-60, which provides guidance on the formation of a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities."). The Business Combinations Topic includes the following Subtopics: 1. a Overall 2. b Identifiable Assets and Liabilities, and Any Noncontrolling Interest 3. c Goodwill or Gain from Bargain Purchase, Including Consideration Transferred 4. d Reverse Acquisitions 5. e Related Issues 6. f Income Taxes 7. g Joint Venture Formations. ##### [805-10-05-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:059e83eb1499b835483be52705a0c48498989154dda21df3d0cda2d56b6619bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To accomplish the objective identified in paragraph [805-10-10-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-10-1), this Topic establishes principles and requirements for how 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.") does each of the following: 1. a Recognizes and measures in its financial statements 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, the liabilities assumed, and any [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 [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.") 2. b Recognizes and measures the [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.") acquired in the business combination or a gain from a bargain purchase 3. c Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. ##### [805-10-05-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:f5bdd2b5b9369282cf6f258ec13b6ef2976e68389bbeb2baf8962c7c8f12a78b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic and Subtopics 805-20 and 805-30 address specific aspects of the acquisition method. Subtopic 805-20 addresses the recognition and measurement of identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. Subtopic 805-30 addresses the recognition and measurement of goodwill or a gain from a bargain purchase. This Subtopic addresses requirements of the acquisition method, as outlined in the following paragraph, not addressed by those two Subtopics, including the following: 1. a Whether a particular transaction or event is a business combination 2. b The identification of the acquirer and the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c The period of time that an acquirer has to adjust provisional amounts, referred to as the measurement period 4. d The determination of what is part of a business combination transaction. ##### [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:ce19847917594fc7991d88eeef43294b0fb19a708fe31a3df750ac44d045e0fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-1) requires that a business combination be accounted for by applying what is referred to as the acquisition method. The acquisition method requires all of the following steps: 1. a Identifying the acquirer 2. b Determining the acquisition date 3. c Recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree 4. d Recognizing and measuring goodwill or a gain from a bargain purchase. ##### [805-10-05-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:17c0a3be0b1ba2223656e25b9de77c7e9bcd36ab68134730fccf7c7485d13ed2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses steps (a) and (b) of the acquisition method as listed in the preceding paragraph. Subtopic 805-20 addresses step (c) and Subtopic 805-30 addresses step (d). ##### [805-10-05-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:e63c041151624c0aecfb9bad68ac280182e92199720bc84c13bc360edd7a4197 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs presented in bold type in this Topic state the main principles. All paragraphs have equal authority. Source downloaded (UTC): 2026-09-10T01:22:21.226Z to 2026-09-10T01:22:21.226Z Record version: sha256:cad106faac7d27b4e25bc4eb54ed422f5608dc20a0c9c7ccae31e8aa5b6fa91b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/805/10/#10-objectives) SEC content: no ##### [805-10-10-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:21.226Z to 2026-09-10T01:22:21.226Z Record version: sha256:dafac1dca1f4845605230212f98e3d49e64fa2de9a52c9f755cb295152edfed2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the Subtopics in this Topic that address [business combinations](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.") is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:0c12eb02ec13d463e47a73261f459a9bb5c3c066ea2e57a284fb944cbfd2096e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-10-15-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:efbc252d6de87241b4e72b96240132c550bf33d66ede0315b34c1b205a918e1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Scope Section of the Overall Subtopic establishes the pervasive scope for all Subtopics of the Business Combinations Topic. Unless explicitly addressed within specific Subtopics, the following scope guidance applies to all Subtopics of the Business Combinations Topic, with the exception of Subtopic 805-50and Subtopic 805-60, each of which has its own discrete scope guidance. #### Entities ##### [805-10-15-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:9d0b06e913a8f226b145407f4cd112ecb805dd44e3b822e7c255ba64feacded1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Business Combinations Topic applies to all entities, with specific qualifications and exceptions in paragraph [805-10-15-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-4). #### Transactions ##### [805-10-15-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:3f0ebd11b4bd972f55f3b882304388b3b4b137c541aec4b3c561eb38864d77a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Business Combinations Topic applies to all transactions or other events that meet the definition of 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.") or an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities."). ##### [805-10-15-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:381778ef0d9f9a45bb6d741a6b9fc87f8302a39444335700715d19e29c80b9ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Business Combinations Topic does not apply to any of the following: 1. a The formation of a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") or a [corporate joint venture](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.") (except as described in Subtopic 805-60) 2. b The acquisition of an asset or a group of assets that does not 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.") or a [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.") 3. c A combination between entities, businesses, or nonprofit activities under common [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") (see paragraph [805-50-15-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-6) for examples) 4. d An acquisition by a not-for-profit entity for which the acquisition date is before December 15, 2009 or a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.") (NFPs) 5. e A transaction or other event in which an NFP obtains [control of a not-for-profit entity](https://asc.understandingaccounting.org/glossary/c/#control-of-a-not-for-profit-entity "See Control.") but does not consolidate that entity, as described in paragraph [958-810-25-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-4). The Business Combinations Topic also does not apply if an NFP that obtained control in a transaction or other event in which consolidation was permitted but not required decides in a subsequent annual reporting period to begin consolidating a controlled entity that it initially chose not to consolidate. 6. f Financial assets and financial liabilities of a consolidated variable interest entity that is a [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") within the scope of the guidance on collateralized financing entities in Subtopic 810-10. 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. Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:19d55a8913c4da3fef6b11fea0ea0e6b1231768c6890d300f8f3ea7f0f961e25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/10/#30-initial-measurement) SEC content: no ##### [805-10-30-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:0aec4eacc052af558ab8647a1b6cb5003040254e85827a4b5c93d44e1dfd8d63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-15) establishes that the measurement period provides 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.") with a reasonable time to obtain the information necessary to identify and measure various items in 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."). ##### [805-10-30-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:a4bfa05cb9cfda4e44722539b7327579cea640436dc16b6acfdd12485dd5988e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall consider all pertinent factors in determining whether information obtained after the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") should result in an adjustment to the provisional amounts recognized or whether that information results from events that occurred after the acquisition date. Pertinent factors include the time at which additional information is obtained and whether the acquirer can identify a reason for a change to provisional amounts. ##### [805-10-30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:f40564df98c3b918e44e7a5bf0a2a1700d16e1eb60ff28a67285af77687ff5d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Information that is obtained shortly after the acquisition date is more likely to reflect circumstances that existed at the acquisition date than is information obtained several months later. For example, unless an intervening event that changed its [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.") can be identified, the sale of an asset to a third party shortly after the acquisition date for an amount that differs significantly from its provisional fair value determined at that date is likely to indicate an error in the provisional amount. Source downloaded (UTC): 2026-09-10T01:22:33.360Z to 2026-09-10T01:22:33.360Z Record version: sha256:df94910a5eb0bfbc8b2f78a2ddd3ed97a9153c7528a50fe3ff8b2879d6227ca7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/10/#35-subsequent-measurement) SEC content: no ##### [805-10-35-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:33.360Z to 2026-09-10T01:22:33.360Z Record version: sha256:3412eb1df1ee61970a46094d5202771de2061ee7f54d364ccdc2c6e3daddd883 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, an [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.") shall subsequently measure and account for assets acquired, liabilities assumed or incurred, and equity instruments issued in 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.") in accordance with other applicable generally accepted accounting principles (GAAP) for those items, depending on their nature. However, this Topic provides guidance on subsequently measuring and accounting for any of the following assets acquired, liabilities assumed or incurred, and equity instruments issued in a business combination: 1. a Reacquired rights (see paragraph [805-20-35-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-2)) 2. b Assets and liabilities arising from contingencies recognized as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") (see paragraph [805-20-35-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-3)) 3. c Indemnification assets (see paragraph [805-20-35-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4)) 4. d [Contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.") (see paragraph [805-30-35-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1)) 5. e Contingent consideration arrangements of an acquiree assumed by the acquirer (see paragraph [805-30-35-1A](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1A)). ##### [805-10-35-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:33.360Z to 2026-09-10T01:22:33.360Z Record version: sha256:6616df47739f53aae786de1eaae310af6c267732e2bcd55f23452938b69e3722 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other Subtopics in this Topic provide examples of guidance elsewhere in GAAP on subsequently measuring and accounting for assets acquired, liabilities assumed or incurred, and any noncontrolling interests in a business combination. Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:9b5229871d3a18526814a1429ffd8055818f51fa3c7aa22c799f2fbae5de79e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/10/#50-disclosure) SEC content: no #### Business Combinations Occurring during a Current Reporting Period or after the Reporting Date but before the Financial Statements Are Issued ##### [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:039ef3b0532daf1740fdb7bf2ed4ae82233a74cee8065e3b8223aaeef2996fb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall disclose information that enables users of its financial statements to evaluate the nature and financial effect of 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.") that occurs either: 1. a During the current reporting period 2. b After the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For interim and annual reporting periods, 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.") shall disclose information that enables users of its financial statements to evaluate the nature and financial effect of 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.") that occurs either: 1. a During the current reporting period 2. b After the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25). ##### [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:f023cc57183a911be7c7478207e1ce1ec5158043f5b557a03f2ff1ff79e76c82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To meet the objective in paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1), the acquirer shall disclose the following information for each business combination that occurs during the reporting period: 1. a The name and a description 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.") 2. b The [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c The percentage of voting [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.") acquired 4. d The primary reasons for the business combination and a description of how the acquirer obtained [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 5. e For transactions that are recognized separately from the acquisition of assets and assumptions of liabilities in the business combination (see paragraph [805-10-25-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20)), all of the following: 1. 1 A description of each transaction 2. 2 How the acquirer accounted for each transaction 3. 3 The amounts recognized for each transaction and the line item in the financial statements in which each amount is recognized 4. 4 If the transaction is the effective settlement of a preexisting relationship, the method used to determine the settlement amount. 6. f The disclosure of separately recognized transactions required in (e) shall include the amount of acquisition-related costs, the amount recognized as an expense, and the line item or items in the income statement in which those expenses are recognized. The amount of any issuance costs not recognized as an expense and how they were recognized also shall be disclosed. 7. g In a business combination achieved in stages, all of the following: 1. 1 The 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.") of the equity interest in the acquiree held by the acquirer immediately before the acquisition date 2. 2 The amount of any gain or loss recognized as a result of remeasuring to fair value the equity interest in the acquiree held by the acquirer immediately before the business combination (see paragraph [805-10-25-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-10)) and the line item in the income statement in which that gain or loss is recognized 3. 3 The valuation technique(s) used to measure the acquisition-date fair value of the equity interest in the acquiree held by the acquirer immediately before the business combination 4. 