# ASC 805-20-25: Business Combinations — Identifiable Assets and Liabilities, and Any Noncontrolling Interest — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/20/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:bc39e1564264464cd6cd71eaee230b0fc95b86a98d2b946256c73c87a404d940 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/20/#25-recognition) SEC content: no #### Recognition Principle ##### [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:a947d60500e6ad3183fa1910cce14f44168343aed09301c51e85a2f8d43250d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."), 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 recognize, separately from [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."), 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."). Recognition of identifiable assets acquired and liabilities assumed is subject to the conditions specified in paragraphs [805-20-25-2 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) . However, an entity (the acquirer) within the scope of paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) may elect to apply the accounting alternative for the recognition of identifiable intangible assets acquired in a business combination as described in paragraphs [805-20-25-29 through 25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-29) . ##### [805-20-25-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:eb33496efbaa454c25fe64deefe2fea45a55009d0fd0db0d89842b55b7ad9e84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements, at the acquisition date. For example, costs the acquirer expects but is not obligated to incur in the future to effect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree's employees are not liabilities at the acquisition date. Therefore, the acquirer does not recognize those costs as part of applying the acquisition method. Instead, the acquirer recognizes those costs in its postcombination financial statements in accordance with other applicable generally accepted accounting principles (GAAP). Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [105-10-65-9](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-9)To qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must exist at the acquisition date. For example, costs the acquirer expects but is not obligated to incur in the future to effect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree's employees are not liabilities at the acquisition date. Therefore, the acquirer does not recognize those costs as part of applying the acquisition method. Instead, the acquirer recognizes those costs in its postcombination financial statements in accordance with other applicable generally accepted accounting principles (GAAP). ##### [805-20-25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:542ebbb6151808cc1d1137a9d5f61ff2fc0965b0d242c6052353bd5fe30f87df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must be part of what the acquirer and the acquiree (or its former owners) exchanged in the [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.") transaction rather than the result of separate transactions. The acquirer shall apply the guidance in paragraphs [805-10-25-20 through 25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20) to determine which assets acquired or liabilities assumed are part of the exchange for the acquiree and which, if any, are the result of separate transactions to be accounted for in accordance with their nature and the applicable GAAP. ##### [805-20-25-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:c25854d572afd1c6af4768f0a3f9bf7c6cca112c961fa2ffab37ca83fd09b3f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer's application of the recognition principle and conditions may result in recognizing some assets and liabilities that the acquiree had not previously recognized as assets and liabilities in its financial statements. For example, the acquirer recognizes the acquired identifiable [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.)"), such as a brand name, a patent, or a customer relationship, that the acquiree did not recognize as assets in its financial statements because it developed them internally and charged the related costs to expense. ##### [805-20-25-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0cc5e662391c96289803f72d6e344dc9e8581cc284e57faa6e144803dfeb247c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-20-25-11 through 25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-11) provide guidance on recognizing operating leases and paragraphs [805-20-55-2 through 55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2) provide guidance on recognizing intangible assets. Paragraphs [805-20-25-17 through 25-28B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic and Subtopic 805-740 provide limited exceptions to the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . Transition date:(P) December 16, 2028; (N) December 16, 2029Transition guidance: [832-10-65-2](https://asc.understandingaccounting.org/asc/832/10/#832-10-65-2)Paragraphs [805-20-25-11 through 25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-11) provide guidance on recognizing operating leases and paragraphs [805-20-55-2 through 55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2) provide guidance on recognizing intangible assets. Paragraphs [805-20-25-17 through 25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic and Subtopic 805-740 provide limited exceptions to the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . ##### [805-20-25-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:90cde8f2000a1c9874153a7abda03812366e25df6ec3244c915b32f7f9967b23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the acquisition date, the acquirer shall classify or designate the identifiable assets acquired and liabilities assumed as necessary to subsequently apply other GAAP. The acquirer shall make those classifications or designations on the basis of the contractual terms, economic conditions, its operating or accounting policies, and other pertinent conditions as they exist at the acquisition date. ##### [805-20-25-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:3d55920ea800b9f4b86c5a40ec89f4f9386f6e568f2ce9f3796ae9f92f83ca8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some situations, GAAP provides for different accounting depending on how an entity classifies or designates a particular asset or liability. Examples of