4 Information that enables users of the acquirer's financial statements to assess the inputs used to develop the fair value measurement of the equity interest in the acquiree held by the acquirer immediately before the business combination. 8. h If the acquirer is a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market."), all of the following: 1. 1 The amounts of revenue and earnings of the acquiree since the acquisition date included in the consolidated income statement for the reporting period. 2. 2 If comparative financial statements are not presented, the revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period (supplemental pro forma information). 3. 3 If comparative financial statements are presented, the revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period (supplemental pro forma information). For example, for a calendar year-end entity, disclosures would be provided for a business combination that occurs in 20X2, as if it occurred on January 1, 20X1. Such disclosures would not be revised if 20X2 is presented for comparative purposes with the 20X3 financial statements (even if 20X2 is the earliest period presented). 4. 4 The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the business combination(s) included in the reported pro forma revenue and earnings (supplemental pro forma information). If disclosure of any of the information required by (h) is impracticable, the acquirer shall disclose that fact and explain why the disclosure is impracticable. In this context, the term _impracticable_ has the same meaning as in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)To meet the objective in paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1), the acquirer shall disclose in interim and annual reporting periods the following information for each business combination that occurs during the reporting period: 1. a The name and a description 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.") 2. b The [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c The percentage of voting [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.") acquired 4. d The primary reasons for the business combination and a description of how the acquirer obtained [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 5. e For transactions that are recognized separately from the acquisition of assets and assumptions of liabilities in the business combination (see paragraph [805-10-25-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20)), all of the following: 1. 1 A description of each transaction 2. 2 How the acquirer accounted for each transaction 3. 3 The amounts recognized for each transaction and the line item in the financial statements in which each amount is recognized 4. 4 If the transaction is the effective settlement of a preexisting relationship, the method used to determine the settlement amount. 6. f The disclosure of separately recognized transactions required in (e) shall include the amount of acquisition-related costs, the amount recognized as an expense, and the line item or items in the income statement in which those expenses are recognized. The amount of any issuance costs not recognized as an expense and how they were recognized also shall be disclosed. 7. g In a business combination achieved in stages, all of the following: 1. 1 The 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.") of the equity interest in the acquiree held by the acquirer immediately before the acquisition date 2. 2 The amount of any gain or loss recognized as a result of remeasuring to fair value the equity interest in the acquiree held by the acquirer immediately before the business combination (see paragraph [805-10-25-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-10)) and the line item in the income statement in which that gain or loss is recognized 3. 3 The valuation technique(s) used to measure the acquisition-date fair value of the equity interest in the acquiree held by the acquirer immediately before the business combination 4. 4 Information that enables users of the acquirer's financial statements to assess the inputs used to develop the fair value measurement of the equity interest in the acquiree held by the acquirer immediately before the business combination. 8. h If the acquirer is a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market."), all of the following: 1. 1 The amounts of revenue and earnings of the acquiree since the acquisition date included in the consolidated income statement for the reporting period. 2. 2 If comparative financial statements are not presented, the revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period (supplemental pro forma information). 3. 3 If comparative financial statements are presented, the revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period (supplemental pro forma information). For example, for a calendar year-end entity, disclosures would be provided for a business combination that occurs in 20X2, as if it occurred on January 1, 20X1. Such disclosures would not be revised if 20X2 is presented for comparative purposes with the 20X3 financial statements (even if 20X2 is the earliest period presented). 4. 4 The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the business combination(s) included in the reported pro forma revenue and earnings (supplemental pro forma information). If disclosure of any of the information required by (h) is impracticable, the acquirer shall disclose that fact and explain why the disclosure is impracticable. In this context, the term _impracticable_ has the same meaning as in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9). ##### [805-10-50-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:614fec119a7f80b9010ef450c85a51e5ee64f01b97683c04897c5b33f6fb81b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For individually immaterial business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by (e) through (h) in paragraph [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) in the aggregate. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For individually immaterial business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by (e) through (h) in paragraph [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) in the aggregate in interim and annual reporting periods. ##### [805-10-50-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:060eee10780284577af781f0da5f5657672af91d247273f5678ea4a4e7711acd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. In that situation, the acquirer shall describe which disclosures could not be made and the reason why they could not be made. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If the acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2)in interim and annual reporting periods unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. In that situation, the acquirer shall describe which disclosures could not be made and the reason why they could not be made. #### The Financial Effects of Adjustments That Relate to Business Combinations That Occurred in the Current or Previous Reporting Periods ##### [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:c4ab09fcd12142aa628a21886456b1ae95ff0eb53530baffc92f220f7c5028d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall disclose information that enables users of its financial statements to evaluate the financial effects of adjustments recognized in the current reporting period that relate to business combinations that occurred in the current or previous reporting periods. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)The acquirer shall disclose information in interim and annual reporting periods that enables users of its financial statements to evaluate the financial effects of adjustments recognized in the current reporting period that relate to business combinations that occurred in the current or previous reporting periods. ##### [805-10-50-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:1dfb0c3a38ef2025b83cde91e9f347e465a833985076f0fd134d798e5570e566 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-10](https://asc.understandingaccounting.org/updates/asu-2015-10/). #### Other Disclosures ##### [805-10-50-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-7) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:11ecfd3f5a86058014b763069dffcc1bab6e2b90440042af7ed92590eeaf2b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the specific disclosures required by this Subtopic and other generally accepted accounting principles (GAAP) do not meet the objectives set out in paragraphs [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) and [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5), the acquirer shall disclose whatever additional information is necessary to meet those objectives. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If the specific disclosures required by this Subtopic and other generally accepted accounting principles (GAAP) do not meet the objectives set out in paragraphs [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) and [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5), the acquirer shall disclose whatever additional information is necessary to meet those objectives in interim and annual reporting periods. ##### [805-10-50-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:b7ba3367f3257f647b3f06cce03d74a23f378229abf2dec422dd8b1f9849bc6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 5 (see paragraph [805-10-55-37 through 55-50](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37) ) illustrates the disclosure requirements applicable to business combinations. Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:cac766ebbe02af91208da5087b2a2d3352176b97d9f1273e4eb29f1a851cca75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/10/#55-implementation-guidance-and-illustrations) SEC content: no ##### [805-10-55-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:304b54edfa67650d87c74ad7a99ed7719b8b8a84780c0cf8636537b900a3635d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides additional guidance and illustrations that address the general application of accounting requirements for [business combinations](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."). #### Implementation Guidance ##### [805-10-55-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:eab472fac06146e461a7b8d3bf0c82b01715ae47f0db299455127200b3bfb99c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-1) requires an entity to determine whether a transaction or event is a business combination. In a business combination, an [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.") might obtain [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of an [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.") in a variety of ways, including any of the following: 1. a By transferring cash, cash equivalents, or other assets (including net assets that 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.")) 2. b By incurring liabilities 3. c By issuing [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.") 4. d By providing more than one type of consideration 5. e Without transferring consideration, including by contract alone (see paragraph [805-10-25-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-11)). ##### [805-10-55-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:29aa6b139e33db618d036333f465ef798288f3213ee96cbccecf78790ffac087 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business combination may be structured in a variety of ways for legal, taxation, or other reasons, which include but are not limited to, the following: 1. a One or more businesses become subsidiaries of an acquirer or the net assets of one or more businesses are legally merged into the acquirer. 2. b One combining entity transfers its net assets or its [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.") transfer their equity interests to another combining entity or its owners. 3. c All of the combining entities transfer their net assets or the owners of those entities transfer their equity interests to a newly formed entity (sometimes referred to as a roll-up or put-together transaction). 4. d A group of former owners of one of the combining entities obtains control of the combined entity. ##### [805-10-55-3A](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-3A) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:cd331b1e5aa0d113064de1d377a205b911d8619e4815e6b11ab8466807a9dcf7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. To be considered a business, an integrated set must meet the requirements in paragraphs [805-10-55-4 through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-4) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) . ##### [805-10-55-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a02ac3d939010aa2737b2902aac8313b603f1911b6f27b494fa8ac18c8d30be4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business consists of inputs and processes applied to those inputs that have the ability to contribute to the creation of outputs. Although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business. The three elements of a business are defined as follows: 1. a Input. Any economic resource that creates, or has the ability to contribute to the creation of, outputs when one or more processes are applied to it. Examples include long-lived assets (including [intangible assets](https://asc.understandingaccounting.org/glossary/i/#intangible-assets "Assets (not including financial assets) that lack physical substance. (The term intangible assets is used to refer to intangible assets other than goodwill.)") or rights to use long-lived assets), intellectual property, the ability to obtain access to necessary materials or rights, and employees. 2. b Process. Any system, standard, protocol, convention, or rule that when applied to an input or inputs, creates or has the ability to contribute to the creation of outputs. Examples include strategic management processes, operational processes, and resource management processes. These processes typically are documented, but the intellectual capacity of an organized workforce having the necessary skills and experience following rules and conventions may provide the necessary processes that are capable of being applied to inputs to create outputs. Accounting, billing, payroll, and other administrative systems typically are not processes used to create outputs. 3. c Output. The result of inputs and processes applied to those inputs that provide goods or services to customers, investment income (such as dividends or interest), or other revenues. ##### [805-10-55-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e2d93083aabb03a0a42401eb3b692bb0557fc27dcdf5db6da437feb3d8889db7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be capable of being conducted and managed for the purposes described in paragraph [805-10-55-3A](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-3A), an integrated set of activities and assets requires two essential elements—inputs and processes applied to those inputs. A business need not include all the inputs or processes that the seller used in operating that business. However, to be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) provide a practical screen to determine when a set would not be considered a business. If the screen is not met, further assessment is necessary to determine whether the set is a business. Paragraphs [805-10-55-5D through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) provide a framework to assist an entity in evaluating whether the set includes both an input and a substantive process. ##### [805-10-55-5A](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5120d7164d0281983a8c615ba5e176a734ad08a0fada35203dcaf898643bf22b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not considered a business. Gross assets acquired should exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities. However, the gross assets acquired should include any consideration transferred (plus the fair value of any noncontrolling interest and previously held interest, if any) in excess of the fair value of net identifiable assets acquired. ##### [805-10-55-5B](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5B) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:0ba4375ddf4152487b256fa6b158357172493489187b04795dc840fbca112370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A single identifiable asset includes any individual asset or group of assets that could be recognized and measured as a single identifiable asset in a business combination. However, for purposes of this evaluation, the following should be considered a single asset: 1. a A tangible asset that is attached to and cannot be physically removed and used separately from another tangible asset (or an intangible asset representing the right to use a tangible asset) without incurring significant cost or significant diminution in utility or fair value to either asset (for example, land and building) 2. b In-place lease intangibles, including favorable and unfavorable intangible assets or liabilities, and the related leased assets. ##### [805-10-55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5C) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d7d10425bdc330b24344d3d748995460caaeb356af1ac12192373b73a7290cbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A group of similar assets includes multiple assets identified in accordance with paragraph [805-10-55-5B](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5B). When evaluating whether assets are similar, an entity should consider the nature of each single identifiable asset and the risks associated with managing and creating outputs from the assets (that is, the risk characteristics). However, the following should not be considered similar assets: 1. a A tangible asset and an intangible asset 2. b Identifiable intangible assets in different major [intangible asset classes](https://asc.understandingaccounting.org/glossary/i/#intangible-asset-class "A group of intangible assets that are similar, either by their nature or by their use in the operations of an entity.") (for example, customer-related intangibles, trademarks, and in-process research and development) 3. c A financial asset and a nonfinancial asset 4. d Different major classes of financial assets (for example, accounts receivable and marketable securities) 5. e Different major classes of tangible assets (for example, inventory, manufacturing equipment, and automobiles) 6. f Identifiable assets within the same major asset class that have significantly different risk characteristics. ##### [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ac2658a0f433d6382ac57cffa60df3fe7b990bc967d3f936e199767b676a95c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a set does not have outputs (for example, an early stage company that has not generated revenues), the set will have both an input and a substantive process that together significantly contribute to the ability to create outputs only if it includes employees that form an organized workforce and an input that the workforce could develop or convert into output. The organized workforce must have the necessary skills, knowledge, or experience to perform an acquired process (or group of processes) that when applied to another acquired input or inputs is critical to the ability to develop or convert that acquired input or inputs into outputs. An entity should consider the following in evaluating whether the acquired workforce is performing a substantive process: 1. a A process (or group of processes) is not critical if, for example, it is considered ancillary or minor in the context of all the processes required to create outputs. 2. b Inputs that employees who form an organized workforce could develop (or are developing) or convert into outputs could include the following: 1. 1 Intellectual property that could be used to develop a good or service 2. 2 Resources that could be developed to create outputs 3. 3 Access to necessary materials or rights that enable the creation of future outputs. Examples of inputs that could be developed include technology, mineral interests, real estate, and in-process research and development. ##### [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:20ce50eb3272fa30d86e409dfccd11cf5ef87e2ec2d4062decd1125470c78870 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When the set has outputs (that is, there is a continuation of revenue before and after the transaction), the set will have both an input and a substantive process that together significantly contribute to the ability to create outputs when any of the following are present: 1. a Employees that form an organized workforce that has the necessary skills, knowledge, or experience to perform an acquired process (or group of processes) that when applied to an acquired input or inputs is critical to the ability to continue producing outputs. A process (or group of processes) is not critical if, for example, it is considered ancillary or minor in the context of all of the processes required to continue producing outputs. 2. b An acquired contract that provides access to an organized workforce that has the necessary skills, knowledge, or experience to perform an acquired process (or group of processes) that when applied to an acquired input or inputs is critical to the ability to continue producing outputs. An entity should assess the substance of an acquired contract and whether it has effectively acquired an organized workforce that performs a substantive process (for example, considering the duration and the renewal terms of the contract). 3. c The acquired process (or group of processes) when applied to an acquired input or inputs significantly contributes to the ability to continue producing outputs and cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs. 4. d The acquired process (or group of processes) when applied to an acquired input or inputs significantly contributes to the ability to continue producing outputs and is considered unique or scarce. ##### [805-10-55-5F](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5F) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dba0f0ee0de483eca083652fdd585188a4e94a9cee2f1e8da8bca0c43fc9806c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a set has outputs, continuation of revenues does not on its own indicate that both an input and a substantive process have been acquired. Accordingly, assumed contractual arrangements that provide for the continuation of revenues (for example, customer contracts, customer lists, and leases \[when the set is the lessor\]) should be excluded from the analysis in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) of whether a process has been acquired. ##### [805-10-55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5218f6e327e827036e1dd90869acb6727edd052b6fc94284fb20acb77756f94c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nature of the elements of a business varies by industry and by the structure of an entity's operations (activities), including the entity's stage of development. Established businesses often have many different types of inputs, processes, and outputs, whereas new businesses often have few inputs and processes and sometimes only a single output (product). Nearly all businesses also have liabilities, but a business need not have liabilities. In addition, some transferred sets of assets and activities that are not a business may have liabilities. ##### [805-10-55-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7864691d17a2725b8bd78ea7f2e62d0ee2a867ed356004a2df91fb22a445397b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-01](https://asc.understandingaccounting.org/updates/asu-2017-01/). ##### [805-10-55-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8b7bc111245e82aea5ac28bb17aad9be89e20d7560ae986be72d114bc1c41b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Determining whether a particular set of assets and activities is a business should be based on whether the integrated set is capable of being conducted and managed as a business by a [market participant](https://asc.understandingaccounting.org/glossary/m/#market-participants "Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics: They are independent of each other, that is, they are not related parties, although the price in a related-party transaction may be used as an input to a fair value measurement if the reporting entity has evidence that the transaction was entered into at market terms They are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary They are able to enter into a transaction for the asset or liability They are willing to enter into a transaction for the asset or liability, that is, they are motivated but not forced or otherwise compelled to do so."). Thus, in evaluating whether a particular set is a business, it is not relevant whether a seller operated the set as a business or whether the acquirer intends to operate the set as a business. ##### [805-10-55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3f98e481ab53445059945d1e1a1b9c84e3b7d06d662febb16786bac5f9616434 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When evaluating whether a set meets the criteria in paragraphs [805-10-55-5D through 55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) , the presence of more than an insignificant amount of [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.") may be an indicator that the acquired process is substantive and, therefore, the acquired set is a business. However, a business need not have goodwill. ##### [805-10-55-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-10) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d60d8c73e7e4b3b4c4059921eb280a29a47d2f36846235dce3a7c6238c406c8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) provides that the guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest should be used to identify the acquirer in a business combination, except when a variable interest entity (VIE) is acquired. If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) requires the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) to be considered in making that determination. 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) Paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) provides that the guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest should be used to identify the acquirer in a business combination, except when 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. If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) requires the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) to be considered in making that determination.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. For a business combination that is not effected primarily by exchanging equity interests in which a 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 accounting acquirer. ##### [805-10-55-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:4577a14079a3e880fd5cd7c93b4d6dbe970a704d412b5e85f91ba70814e3bd4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination effected primarily by transferring cash or other assets or by incurring liabilities, the acquirer usually is the entity that transfers the cash or other assets or incurs the liabilities. ##### [805-10-55-12](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8e81fe03507f795a1d49a97d06f784d0352d8fb171a0c6d67be6f394d16e97b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination effected primarily by exchanging equity interests, the acquirer usually is the entity that issues its equity interests. However, in some business combinations, commonly called [reverse acquisitions](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition."), the issuing entity is the acquiree. Subtopic 805-40 provides guidance on accounting for reverse acquisitions. Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following: 1. a The relative voting rights in the combined entity after the business combination. The acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity. In determining which group of owners retains or receives the largest portion of the voting rights, an entity shall consider the existence of any unusual or special voting arrangements and options, warrants, or convertible securities. 2. b The existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest. The acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity. 3. c The composition of the governing body of the combined entity. The acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity. 4. d The composition of the senior management of the combined entity. The acquirer usually is the combining entity whose former management dominates the management of the combined entity. 5. e The terms of the exchange of equity interests. The acquirer usually is the combining entity that pays a premium over the precombination [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.") of the equity interests of the other combining entity or entities. ##### [805-10-55-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e99db5c2e8649e62b0beb4356e2e18e556c12114de602b6120f962e7d53720d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities. ##### [805-10-55-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:fbc1958cfa617998a37bcf77759401cad6650325bec60e2cbf1edc62e7d5a215 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination involving more than two entities, determining the acquirer shall include a consideration of, among other things, which of the combining entities initiated the combination, as well as the relative size of the combining entities, as discussed in paragraph [805-10-55-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-13). ##### [805-10-55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ce108665179623d090706f1410b94d7d9dc69f432379f7f9c8604b91ae1e70ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A new entity formed to effect a business combination is not necessarily the acquirer. If a new entity is formed to issue equity interests to effect a business combination, one of the combining entities that existed before the business combination shall be identified as the acquirer by applying the guidance in paragraphs [805-10-55-10 through 55-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-10) . In contrast, a new entity that transfers cash or other assets or incurs liabilities as consideration may be the acquirer. ##### [805-10-55-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:0c03d79f9693f17468cd3768aa2dc0352028788ff40db5ad163f926b74adb3de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-25-14 through 25-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-14) and [805-10-30-2 through 30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-2) discuss requirements related to the measurement period in a business combination. If the initial accounting for a business combination is incomplete at the end of the financial reporting period in which the combination occurs, paragraph [805-10-25-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) requires that the acquirer recognize in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the acquirer recognizes adjustments to the provisional amounts needed to reflect new information obtained about facts and circumstances that existed as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") that, if known, would have affected the measurement of the amounts recognized as of that date. Paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17) requires the acquirer to recognize such adjustments with a corresponding adjustment to goodwill in the reporting period the adjustments are determined. The effects of adjustments to provisional amounts to periods after the acquisition date are included in the earnings of the adjustment period. ##### [805-10-55-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:cd7262089a146484d5ca3554a72cde0ef783eb101257d9d6fdaa24e4e610758c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [805-10-55-27](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-27)) illustrates measurement period guidance. ##### [805-10-55-18](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:0086dd4ed089d525a1cf0695bf1cdf08d99836ac4cd57db798478dc1921e7084 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-25-20 through 25-22](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20) establish the requirements to identify amounts that are not part of the business combination. The acquirer should consider the following factors, which are neither mutually exclusive nor individually conclusive, to determine whether a transaction is part of the exchange for the acquiree or whether the transaction is separate from the business combination: 1. a The reasons for the transaction. Understanding the reasons why the parties to the combination (the acquirer, the acquiree, and their owners, directors, managers, and their agents) entered into a particular transaction or arrangement may provide insight into whether it is part of the consideration transferred and the assets acquired or liabilities assumed. For example, if a transaction is arranged 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, that portion of the transaction price paid (and any related assets or liabilities) is less likely to be part of the exchange for the acquiree. Accordingly, the acquirer would account for that portion separately from the business combination. 