classifications or designations that the acquirer shall make on the basis of the pertinent conditions as they exist at the acquisition date include but are not limited to the following: 1. a Classification of particular investments in securities as trading, available for sale, or held to maturity in accordance with Section 320-10-25 2. b Designation of a derivative instrument as a hedging instrument in accordance with paragraph [815-10-05-4](https://asc.understandingaccounting.org/asc/815/10/#815-10-05-4) 3. c Assessment of whether an embedded derivative should be separated from the host contract in accordance with Section 815-15-25 (which is a matter of classification as this Subtopic uses that term). ##### [805-20-25-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0c9ff7ac156e6ab43c7a85458e3b45dda76d0f29b9329ce563a02cf326978998 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides the following two exceptions to the principle in paragraph [805-20-25-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-6): 1. a Classification of a lease of an acquiree shall be in accordance with the guidance in paragraph [842-10-55-11](https://asc.understandingaccounting.org/asc/842/10/#842-10-55-11) 2. b Classification of a contract written by an entity that is in the scope of Subtopic 944-10 as an insurance or [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contract or a deposit contract. The acquirer shall classify that contract on the basis of the contractual terms and other factors at the inception of the contract (or, if the terms of the contract have been modified in a manner that would change its classification, at the date of that modification, which might be the acquisition date). #### Recognizing Particular Assets Acquired and Liabilities Assumed ##### [805-20-25-9](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-9) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:5ce44d126d84add38444c1c00e5752ca1d3c7c721f07c2b7e4eaa23864932861 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on recognizing identifiable intangible assets, including reacquired rights, follows. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Guidance on recognizing particular assets acquired and liabilities assumed is as follows. ##### [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:b7ef9fc1d6b5a81613efa1d983a4b432e0570ec67b502c67e59e02ab6f582ee2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize separately from goodwill the identifiable intangible assets acquired in a business combination. An intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion described in the definition of identifiable. Additional guidance on applying that definition is provided in paragraphs [805-20-25-14 through 25-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) , [805-20-55-2 through 55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2) , and Example 1 (see paragraph [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52)). For guidance on the recognition and subsequent measurement of a [defensive intangible asset](https://asc.understandingaccounting.org/glossary/d/#defensive-intangible-asset "An acquired intangible asset in a situation in which an entity does not intend to actively use the asset but intends to hold (lock up) the asset to prevent others from obtaining access to the asset."), see Subtopic 350-30. ##### [805-20-25-10A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:7140b0e27e1df7994212918872a5d181b903a46efefd2c5e4c4df1d0a2ad4e97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An identifiable intangible asset may be associated with a [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."), which may be evidenced by market participants' willingness to pay a price for the lease even if it is at market terms. For example, a lease of gates at an airport or of retail space in a prime shopping area might provide entry into a market or other future economic benefits that qualify as identifiable intangible assets, such as a customer relationship. In that situation, the acquirer shall recognize the associated identifiable intangible asset(s) in accordance with paragraph [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10). ##### [805-20-25-11](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:f7d075bc6d3c3fc450cf75dbc58a364fcdb83aa8c8f32f11af3a556ca1374d44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize assets or liabilities related to an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") in which the acquiree is the [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") as required by paragraphs [805-20-25-10A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10A) and [805-20-25-28A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28A). ##### [805-20-25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:e47921a41f627005c4f21e4150ac840840fb22a485f2d68ffce71266cebcc52d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of whether the acquiree is the lessee or the [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration."), the acquirer shall determine whether the terms of each of an acquiree's operating leases are favorable or unfavorable compared with the market terms of leases of the same or similar items at the acquisition date. If the acquiree is a lessor, the acquirer shall recognize an intangible asset if the terms of an operating lease are favorable relative to market terms and a liability if the terms are unfavorable relative to market terms. If the acquiree is a lessee, the acquirer shall adjust the measurement of the acquired [right-of-use asset](https://asc.understandingaccounting.org/glossary/r/#right-of-use-asset "An asset that represents a lessee's right to use an underlying asset for the lease term.") for any favorable or unfavorable terms in accordance with paragraph [805-20-30-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-24). ##### [805-20-25-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:289c1176d8cef90e6df0309afaca0ab4f797db40ea8d1e7cb6e1d91a988aa838 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-02](https://asc.understandingaccounting.org/updates/asu-2016-02/) ##### [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:c4c18b792d20b63c4bac3f2cf498152d8e2b79b0052558f83f51a1a1fb3678a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As part of a business combination, an acquirer may reacquire a right that it had previously granted to the acquiree to use one or