2. b Who initiated the transaction. Understanding who initiated the transaction may also provide insight into whether it is part of the exchange for the acquiree. For example, a transaction or other event that is initiated by the acquirer may be entered into for the purpose of providing future economic benefits to the acquirer or combined entity with little or no benefit received by the acquiree or its former owners before the combination. On the other hand, a transaction or arrangement initiated by the acquiree or its former owners is less likely to be for the benefit of the acquirer or the combined entity and more likely to be part of the business combination transaction. 3. c The timing of the transaction. The timing of the transaction may also provide insight into whether it is part of the exchange for the acquiree. For example, a transaction between the acquirer and the acquiree that takes place during the negotiations of the terms of a business combination may have been entered into in contemplation of the business combination to provide future economic benefits to the acquirer or the combined entity. If so, the acquiree or its former owners before the business combination are likely to receive little or no benefit from the transaction except for benefits they receive as part of the combined entity. ##### [805-10-55-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5c62786aedb7d92f3053b164111fe96248000684e5dc36455df2020f91990f72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses specific transactions referred to in paragraph [805-10-25-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-21) that are not to be included in applying the acquisition method: 1. a Effective settlement of a preexisting relationship between the acquirer and acquiree in a business combination 2. b Arrangements for contingent payments to employees or selling shareholders. ##### [805-10-55-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:6f6c9155e1b09135ebfb1640e01db157bd0c589d5eb9445231ac141cd883af90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer and acquiree may have a relationship that existed before they contemplated the business combination, referred to here as a preexisting relationship. A preexisting relationship between the acquirer and acquiree may be contractual (for example, vendor and customer or licensor and licensee) or noncontractual (for example, plaintiff and defendant). ##### [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:80d9c712604716ddee3a9569dc3a31a1223d2cf59e6873fb6944b6a7a896e3bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the business combination in effect settles a preexisting relationship, the acquirer recognizes a gain or loss, measured as follows: 1. a For a preexisting noncontractual relationship, such as a lawsuit, fair value 2. b For a preexisting contractual relationship, the lesser of the following: 1. 1 The amount by which the contract is favorable or unfavorable from the perspective of the acquirer when compared with pricing for current market transactions for the same or similar items. An unfavorable contract is a contract that is unfavorable in terms of current market terms. It is not necessarily a loss contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. 2. 2 The amount of any stated settlement provisions in the contract available to the counterparty to whom the contract is unfavorable. If this amount is less than the amount in (b)(1), the difference is included as part of the business combination accounting. ##### [805-10-55-22](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:2cec1cb223fbea05935d8646f86968a1623c543d181e61b513b80d7fa351ed26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples 2 and 3 (see paragraphs [805-10-55-30 through 55-33](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30) ) illustrate the accounting for the effective settlement of a preexisting relationship as a result of a business combination. As indicated in Example 3 (see paragraph [805-10-55-33](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-33)), the amount of gain or loss recognized may depend in part on whether the acquirer had previously recognized a related asset or liability, and the reported gain or loss therefore may differ from the amount calculated by applying paragraph [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21). ##### [805-10-55-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:9c1f688afaedf79f3908c43332493b441cb9c6498031cb18e77f7961b74fdc26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A preexisting relationship may be a contract that the acquirer recognizes as a reacquired right in accordance with paragraph [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14). If the contract includes terms that are favorable or unfavorable when compared with pricing for current market transactions for the same or similar items, the acquirer recognizes, separately from the business combination, a gain or loss for the effective settlement of the contract, measured in accordance with paragraph [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21). ##### [805-10-55-24](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3b6c1e4c57de13762e30a68428b18dfc374cbaffb18b58c7dafc236d14b4836e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether arrangements for contingent payments to employees or selling shareholders are [contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.") in the business combination or are separate transactions depends on the nature of the arrangements. Understanding the reasons why the acquisition agreement includes a provision for contingent payments, who initiated the arrangement, and when the parties entered into the arrangement may be helpful in assessing the nature of the arrangement. ##### [805-10-55-25](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:b08f915dea7f863f92648513abaa8af700411c6572dc3acf31c6daf7c885e1d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is not clear whether an arrangement for payments to employees or selling shareholders is part of the exchange for the acquiree or is a transaction separate from the business combination, the acquirer should consider the following indicators: 1. a Continuing employment. The terms of continuing employment by the selling shareholders who become key employees may be an indicator of the substance of a contingent consideration arrangement. The relevant terms of continuing employment may be included in an employment agreement, acquisition agreement, or some other document. A contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is compensation for postcombination services. Arrangements in which the contingent payments are not affected by employment termination may indicate that the contingent payments are additional consideration rather than compensation. 2. b Duration of continuing employment. If the period of required employment coincides with or is longer than the contingent payment period, that fact may indicate that the contingent payments are, in substance, compensation. 3. c Level of compensation. Situations in which employee compensation other than the contingent payments is at a reasonable level in comparison to that of other key employees in the combined entity may indicate that the contingent payments are additional consideration rather than compensation. 4. d Incremental payments to employees. If selling shareholders who do not become employees receive lower contingent payments on a per-share basis than the selling shareholders who become employees of the combined entity, that fact may indicate that the incremental amount of contingent payments to the selling shareholders who become employees is compensation. 5. e Number of shares owned. The relative number of shares owned by the selling shareholders who remain as key employees may be an indicator of the substance of the contingent consideration arrangement. For example, if the selling shareholders who owned substantially all of the shares in the acquiree continue as key employees, that fact may indicate that the arrangement is, in substance, a profit-sharing arrangement intended to provide compensation for postcombination services. Alternatively, if selling shareholders who continue as key employees owned only a small number of shares of the acquiree and all selling shareholders receive the same amount of contingent consideration on a per-share basis, that fact may indicate that the contingent payments are additional consideration. The preacquisition ownership interests held by parties related to selling shareholders who continue as key employees, such as family members, also should be considered. 6. f Linkage to the valuation. If the initial consideration transferred at the acquisition date is based on the low end of a range established in the valuation of the acquiree and the contingent formula relates to that valuation approach, that fact may suggest that the contingent payments are additional consideration. Alternatively, if the contingent payment formula is consistent with prior profit-sharing arrangements, that fact may suggest that the substance of the arrangement is to provide compensation. 7. g Formula for determining consideration. The formula used to determine the contingent payment may be helpful in assessing the substance of the arrangement. For example, if a contingent payment is determined on the basis of a multiple of earnings, that might suggest that the obligation is contingent consideration in the business combination and that the formula is intended to establish or verify the fair value of the acquiree. In contrast, a contingent payment that is a specified percentage of earnings might suggest that the obligation to employees is a profit-sharing arrangement to compensate employees for services rendered. 8. h Other agreements and issues. The terms of other arrangements with selling shareholders (such as noncompete agreements, executory contracts, consulting contracts, and property lease agreements) and the income tax treatment of contingent payments may indicate that contingent payments are attributable to something other than consideration for the acquiree. For example, in connection with the acquisition, the acquirer might enter into a property lease arrangement with a significant selling shareholder. If the lease payments specified in the lease contract are significantly below market, some or all of the contingent payments to the lessor (the selling shareholder) required by a separate arrangement for contingent payments might be, in substance, payments for the use of the leased property that the acquirer should recognize separately in its postcombination financial statements. In contrast, if the lease contract specifies lease payments that are consistent with market terms for the leased property, the arrangement for contingent payments to the selling shareholder may be contingent consideration in the business combination. ##### [805-10-55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:51e43078d145471d53a0f4c2ad07dbcb9b2d1f3511359c9f434f45ea1aa9b89b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 4 (see paragraph [805-10-55-34](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-34)) illustrates guidance relating to contingent payments made to an employee in a business combination. #### Illustrations ##### [805-10-55-27](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ff497d703572e1b117bb3c135f44c292f286aedf32fe336868e4f5a225183ba7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the measurement period guidance in paragraph [805-10-55-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-16). Acquirer acquires Target on September 30, 20X7. Acquirer seeks an independent appraisal for an item of property, plant, and equipment acquired in the combination, and the appraisal was not complete by the time Acquirer issued its financial statements for the year ended December 31, 20X7. In its 20X7 annual financial statements, Acquirer recognized a provisional fair value for the asset of $30,000. At the acquisition date, the item of property, plant, and equipment had a remaining useful life of five years. Six months after the acquisition date, Acquirer received the independent appraisal, which estimated the asset's acquisition-date fair value as $40,000. ##### [805-10-55-28](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:79357b39c56a7800a6bdc55de4035541cf061b26032c0917b9fbf3dd71fac8bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In its interim financial statements for the quarter ended March 31, 20X8, Acquirer adjusts the provisional amounts recorded and the related effects on that period's earnings as follows: 1. a The carrying amount of property, plant, and equipment as of March 31, 20X8, is increased by $9,000. That adjustment is measured as the fair value adjustment at the acquisition date of $10,000 less the additional depreciation that would have been recognized had the asset's fair value at the acquisition date been recognized from that date ($1,000 for 6 months' depreciation). 2. b The carrying amount of goodwill as of March 31, 20X8, is decreased by $10,000. 