more of the acquirer's recognized or unrecognized assets. Examples of such rights include a right to use the acquirer's trade name under a franchise agreement or a right to use the acquirer's technology under a technology licensing agreement. A reacquired right is an identifiable intangible asset that the acquirer recognizes separately from goodwill. Paragraph [805-20-30-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-20) provides guidance on measuring a reacquired right, and paragraph [805-20-35-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-2) provides guidance on the subsequent accounting for a reacquired right. ##### [805-20-25-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:bc52dfcaf168d82901b3a9cf8a2bc7923cd6fee63734fa2bcd83552f09359a9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the terms of the contract giving rise to a reacquired right are favorable or unfavorable relative to the terms of current market transactions for the same or similar items, the acquirer shall recognize a settlement gain or loss. Paragraph [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21) provides guidance for measuring that settlement gain or loss. ##### [805-20-25-15A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:a43df8c104f3eb7a108b50ce4c8f0857ac74a3814b371242e52a4e3d6ff17113 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination shall be recognized initially at fair value in accordance with the guidance for contingent consideration arrangements in paragraph [805-30-25-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-5). ##### [805-20-25-15B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15B) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:580fce23d0877b646f2c7352de75270662977083462e37c8e8a7fdfd160bf1a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An acquirer shall recognize an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An enforceable right that is acquired, internally generated, granted by a regulatory agency or its designee(s), or received in a nonreciprocal transfer that is not a grant from a regulator or its designee(s) that meets all of the following criteria:Lacks physical substance and is not a financial asset.Is represented to prevent, control, reduce, or remove emissions or other pollution.Is, or previously was, separately transferable in an exchange transaction. If an item is no longer separately transferable in an exchange transaction, an entity must be able to use that item to satisfy an environmental credit obligation to meet this criterion.Is not an income tax credit that may be used to settle an entity’s income tax liability, regardless of whether the entity has a tax liability or intends to use the credit for that purpose.An environmental credit that meets the above criteria may exist in a variety of forms, including (but not limited to) credits, certificates, allowances, and offsets.") acquired in a business combination as an asset, regardless of whether it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the acquirer will use that environmental credit to settle an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(P) December 16, 2027; (N) December 16, 2028818-10-65-1A regulatory compliance obligation arising from existing or enacted laws, statutes, or ordinances represented to prevent, control, reduce, or remove emissions or other pollution that may be settled with environmental credits. Obligations within the scope of Subtopic 410-30 are not environmental credit obligations."), transfer the environmental credit in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "An exchange (or exchange transaction) is a reciprocal transfer between two entities that results in one of the entities acquiring assets or services or satisfying liabilities by surrendering other assets or services or incurring other obligations.") transaction, or use the environmental credit in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "Nonreciprocal transfer is a transfer of assets or services in one direction, either from an entity to its owners (whether or not in exchange for their ownership interests) or to another entity, or from owners or another entity to the entity. An entity's reacquisition of its outstanding stock is an example of a nonreciprocal transfer."). An environmental credit recognized as an asset in a business combination shall subsequently be accounted for in accordance with Topic 818, including the recognition reassessment requirements in paragraph [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2). ##### [805-20-25-15C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15C) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:b72bfd8c58d25c3581975c2d4947a87f1330c0693f80e8eacfcc0386184c1da6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An item acquired in a business combination that does not meet the definition of an environmental credit solely because it is not separately transferable in an exchange transaction at the acquisition date is not an identifiable asset and shall not be recognized as an asset. ##### [805-20-25-15D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15D) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:f314a4878dc713a5d878dd21ead7396c6e8cad991c0b8a74aee457a3709e00ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)When evaluating whether an environmental credit obligation liability should be recognized in a business combination, an entity shall determine whether environmental credits would be due assuming that the acquisition date is the end of the regulatory compliance period, regardless of whether the regulatory compliance period ends after the acquisition date. #### Exceptions to the Recognition Principle ##### [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:aac0267b4db4a04f22182e36447d6fcb49a22a4de932040c09948584b16b0663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs [805-20-25-17 through 25-28C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1). The acquirer shall apply the specified GAAP or the specified requirements rather than that recognition principle to determine when to recognize the assets or liabilities identified in paragraphs [805-20-25-17 through 25-28C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17). That will result in some items being recognized either by applying recognition conditions in addition to those in paragraphs [805-20-25-2 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) or