3. c Depreciation expense for the period ended March 31, 20X8, is increased by $1,000 to reflect the effect on earnings as a result of the change to the provisional amount recognized. ##### [805-10-55-29](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:69c64eaeca545b0a0e20389a205fd5f49875925701c83664a32c6171f494cdf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A), Acquirer discloses both of the following: 1. a In its 20X7 financial statements, that the initial accounting for the business combination has not been completed because the appraisal of property, plant, and equipment has not yet been received 2. b In its March 31, 20X8 financial statements, the amounts and explanations of the adjustments to the provisional values recognized during the current reporting period. Therefore, Acquirer discloses that the increase to the fair value of the item of property, plant, and equipment was $10,000, with a corresponding decrease to goodwill. Additionally, the change to the provisional amount resulted in an increase in depreciation expense and accumulated depreciation of $1,000, of which $500 relates to the previous quarter. ##### [805-10-55-30](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ef5c6858bdd597e23bb3b7490297bfde2cca70c7051e0cfa20e8f353360cabab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [805-10-55-20 through 55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) . Acquirer purchases electronic components from Target under a five-year supply contract at fixed rates. Currently, the fixed rates are higher than rates at which Acquirer could purchase similar electronic components from another supplier. The supply contract allows Acquirer to terminate the contract before the end of the initial 5-year term only by paying a $6 million penalty. With 3 years remaining under the supply contract, Acquirer pays $50 million to acquire Target, which is the fair value of Target based on what other market participants would be willing to pay. ##### [805-10-55-31](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1c833e8fe61de14d963cd602576f552bfe7ace07da821eda4d9cd09667840b0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Included in the total fair value of Target is $8 million related to the fair value of the supply contract with Acquirer. The $8 million represents a $3 million component that is at-market because the pricing is comparable to pricing for current market transactions for the same or similar items (selling effort, customer relationships, and so forth) and a $5 million component for pricing that is unfavorable to Acquirer because it exceeds the price of current market transactions for similar items. Target has no other [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 or liabilities related to the supply contract, and Acquirer has not recognized any assets or liabilities related to the supply contract before the business combination. ##### [805-10-55-32](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:bcddfa8910e63efecc778e3e7e9b608309f0699311f2b8f729d9b061ae6cd82a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, Acquirer recognizes a loss of $5 million (the lesser of the $6 million stated settlement amount and the amount by which the contract is unfavorable to the acquirer) separately from the business combination. The $3 million at-market component of the contract is part of goodwill. ##### [805-10-55-33](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dc16ecf6726c4ec72bbd05e0e173e10fa8172d6334c53372372d8820aa7cfb42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [805-10-55-20 through 55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) . Whether Acquirer had previously recognized an amount in its financial statements related to a preexisting relationship will affect the amount recognized as a gain or loss for the effective settlement of the relationship. In Example 2 (see paragraph [805-10-55-30](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30)), generally accepted accounting principles (GAAP) might have required Acquirer to recognize a $6 million liability for the supply contract before the business combination. In that situation, Acquirer recognizes a $1 million settlement gain on the contract in earnings at the acquisition date (the $5 million measured loss on the contract less the $6 million loss previously recognized). In other words, Acquirer has in effect settled a recognized liability of $6 million for $5 million, resulting in a gain of $1 million. ##### [805-10-55-34](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ba0f26c1b094629d92b61ebea67e8d7191e800559c20ebacc7dc98cca4cff5ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [805-10-55-24 through 55-25](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) relating to contingent payments to employees in a business combination. Target hired a candidate as its new chief executive officer under a 10-year contract. The contract required Target to pay the candidate $5 million if Target is acquired before the contract expires. Acquirer acquires Target eight years later. The chief executive officer was still employed at the acquisition date and will receive the additional payment under the existing contract. ##### [805-10-55-35](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:91c18127886d6037fdc19cc49d4c6a9f9258ab9796731eedf2ae417312c4a9fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, Target entered into the employment agreement before the negotiations of the combination began, and the purpose of the agreement was to obtain the services of the chief executive officer. Thus, there is no evidence that the agreement was arranged primarily to provide benefits to Acquirer or the combined entity. Therefore, the liability to pay $5 million is included in the application of the acquisition method. ##### [805-10-55-36](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a9527bd654ee5afe07cd5276baccb69ae7cea98b59df51c68b77a7e2b3aeda7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In other circumstances, Target might enter into a similar agreement with the chief executive officer at the suggestion of Acquirer during the negotiations for the business combination. If so, the primary purpose of the agreement might be to provide severance pay to the chief executive officer, and the agreement may primarily benefit Acquirer or the combined entity rather than Target or its former owners. In that situation, Acquirer accounts for the liability to pay the chief executive officer in its postcombination financial statements separately from application of the acquisition method. ##### [805-10-55-37](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:b633ad35cecd0de6699e7b3ba7462fd200eac61e6e17629431893de98950ee12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates some of the disclosure requirements established in the several Subtopics of this Topic; it is not based on an actual transaction. The Example assumes that Acquirer is a public entity and that Target is a private entity. The illustration presents the disclosures in a tabular format that refers to the specific disclosure requirements illustrated. An actual note to financial statements might present many of the disclosures illustrated in a simple narrative format. ##### [805-10-55-38](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dd1c6ed5356153b4e3d9bf39c1f2800478b2138d9140bf724f8bc684359b1b06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(a) through (d)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - On June 30, 20X0, Acquirer acquired 15 percent of the outstanding common shares of Target. On June 30, 20X2, Acquirer acquired 60 percent of the outstanding common shares of Target. Target is a provider of data networking products and services in Canada and Mexico. As a result of the acquisition, Acquirer is expected to be the leading provider of data networking products and services in those markets. It also expects to reduce costs through economies of scale. ##### [805-10-55-39](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:45c5c7299c4862ccb9df25137a9a0ddc65a952464391c03b814fa60415535839 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(a)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) and [805-30-50-1(e)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - The goodwill of $2,500 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of Acquirer and Target. All of the goodwill was assigned to Acquirer's network segment. ##### [805-10-55-40](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a8d7b09374dbd67206cba278a33a7800a267769cf48e010a1d785193bd022286 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(d)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - None of the goodwill recognized is expected to be deductible for income tax purposes. ##### [805-10-55-41](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5720d2d8ca6680865444204ef127c907bee95b1297e975aaa24d0271dd73ac8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2), [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1), and [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - The following table summarizes the consideration paid for Target and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date of the [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 Target. - At June 30, 20X2 - ![](https://asc.understandingaccounting.org/asc-img/GUID-184F6F82-5E3F-49F5-872D-97588ABA431F-low.gif) Refer to Paragraph(s) $ 805-30-50-1(b) Consideration 805-30-50-1(b)(1) Cash " 5,000 " 805-30-50-1(b)(4) "Equity instruments (100,000 common shares of Acquirer)" " 4,000 " " 805-30-50-1(b)(3), 805-30-50-1(c)(1)" Contingent consideration arrangement " 1,000 " Fair value of total consideration transferred " 10,000 " 805-10-50-2(g)(1) Fair value of Acquirer's equity interest in Target held before the business combination " 2,000 " " 12,000 " "805-10-50-2(e), 805-10-50-2(f)" "Acquisition-related costs (including in selling, general, and administrative expenses in Acquirer's income statement for the year ending December 31, 20X2)" " 1,250 " 805-20-50-1(c) Recognized amounts of identifiable assets acquired and liabilities assumed Financial assets " 3,500 " Inventory " 1,000 " "Property, plant, and equipment" " 10,000 " Identifiable intangible assets " 3,300 " Financial liabilities " (4,000)" Liability arising from a contingency " (1,000)" Total identifiable net assets " 12,800 " 805-20-50-1(e)(1) Noncontrolling interest in Target " (3,300)" Goodwill " 2,500 " " 12,000 " ##### [805-10-55-42](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:02888dc462ec033d8c4caaa143ec843288b536c9913cd49022058e3ddc423c46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(b)(4)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - The fair value of the 100,000 common shares issued as part of the consideration paid for Target ($4,000) was determined on the basis of the closing market price of Acquirer's common shares on the acquisition date. ##### [805-10-55-43](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:88914d7a0f2a4ad20ecf878b723486015c71aa0275bba17aa8e3cc0d6b426797 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(b)(3)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) and [805-30-50-1(c)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1), and paragraph [805-30-50-4(a)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-4) - The contingent consideration arrangement requires Acquirer to pay the former owners of Target 5 percent of the revenues of an unconsolidated equity investment, referred to as Investee, owned by Target, in excess of $7,500 for 20X3, up to a maximum amount of $2,500 (undiscounted). The potential undiscounted amount of all future payments that Acquirer could be required to make under the contingent consideration arrangement is between $0 and $2,500. The fair value of the contingent consideration arrangement of $1,000 was estimated by applying the income approach. That measure is based on significant inputs that are not observable in the market, which Section 820-10-35 refers to as Level 3 inputs. Key assumptions include a discount rate range of 20 percent to 25 percent and a probability-adjusted level of revenues in Investee between $10,000 and $20,000. As of December 31, 20X2, the amount recognized for the contingent consideration arrangement, the range of outcomes, and the assumptions used to develop the estimates had not changed. ##### [805-10-55-44](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:93fd8dd43376b9ba5d642cc25a98f05b28716efb722bf746cee4ca1df0270b4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-1(b)](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) - The fair value of the financial assets acquired includes receivables under [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") of data networking equipment with a fair value of $2,000. The gross amount due under the contracts is $3,100, of which $450 is expected to be uncollectible. ##### [805-10-55-45](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ec3e79c9e6615b33b650844d9e239744386e987f58f7cd1bd6b2c6b3ee81c496 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) - The fair value of the acquired identifiable intangible assets of $3,300 is provisional pending receipt of the final valuations for those assets. ##### [805-10-55-46](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5154f7e96bfd5276914a2565471e618d44b61d61b49a15d19bc859b53fceb2d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-1(d)](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) - A liability of $1,000 has been recognized at fair value for expected warranty claims on products sold by Target during the last 3 years. Acquirer expects that the majority of this expenditure will be incurred in 20X3 and that all will be incurred by the end of 20X4. ##### [805-10-55-47](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3d6e46ada200da5df7a942a8d90efb00f82d031f1659d0d3c40b33d500e6cb17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-1(e)](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) - The fair value of the noncontrolling interest in Target, a private entity, was estimated by applying the income approach and a market approach. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a fair value measurement categorized within Level 3 of the fair value hierarchy as described in Section 820-10-35. Key assumptions include a discount rate range of 20 percent to 25 percent, a terminal value based on a range of terminal earnings before interest, taxes, depreciation, and amortization multiples between 3 and 5 (or, if appropriate, based on long-term sustainable growth rates ranging between 3 percent and 6 percent), financial multiples of entities deemed to be similar to Target, and adjustments because of the lack of control or lack of marketability that market participants would consider when measuring the fair value of the noncontrolling interest in Target. ##### [805-10-55-48](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:4a8f05af1c014c1713d5f822240690095930e50000facc972c28d35c71c95f9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(g)(2)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - Acquirer recognized a gain of $500 as a result of remeasuring to fair value its 15 percent equity interest in Target held before the business combination. The gain is included in other income in Acquirer's income statement for the year ending December 31, 20X2. ##### [805-10-55-49](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7e395d3ad4e82f3d36cf82128bffa3df42f159bc55738c0809bc8005ddbb16ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(h)(1) through (h)(3)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - The amounts of Target's revenue and earnings included in Acquirer's consolidated income statement for the year ended December 31, 20X2, and the revenue and earnings of the combined entity had the acquisition date been January 1, 20X2 (if comparative financial statements are not presented), and January 1, 20X1 (if comparative financial statements are presented), are as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-34AE1002-F88D-49F7-97DC-709D62A8093C-low.gif) Refer to Paragraph Revenue Earnings 805-10-50-2(h)(1) Actual from 6/30/20X2-12/31/20X2 " $4,090 " " $1,710 " 805-10-50-2(h)(2) "20X2 supplemental pro forma from 1/1/20X2-12/31/20X2" " $27,670 " " $12,870 " 805-10-50-2(h)(3) "20X2 supplemental pro forma from 1/1/20X2-12/31/20X2" " $27,670 " " $14,770 " "20X1 supplemental pro forma from 1/1/20X1-12/31/20X1" " $26,985 " " $12,325 " ##### [805-10-55-50](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:78f9a1b743d6ae7eeb5b814c39e0d3a28602e62c1dd63f7ff7b09716b0f76b5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(h)(4)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - 20X2 supplemental pro forma earnings were adjusted to exclude $1,250 of acquisition-related costs incurred in 20X2 and $650 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. 20X1 supplemental pro forma earnings were adjusted to include these charges. ##### [805-10-55-51](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3f379d3d3863d69fa0d231f1213800d3a9c5a57848c28b5aecaa73054c51237b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Examples in paragraphs [805-10-55-52 through 55-96](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-52) illustrate the guidance in paragraphs [805-10-55-4 through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-4) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) on the definition of a business. In each of the Examples, the first step of the analysis is the evaluation of the threshold in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. If that threshold is not met, an entity should evaluate whether the set includes an input and a substantive process that together significantly contribute to the ability to create outputs. To determine whether both an input and a substantive process are included in the set, an entity should complete its evaluation using the framework (guidance in paragraphs [805-10-55-5D through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) ). ##### [805-10-55-52](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3a37e0d839e9b60e27c27d22dbb4be4796e8839db6c97ae0eabe0541dfc54fb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC acquires, renovates, leases, sells, and manages real estate properties. ABC acquires a portfolio of 10 single-family homes that each have in-place leases. The only elements included in the acquired set are the 10 single-family homes and the 10 in-place leases. Each single-family home includes the land, building, and property improvements. Each home has a different floor plan, square footage, lot, and interior design. No employees or other assets are acquired. ##### [805-10-55-53](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e5b802c6e226d4c78ca38486bb34a86ec6d2fb50552e4750a32dcd20f506d804 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC first considers the threshold guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . ABC concludes that the land, building, property improvements, and in-place leases at each property can be considered a single asset in accordance with paragraph [805-10-55-5B](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5B). That is, the building and property improvements are attached to the land and cannot be removed without incurring significant cost. Additionally, the in-place lease is an intangible asset that should be combined with the related real estate and considered a single asset. ##### [805-10-55-54](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5a5ed41eb8b52dac618e8df8ea5ee2c94c0a880741497029e9d0fdfb57735e9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC also concludes that the 10 single assets (the combined land, building, in-place lease intangible, and property improvements) are similar. Each home has a different floor plan; however, the nature of the assets (all single-family homes) are similar. ABC also concludes that the risks associated with managing and creating outputs are not significantly different. That is, the risks associated with operating the properties and tenant acquisition and management are not significantly different because the types of homes and class of customers are not significantly different. Similarly, the risks associated with operating in the real estate market of the homes acquired are not significantly different. Consequently, ABC concludes that substantially all of the fair value of the gross assets acquired is concentrated in the group of similar identifiable assets; thus, the set is not a business. ##### [805-10-55-55](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5023de752e60b8ce35ebc78c6b29e1a754cfecaa57b7611280e647bb1de69e74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 1 except that ABC also acquires an office park with six 10-story office buildings leased to maximum occupancy of which all have significant fair value. ABC also acquires the vendor contracts for outsourced cleaning, security, and maintenance. Seller's employees that perform leasing (sales, underwriting, and so forth), tenant management, financing, and other strategic management processes are not included in the set. ABC plans to replace the property management and employees with its own internal resources. ##### [805-10-55-56](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1fc559a562946ce22787f0cfb6b3ab410e1151562a5189f7f8886262f5404344 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC concludes that the single-family homes and office park are not similar assets. ABC considers the risks associated with operating the assets, obtaining tenants, and tenant management between the single-family homes and office park to be significantly different because the scale of operations and risks associated with the class of customers are significantly different. Therefore, substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets. Thus, ABC must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-57](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8695d6faf7f2027af32b074784333435385798031dc3b8949f65d462c56c0fa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has continuing revenues through the in-place leases and, therefore, has outputs. ABC must consider the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. ##### [805-10-55-58](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d2373b5b4bbee77dbe25ef54499e4cf7abc488e706e392cc33e0013d0c40bc8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC concludes that the criteria in paragraph [805-10-55-5E(a) through (b)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) are not met because the set does not include employees and the processes performed through the cleaning and security contracts (the only processes acquired) will be considered ancillary or minor in the context of all the processes required to create outputs in the real estate industry. That is, while those outsourcing agreements may be considered to provide an organized workforce that performs cleaning and security processes when applied to the building, the processes performed by the cleaning, security, and maintenance personnel are not considered critical in the context of all the processes required to create outputs. ##### [805-10-55-59](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:544e1feb6da0cb5dba82dc300cc5334d304dc5bb1abb74ce7539b872ccb4c500 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC also concludes that the criterion in paragraph [805-10-55-5E(c)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is not met because the cleaning and security processes could be easily replaced with little cost, effort, or delay in the ability to continue producing outputs. While the cleaning and security processes are necessary for continued operations of the buildings, these contracts can be replaced quickly with little effect on the ability to continue producing outputs. ##### [805-10-55-60](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5fd91b81a9ab0332ec2a774f1d3a8539a02597bfacbd8d2a777d235096178f34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC concludes that the criterion in paragraph [805-10-55-5E(d)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is not met because the cleaning and security contracts are not considered unique or scarce. That is, these types of arrangements are readily accessible in the marketplace. ##### [805-10-55-61](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f00eb24349316bfc76bc3394206d686c98f7c18d3e16b1bc132a0e5b652aae4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because none of the criteria were met, ABC concludes that the set does not include both an input and substantive processes that together significantly contribute to the ability to create outputs and, therefore, is not considered a business. ##### [805-10-55-62](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f79131b0d7f3ce4071d484fdb6a90ab69c605dcc1837b88a6fa393113850daa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 2, except that the set includes the employees responsible for leasing, tenant management, and managing and supervising all operational processes. ##### [805-10-55-63](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d25667902e5d5e58eb1f1b6de2f83e99e1476598393344e24dec828e2991e1b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has continuing revenues through the in-place leases and, therefore, has outputs. ABC must consider the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. ##### [805-10-55-64](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:77d6dc13ce6d7e61f49c2cfecff44e6665908dec9334827137b09d9204fff0fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC determines that the criterion in paragraph [805-10-55-5E(a)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is met because the set includes an organized workforce that performs processes that when applied to the acquired inputs in the set (the land, building, and in-place leases) are critical to the ability to continue producing outputs. That is, ABC concludes that the leasing, tenant management, and supervision of the operational processes are critical to the creation of outputs. Because it includes both an input and a substantive process, the set is considered a business. ##### [805-10-55-65](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d522daabcfb98d1ff9f4827682d5a3201f65ab8e2e2f4829055767827eae59db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. purchases from Biotech a legal entity that contains the rights to a Phase 3 (in the clinical research phase) compound being developed to treat diabetes (the in-process research and development project). Included in the in-process research and development project is the historical know-how, formula protocols, designs, and procedures expected to be needed to complete the related phase of testing. The legal entity also holds an at-market clinical research organization contract and an at-market clinical manufacturing organization contract. No employees, other assets, or other activities are transferred. ##### [805-10-55-66](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a3103ae8d58c8b577b73f3dca1ed7a4620347fe11066bdce346971b8c4a47bf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Pharma Co. concludes that the in-process research and development project is an identifiable intangible asset that would be accounted for as a single asset in a business combination. Pharma Co. also qualitatively concludes that there is no fair value associated with the clinical research organization contract and the clinical manufacturing organization contract because the services are being provided at market rates and could be provided by multiple vendors in the marketplace. Therefore, all of the consideration in the transaction will be allocated to the in-process research and development project. As such, Pharma Co. concludes that substantially all of the fair value of the gross assets acquired is concentrated in the single in-process research and development asset and the set is not a business. ##### [805-10-55-67](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:acfa377c2fc9c37f18b3f95e719d55721f72b4ceee5940a86506461c26dc6b11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. purchases from Biotech a legal entity that contains the rights to a Phase 3 compound being developed to treat diabetes (Project 1) and a Phase 3 compound being developed to treat Alzheimer's disease (Project 2). Included with each project are the historical know-how, formula protocols, designs, and procedures expected to be needed to complete the related phase of testing. The legal entity also holds at-market clinical research organization contracts and at-market clinical manufacturing organization contracts associated with each project. Assume that Project 1 and Project 2 have equal fair value. No employees, other assets, or other activities are transferred. ##### [805-10-55-68](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e759bc7894b1cb03dfe7853e469b6e21ac35aa7cd946a3261339cb7039288e15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. concludes that Project 1 and Project 2 are each separately identifiable intangible assets, both of which would be accounted for as a single asset in a business combination. Pharma Co. then considers whether Project 1 and Project 2 are similar assets. Pharma Co. notes that the nature of the assets is similar in that both Project 1 and Project 2 are in-process research and development assets in the same major asset class. However, Pharma Co. concludes that Project 1 and Project 2 have significantly different risks associated with creating outputs from each asset because each project has different risks associated with developing and marketing the compound to customers. The projects are intended to treat significantly different medical conditions, and each project has a significantly different potential customer base and expected market and regulatory risks associated with the assets. Thus, Pharma Co. concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-69](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7ed079f8e403fd3f1791538663d0250b945c00c81b00efd06e8ac7f41bed0250 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the set does not have outputs, Pharma Co. evaluates the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) to determine whether the set has both an input and a substantive process that together significantly contribute to the ability to create outputs. Pharma Co. concludes that the criteria are not met because the set does not have employees. As such, Pharma Co. concludes that the set is not a business. ##### [805-10-55-70](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8092c2b20982843ad7760ba6c1175b04200a9e8f1fe98cbe7904b1c99cad99e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. buys all of the outstanding shares of Biotech. Biotech's operations include research and development activities on several drug compounds that it is developing (in-process research and development projects). The in-process research and development projects are in different phases of the U.S. Food and Drug Administration approval process and would treat significantly different diseases. The set includes senior management and scientists that have the necessary skills, knowledge, or experience to perform research and development activities. In addition, Biotech has long-lived tangible assets such as a corporate headquarters, a research lab, and lab equipment. Biotech does not yet have a marketable product and, therefore, has not generated revenues. Assume that each research and development project has a significant amount of fair value. ##### [805-10-55-71](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ef2f9ddf3f950933fcc87551e8f48b50c94e9edfd74f8ad48a51ec9c7a67178e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The identifiable assets in the set include multiple in-process research and development projects and tangible assets (the corporate headquarters, the research lab, and the lab equipment). Pharma Co. concludes that the in-process research and development projects are not similar assets because the projects have significantly different risks associated with managing the assets and creating the outputs (that is, because there are significantly different development risks in the different phases of development, market risks related to the different customer base, and potential markets for the compounds). In addition, Pharma Co. concludes that there is fair value associated with the acquired workforce because of the proprietary knowledge of and experience with Biotech's ongoing development projects and the potential for creation of new development projects that the workforce embodies. As such, Pharma Co. concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-72](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c6709ee8f3c54a0631d2148b8d0f06938164baa55a97206e64268afe0de10542 