by applying the requirements of other GAAP, with results that differ from applying the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . Transition date:(P) December 16, 2028; (N) December 16, 2029Transition guidance: [832-10-65-2](https://asc.understandingaccounting.org/asc/832/10/#832-10-65-2)This Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs [805-20-25-17 through 25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1). The acquirer shall apply the specified GAAP or the specified requirements rather than that recognition principle to determine when to recognize the assets or liabilities identified in paragraphs[805-20-25-17 through 25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) . That will result in some items being recognized either by applying recognition conditions in addition to those in paragraphs [805-20-25-2 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) or by applying the requirements of other GAAP, with results that differ from applying the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . ##### [805-20-25-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:548842ecd09e0979d8f995a616914c7c1297c9aa5d96f80d940939b7201d83eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance is presented on all of the following exceptions to the recognition principle: 1. a Assets and liabilities arising from contingencies 2. b Income taxes 3. c Employee benefits 4. d Indemnification assets 5. e Leases 6. f [Contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance).") and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer."). Transition date:(P) December 16, 2028; (N) December 16, 2029Transition guidance: [832-10-65-2](https://asc.understandingaccounting.org/asc/832/10/#832-10-65-2)Guidance is presented on all of the following exceptions to the recognition principle: 1. a Assets and liabilities arising from contingencies 2. b Income taxes 3. c Employee benefits 4. d Indemnification assets 5. e Leases 6. f [Contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance).") and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.") 7. g [Grants related to income](https://asc.understandingaccounting.org/glossary/g/#grant-related-to-income "(P) December 16, 2028; (N) December 16, 2029832-10-65-2A government grant, or part of a government grant, other than a grant related to an asset (for example, a grant that reimburses an entity for operating expenses)."). ##### [805-20-25-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:eb6e1ac8f0e0e15d006ac4c568db4ee164d2e424092d387b2ff311340e0ac8a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-25-18A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:cb3c41d069799b229f53e8aa085323e1d1d90cfb560875cf431bd01f87c11071 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following recognition guidance in paragraphs [805-20-25-19 through 25-20B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) applies to assets and liabilities meeting both of the following conditions: 1. a Assets acquired and liabilities assumed that would be within the scope of Topic 450 if not acquired or assumed in a business combination 2. b Assets or liabilities arising from contingencies that are not otherwise subject to specific guidance in this Subtopic. ##### [805-20-25-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:badd0bd3d88d86bf08ccb0dc7bfc4ab21447fc76bc012dc92c766b1bc9c4b0c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition-date fair value of the asset or liability arising from a contingency can be determined during the measurement period, that asset or liability shall be recognized at the acquisition date. For example, the acquisition-date fair value of a warranty obligation often can be determined. ##### [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:f631d2bfc17231b6352ad23a407a023c35e2dd6dce6bf485de5783e9a364f7ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition-date fair value of the asset or liability arising from a contingency cannot be determined during the measurement period, an asset or a liability shall be recognized at the acquisition date if both of the following criteria are met: 1. a Information available before the end of the measurement period indicates that it is probable that an asset existed or that a liability had been incurred at the acquisition date. It is implicit in this condition that it must be probable at the acquisition date that one or more future events confirming the existence of the asset or liability will occur. 2. b The amount of the asset or liability can be reasonably estimated. ##### [805-20-25-20A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:5773df6715e72ba6b958ce63dae697fc4a6812088dc5ca513f76b0df011809e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The criteria in paragraph [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) shall be applied using the guidance in Topic 450 for application of similar criteria in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). ##### [805-20-25-20B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20B) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:db5ff9e483117ba92ea0b027baf160a2fd26af69fe18707c375683bcef7bf40d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the recognition criteria in paragraphs [805-20-25-19 through 25-20A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) are not met at the acquisition date using information that is available during the measurement period about facts and circumstances that existed as of the acquisition date, the acquirer shall not recognize an asset or liability as of the acquisition date. In periods after the acquisition date, the acquirer shall account for an asset or a liability arising from a contingency that does not meet the recognition criteria at the acquisition date in accordance with other applicable GAAP, including Topic 450, as appropriate. ##### [805-20-25-21](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:789934ae399aa50c6877d9cd8fecfd94f10211b133db63003d63f7aab8fe0c4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 805-740-25 establishes the recognition guidance for accounting for income taxes in a business combination. ##### [805-20-25-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:44e58bfed2beee9420d62b084a5fb3bce815027e95b1333a812633cf6bcc4d66 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize a liability (or asset, if any) related to the acquiree's employee benefit