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the set does not have outputs, Pharma Co. evaluates the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) to determine whether the set has both an input and a substantive process that together significantly contribute to the ability to create outputs. Pharma Co. concludes that the criteria are met because the scientists make up an organized workforce that has the necessary skills, knowledge, or experience to perform processes that when applied to the in-process research and development inputs is critical to the ability to develop those inputs into a product that can be provided to a customer. Pharma Co. also determines that there is a more-than-insignificant amount of goodwill (including the fair value associated with the workforce), which is another indicator that the workforce is performing a critical process. Thus, the set includes both inputs and substantive processes and is a business. ##### [805-10-55-73](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d98fdf7e44d87a5d4cb99bf1545c47cca0725dee265915fa65697d832e243f1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A is a television broadcaster whose principal business is the ownership and operation of a television station group in the United States through which it broadcasts its proprietary health-care-related programming. Company B owns and operates several television stations in the western United States. Because of a recent merger, Company B must divest itself of a station in Portland, Oregon (KPOR), and agrees to sell the station to Company A. ##### [805-10-55-74](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:51ebf9224a9f0a7147b98f0ffa32fd10259d5ea89622dbec85bc5ef9a834a4ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A plans to change KPOR's programming format to its proprietary health-care-related programming. Therefore, Company A will receive only the U.S. Federal Communications Commission license, the broadcasting equipment, and the office building. KPOR will be integrated into Company A's operations, with most of the station processes centralized at Company A's corporate headquarters. Company A will not extend offers of employment to any of KPOR's employees or assume any of KPOR's contractual relationships. ##### [805-10-55-75](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:2a90c1afd9349e8153d63c829ed27941c0a837a06dfb91375d5a04e98336dca1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The U.S. Federal Communications Commission license is an intangible asset that is recognized and measured separately in a business combination, while the broadcast equipment and building are tangible nonfinancial assets in different major classes. Company A concludes that the broadcast equipment and building are not considered a single asset because the equipment is not attached to the building and can be removed without significant cost or diminution in fair value. Furthermore, none of the assets will be considered similar in accordance with paragraph [805-10-55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5C) because the U.S. Federal Communications Commission license cannot be considered similar to tangible assets and the tangible assets are in different major asset classes. Each of the separate identifiable assets has significant fair value. Thus, Company A concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-76](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:512202501fc14b571da9852aa568acc47d50a386758e31980c5cc14505dede44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set does not have outputs; therefore, Company A considers the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. The set does not include an organized workforce, so it does not meet the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D). Therefore, the set does not include both an input and a substantive process and is not considered a business. ##### [805-10-55-77](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-77) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:4493ada4d6f40ce293ce5f11c08c2c9cd93b3f644746761e61c18772e8df7d9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Widget Co. manufactures complex equipment and has manufacturing facilities throughout the world. Widget Co. decided to idle a facility in a foreign jurisdiction in a reorganization of its manufacturing footprint and furloughed the assembly line employees. ##### [805-10-55-78](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-78) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c9f0bee7f442fe4008517e6e0134e3c28aa0a978167fbe3e8ea51fd6ecb25836 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer enters into an agreement to purchase a manufacturing facility and related equipment from Widget Co. To comply with the local labor laws, Acquirer also must assume the furloughed employees. ##### [805-10-55-79](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-79) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f1ebb419ff32587d975df656a771dd318a18d9c5907919958b55e932f494c894 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets acquired include the equipment and facility (land and building) but no intellectual property, inventory, customer relationships, or any other inputs. ##### [805-10-55-80](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-80) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a09c7e3838ffc213298f9281221e2555b2171629025a8f19d74a8049beb3da56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Acquirer concludes that the equipment in the facility can be removed without significant cost or diminution in utility or fair value because the equipment is not attached to the building and can be used in many types of manufacturing facilities. Therefore, the equipment and building are not a single asset. Furthermore, the equipment and facility are not considered similar assets because they are different major classes of tangible assets. Acquirer determines that there is significant fair value in both the equipment and the facility and, thus, concludes that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-81](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-81) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ae9e4a5195b001ea230fdc0e8d3c66648101541ef165fcf13c77d0efde7094fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set is not currently producing outputs because there is no continuation of revenue before and after the transaction; therefore, Acquirer considers the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) and whether the set includes both employees that form an organized workforce and an input that the workforce could develop or convert into output. The set includes employees that have the necessary skills, knowledge, or experience to use the equipment; however, without intellectual property or other inputs that could be converted into outputs using the equipment, the set does not include both an organized workforce and an input that will meet the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D). That is, the equipment itself cannot be developed or converted into an output by those employees. Therefore, the set is not a business. ##### [805-10-55-82](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-82) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f8cd35d0b518fa6945a1b23e9cc731a238ae44619e63043720433ef3b12743c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A is a distributor of food and beverages. Company A enters into an agreement to sublicense the Latin American distribution rights of Yogurt Brand F to Company B, whereby Company B will distribute Yogurt Brand F in Latin America. As part of the agreement, Company A transfers the existing customer contracts in Latin America to Company B and an at-market supply contract with the producer of Yogurt Brand F. Company A retains all of its employees and distribution capabilities. ##### [805-10-55-83](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-83) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a2da1c57f28c188d2fb95294e5d289a34d41436a3d72662b59126e67d6279325 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company B first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The identifiable assets that could be recognized in a business combination include the license to distribute Yogurt Brand F, customer contracts, and the supply agreement. Company B concludes that the license and customer contracts will have fair value assigned to them. Company B concludes that neither asset represents substantially all of the fair value of the gross assets. Company B then considers whether the license and customer contracts are a group of similar intangible assets. Because the license and customer contracts are in different major classes of identifiable intangible assets, they are not considered similar assets. Therefore, substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets, and Company B must evaluate whether the set has both an input and a substantive process. ##### [805-10-55-84](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-84) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1ec4e74f8f639609bf7186e463c62171bb5525a2188f9d6a08dac66aae66dff1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues with customers in Latin America. As such, Company B must evaluate the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes an input and a substantive process that together significantly contribute to the ability to create outputs. Company B considers whether the acquired contracts are providing access to an organized workforce that performs a substantive process. However, because the contracts are not providing a service that applies a process to another acquired input, Company B concludes that the substance of the contracts are only that of acquiring inputs. The set is not a business because: 1. a It does not include an organized workforce that could meet the criteria in paragraph [805-10-55-5E(a) through (b)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E). 2. b There are no acquired processes that could meet the criteria in paragraph [805-10-55-5E(c) through (d)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E). 3. c It does not include both an input and a substantive process. ##### [805-10-55-85](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-85) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:79863175e3679aab4074cbcdd04b11bbbb053b34be0043f147af0e7c879097e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A is a global producer of food and beverages. Company A sells the worldwide rights of Yogurt Brand F, including all related intellectual property, to Company B. Company B also acquires all customer contracts and relationships, finished goods inventory, marketing materials, customer incentive programs, raw material supply contracts, specialized equipment specific to manufacturing Yogurt Brand F, and documented processes and protocols to produce Yogurt Brand F. Company B does not receive employees, manufacturing facilities, all of the manufacturing equipment and processes required to produce the product, and distribution facilities and processes. ##### [805-10-55-86](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-86) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1107fb066b2bb0da024146a5ae45cd341306792de24f9f371de3842c9c8eaf45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company B first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The gross assets include intellectual property (the trademark, the related trade name, and recipes) associated with Yogurt Brand F (the intellectual property associated with the brand is determined to be a single intangible asset in accordance with the guidance in paragraph [805-20-55-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-18)), customer contracts and related relationships, equipment, finished goods inventory, and the excess of the consideration transferred over the fair value of the net assets acquired. Company B concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets even though, for purposes of the analysis, the intellectual property is considered to be a single identifiable asset. In addition, because there is significant fair value in both tangible assets and intangible assets, Company B concludes that there is not a group of similar assets that meets this threshold. ##### [805-10-55-87](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-87) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:83a28c00b1001e7950c04cccc6f245cb4cf767e6954a501ade66925ea77f9626 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues, and Company B must consider the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both inputs and a substantive process that together significantly contribute to the ability to create outputs. The set does not include an organized workforce and, therefore, does not meet the criteria in paragraph [805-10-55-5E(a) through (b)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E). However, the acquired manufacturing processes are unique to Yogurt Brand F, and when those processes are applied to acquired inputs such as the intellectual property, raw material supply contracts, and the equipment, they significantly contribute to the ability to continue producing outputs. As such, the criterion in paragraph [805-10-55-5E(c)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is met, and the set includes both inputs and substantive processes. Because the set includes inputs and substantive processes that together significantly contribute to the ability to create outputs, it is considered a business. ##### [805-10-55-88](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-88) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c8993b193534bf1f55e7571fbcc077980a375c2f5dff38a01f3353b97f1203d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A purchases a loan portfolio from Bank Z. The portfolio of loans consists of residential mortgages with terms, size, and risk ratings that are not significantly different. Bank A does not take over the employees of Bank Z that managed the credit risk of the portfolio and the relationship with the borrowers (such as brokers, vendors, and risk managers). ##### [805-10-55-89](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-89) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:529acb981e119bdaf9c41f4f937c53dbdc2efcd0d2245745b85cec480b8cc5cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Bank A concludes that the nature of the assets (residential mortgage loans) is similar. Bank A also concludes that the risks associated with managing and creating outputs are not significantly different because the terms, size, and risk ratings of the loans are not significantly different. Because all of the fair value of the gross assets acquired is in a group of similar identifiable assets, the set is not a business. ##### [805-10-55-90](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-90) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:70a39cc4af3a804565b1b587189f7ba328f30a98f8c5a1eb766c90be95c77378 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 1 except that the portfolio of loans consists of commercial loans with term, size, and risk ratings that are significantly different. ##### [805-10-55-91](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-91) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:45bbfd1c401d8118a73d226665e1dd7cfc384c776133c3ae0a9560e49382478f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Bank A must consider whether the loans are similar. Bank A concludes that the nature of the assets (commercial loans) is similar; however, because the term, size, and risk ratings of the loans are significantly different, Bank A concludes that the risks associated with managing and creating outputs are significantly different. Thus, Bank A concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-92](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-92) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7938662ed18dfc84c76a442cef0d86ad0960d2645c54699b7787de68b9147327 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues (interest income). Consequently, Bank A considers the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both inputs and a substantive process that together significantly contribute to the ability to create outputs. Because the set does not include an organized workforce or acquired processes, the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) are not met and the set is not a business. ##### [805-10-55-93](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-93) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:9f7c81c7ce2f7d4d2f81673adc6993d39b4bae835601f146929295071e56be3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 2 except that Bank A takes over the employees of Bank Z that managed the credit risk of the portfolio and the relationship with the borrowers (such as brokers and risk managers). Additionally, consideration transferred is significantly higher than Bank A's estimate of the fair value of the loan portfolio. ##### [805-10-55-94](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-94) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:bf10faaf62579b27c6aec90af9a5167568840da48a63e4b2c502f4ca35a8b3f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Bank A concludes that the loan portfolio does not consist of similar identifiable assets. Bank A also concludes that there is significant fair value associated with different groups of financial assets and the acquired workforce. As such, Bank A concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has met the minimum requirements to be considered a business. ##### [805-10-55-95](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-95) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c7820bd4276c9f2361efaec739a0446068cc208f45dcee7f97127f2b4b3e480a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues (interest income). Consequently, Bank A considers the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. ##### [805-10-55-96](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-96) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dd7f2e5a64808dda645c0f2f895520e6d3970f8889dfbce75075019481f61798 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A evaluates the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) and concludes that the criterion in paragraph [805-10-55-5E(a)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is met because the set includes an organized workforce that performs processes (customer relationship management and credit risk management) critical to the ability to continue producing outputs; therefore, the set is a business. Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:aff6c3c006e4d95f4980dd2ac91234a458981330d2c00966bcf879f27e094d23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/805/10/#65-transition-and-open-effective-date-information) SEC content: no ##### [805-10-65-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:b1dab72f63910b3b1aecc12c4f118f3baf485b74b24f25d4400e4a7da18c0f0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/01/2010 after the end of the transition period stated in FASB Statement No. 141 (Revised 2007), _Business Combinations_, and No. 164, _Not-for-Profit Entities: Mergers and Acquisitions_. ##### [805-10-65-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:00d684dd0677683357401277607942ac57d3259ecb3cb895863fff3f7021ee8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/18/2012 after the end of the transition period stated in Accounting Standards Update No. 2010-29, _Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations_. ##### [805-10-65-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:e08e39b30215329bec04a2d85a51d016f53c457ecf203bc912d5697a152ed9b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2018 after the end of the transition period stated in Accounting Standards Update No. 2015-16, _Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments_. #### Transition Related to Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ##### [805-10-65-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:d41bdcf21d96e4d49917ec0675c7c6bcb81b7e07af7c264827420ec5f9ceb11d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Accounting Standards Update 2017-01](https://asc.understandingaccounting.org/updates/asu-2017-01/) 2019-6-17 2017-12-16 2017-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 The following represents the transition and effective date information related to Accounting Standards Update No. 2017-01, _Business Combinations (Topic 805): Clarifying the Definition of a Business_: 1. a The pending content that links to this paragraph shall be effective for [public business entities](https://asc.understandingaccounting.org/glossary/p/#public-business-entity "A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.") for annual periods beginning after December 15, 2017, including interim periods within those periods. 2. b The pending content that links to this paragraph shall be effective for all other entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. 3. c Earlier application of the pending content that links to this paragraph is permitted for transactions for which the acquisition date occurs before the issuance date or the effective date of the pending content that links to this paragraph only when the transaction has not been reported in financial statements that have been issued or made available for issuance. 4. d Earlier application of the pending content that links to this paragraph is permitted for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized that occur before the issuance date or the effective date of the pending content that links to this paragraph only when the transaction has not been reported in financial statements issued or made available for issuance. 5. e An entity shall apply the pending content that links to this paragraph prospectively as of the beginning of the period of adoption. #### Transition Related to Accounting Standards Update No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity ##### [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:27d93cbf48e2134c4e19424aa68949e084f11be3e3b9131fd51a8c99a7ccab60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Accounting Standards Update 2025-03](https://asc.understandingaccounting.org/updates/asu-2025-03/) 2028-6-13 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 The following represents the transition and effective date information related to Accounting Standards Update No. 2025-03, _Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity_: **Effective date and early adoption** 1. a All entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. 2. b Early adoption of the pending content that links to this paragraph is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance). If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall adopt the pending content as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period. **Transition method** 1. c An entity shall apply the pending content that links to this paragraph on a prospective basis to all [business combinations](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.") that have an [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") that occurs on or after the date of initial application of the pending content. **Transition disclosures** 1. d An entity applying the pending content that links to this paragraph shall disclose in both the interim reporting period (if applicable) and the annual reporting period of the change the nature of and reason for the change in accounting principle. Source downloaded (UTC): 2026-09-10T01:22:46.628Z to 2026-09-10T01:22:46.628Z Record version: sha256:d0bb17fd8fa7cf3861e5fc5d960e60ebd2a52e0334ea57a0751c54e30aa3d594 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-00-status) SEC content: yes ##### [805-10-S00-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:46.628Z to 2026-09-10T01:22:46.628Z Record version: sha256:d036008fdf0acc5452682f252ecdbe0d1a0d5335d312b117077bb86ef7abdac8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
805-10-S25-1AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S30-1AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S30-2AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S30-3AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S50-2AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S50-3AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-1AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-2AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-3AmendedAccounting Standards Update No. 2009-0709/15/2009
805-10-S55-4AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-5SupersededAccounting Standards Update No. 2012-0308/27/2012
805-10-S99-2AmendedAccounting Standards Update No. 2012-0308/27/2012
805-10-S99-2AmendedAccounting Standards Update No. 2010-2208/19/2010
805-10-S99-3AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-4AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-5AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-6AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-7AmendedAccounting Standards Update No. 2009-0207/01/2009
Source downloaded (UTC): 2026-09-10T01:22:50.648Z to 2026-09-10T01:22:50.648Z Record version: sha256:5fe59f6305b358504a1423154d2b61cac3b772fab60aa52f69f3a98838653370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-25-recognition) SEC content: yes ##### [805-10-S25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:50.648Z to 2026-09-10T01:22:50.648Z Record version: sha256:04e5262b52e5fe0d06fa65923202d3ecbb1a720d80a51ed834eeda033a632938 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:ff387bd397d9fce7d66a7681b755f734aa8461dab6ee42ca19859b21a5843ca7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-30-initial-measurement) SEC content: yes ##### [805-10-S30-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:0a87c909534840a73d89d31151e459d88058aff29650fa6c7617c826bb13eba3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S30-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:9d6d9202c6043f1a9bd8b80fc4a932d6c96270342ef3909e316c3b165dca728a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:beb049ce03d09215d4731fd10618baba7839d6d0370e7c823e173ee5effb0522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Contribution of Businesses to a Newly Formed Joint Venture ##### [805-10-S30-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:702197aa234d73b04add84b024aa7ad9c26f4a29d3ffdd263e760760b52a21e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [805-10-S99-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-8), SEC Observer Comment: Accounting by a Joint Venture for Businesses Received at Its Formation, for SEC Staff views on that issue. Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:7e9e8cb6236f7e0dc00a97a627fa30e83c7f1bfccb3b0491010b31783658423b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-50-disclosure) SEC content: yes #### Pro Forma Disclosure ##### [805-10-S50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:44e0be04fb5f2574dacf8a764cace873bcf82a4f6be68126559932e8ad708a89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [270-10-S99-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-S99-1), Regulation S-X Rule 10-1, for rules pertaining to supplemental pro forma disclosure in a business combination. ##### [805-10-S50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:d5e648528b37c231a8be70adbe11b4846a1fec558c4431be3bb12476a53112a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S50-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:b2c4c61287340098c26299f44378684b3adb0343fdb2ac486986f0a9fec5852f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:2f0867871950328981b10058532639c187af2c05e7c45981fe4331a9fb042890 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S55: SEC 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-55-implementation-guidance-and-illustrations) SEC content: yes ##### [805-10-S55-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:15114ec72d9cc25da756b908991aa5a9c098820a88358f26dbc39661c9577491 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S55-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:a8973406bb54f2e6d34f074196b21fdb543636a2e6eb0e8f43cee75bfb8a5950 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Business Combinations Prior to an Initial Public Offering ##### [805-10-S55-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:ce6b23d86d455ed79c79c23e4c6f9adce5a24d15174c41adfeef3c44a52ce15c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [805-10-S99-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-2), SAB Topic 2.A.8, for SEC Staff views on the accounting for business combinations prior to or contemporaneous with an initial public offering. ##### [805-10-S55-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:ffa66d4e2d9ad95a9232a792f7d7d5117802e1177cb61f5a5f35f180a7b5c7f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S55-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:2a4f9d7b08c1f328af60068778a3b017b9b525be392b0b0ad51bad407503499d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:aba86300689bfabd290f27a0dcf79db50ce5e931bdd133d17ae1d873e42daba4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-99-sec-materials) SEC content: yes ##### [805-10-S99-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:e840d8c047cba3bac63a253aa69dd9a399be005f7e50adacbaa8fb499548f707 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### SEC Staff Guidance ##### [805-10-S99-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:8a735edb6d71cdb32b18ec7ace6e63e3cd45338a307a3f23e5c4b4e37dfe4c08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 2.A.8, Business Combinations Prior to an Initial Public Offering. - Facts: Two or more businesses combine in a single combination just prior to or contemporaneously with an initial public offering. - Question: Does the guidance in SAB Topic 5.G apply to business combinations entered into just prior to or contemporaneously with an initial public offering? - Interpretive Response: No. The guidance in SAB Topic 5.G is intended to address the transfer, just prior to or contemporaneously with an initial public offering, of nonmonetary assets in exchange for a company's stock. The guidance in SAB Topic 5.G is not intended to modify the requirements of FASB ASC Topic 805. Accordingly, the staff believes that the combination of two or more businesses should be accounted for in accordance with FASB ASC Topic 805. ##### [805-10-S99-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:4887a8757f2535cc41f02795d983440d75e8b18f8c538ad966b8de5975d1b0f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:d457a6b40db86c48da8b038107d06a46e2093d00d5c6918415d8b4189d87d98d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:88a27f49d6e0c974bed8072b2f642aeea1d99bdf138c2d924b9c0f791e9b16c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:3a196d916a84b852ff61ce90d3b585a540f5d4ed3be3bfe5ffecf5015a2d43a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:327fd1525b6a5c071f8a97435d4a9eacad7931d87ecaf06e2717036ebc4e4f45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:eaf64bbfabada53f81837b07dda662470555b702d7f7452b51eba3b7b89a7f87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Observer Comment: Accounting by a Joint Venture for Businesses Received at Its Formation. - The SEC staff will object to a conclusion that did not result in the application of Topic 805 to transactions in which businesses are contributed to a newly formed, jointly controlled entity if that entity is not a joint venture. The SEC staff also would object to a conclusion that joint control is the only defining characteristic of a joint venture.