arrangements in accordance with other GAAP. For example, employee benefits in the scope of the guidance identified in paragraphs [805-20-25-23 through 25-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-23) would be recognized in accordance with that guidance and as specified in those paragraphs. ##### [805-20-25-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0823bcc3fd63f674bb69bbcf73f847b42926e71bf11a5623a24dbee9cb4af4cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on defined benefit pension plans is presented in Subtopic 715-30. If an acquiree sponsors a single-employer defined benefit pension plan, the acquirer shall recognize as part of the business combination an asset or a liability representing the funded status of the plan (see paragraph [715-30-25-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-1)). Paragraph [805-20-30-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15) provides guidance on determining that funded status. If an acquiree participates in a multiemployer plan, and it is probable as of the acquisition date that the acquirer will withdraw from that plan, the acquirer shall recognize as part of the business combination a withdrawal liability in accordance with Subtopic 450-20. ##### [805-20-25-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0b3ac8510c5c15f68394362deac50428e21af2696fba449cd6261f0327523ac1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Settlements, Curtailments, and Certain Termination Benefits Subsections of Sections 715-30-25 and 715-30-35 establish the recognition guidance related to accounting for settlements and curtailments of defined benefit pension plans and certain termination benefits. ##### [805-20-25-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:c48e5cedd5a2233abf5348fc9534386720bb9b5eadbd7a3d5293a9c478aa6251 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on defined benefit other postretirement plans is presented in Subtopic 715-60. If an acquiree sponsors a single-employer defined benefit postretirement plan, the acquirer shall recognize as part of the business combination an asset or a liability representing the funded status of the plan (see paragraph [715-60-25-1](https://asc.understandingaccounting.org/asc/715/60/#715-60-25-1)). Paragraph [805-20-30-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15) provides guidance on determining that funded status. If an acquiree participates in a multiemployer plan and it is probable as of the acquisition date that the acquirer will withdraw from that plan, the acquirer shall recognize as part of the business combination a withdrawal liability in accordance with Subtopic 450-20. ##### [805-20-25-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:68cea7db22db94ce5e75dbc777303cb79a06e2422b2ef6ed35f41af15e647d48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See also the recognition-related guidance for the following other employee benefit arrangements: 1. a One-time termination benefits in connection with exit or disposal activities. See Section 420-10-25. 2. b Compensated absences. See Section 710-10-25. 3. c Deferred compensation contracts. See Section 710-10-25. 4. d Nonretirement postemployment benefits. See Section 712-10-25. ##### [805-20-25-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:7336d8ad8c0bd4e31e3d2c1d7f5c2a216f310e8e0fb9373b6f2282a1d0f288f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The seller in a business combination may contractually indemnify the acquirer for the outcome of a contingency or uncertainty related to all or part of a specific asset or liability. For example, the seller may indemnify the acquirer against losses above a specified amount on a liability arising from a particular contingency; in other words, the seller will guarantee that the acquirer's liability will not exceed a specified amount. As a result, the acquirer obtains an indemnification asset. The acquirer shall recognize an indemnification asset at the same time that it recognizes the indemnified item, measured on the same basis as the indemnified item, subject to the need for a valuation allowance for uncollectible amounts. Therefore, if the indemnification relates to an asset or a liability that is recognized at the acquisition date and measured at its acquisition-date fair value, the acquirer shall recognize the indemnification asset at the acquisition date measured at its acquisition-date fair value. ##### [805-20-25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:6a585e55976ae149c28c46c91f8ff9632d9990b5d96841214d662cd0b2ca7b4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some circumstances, the indemnification may relate to an asset or a liability that is an exception to the recognition or measurement principles. For example, an indemnification may relate to a contingency that is not recognized at the acquisition date because it does not satisfy the criteria for recognition in paragraphs [805-20-25-18A through 25-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) at that date. In those circumstances, the indemnification asset shall be recognized and measured using assumptions consistent with those used to measure the indemnified item, subject to management's assessment of the collectibility of the indemnification asset and any contractual limitations on the indemnified amount. ##### [805-20-25-28A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:e240b1f8fe78db4ff06a90a07f9697ed74c84a83506610ed5851bb5d0accb907 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize assets and liabilities arising from leases of an acquiree in accordance with Topic 842 on leases (taking into account the requirements in paragraph [805-20-25-8(a)](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-8)). ##### [805-20-25-28B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28B) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:1d755082eda7491596936ebed7f9f2e00c9cee6ff19a474fac3ec1edd69cbafc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For leases for which the acquiree is a lessee, the acquirer may elect, as an accounting policy election by class of underlying asset and applicable to all of the entity's acquisitions, not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less. This includes not recognizing an intangible asset if the terms of an operating lease are favorable relative to market terms or a liability if the terms are unfavorable relative to market terms. ##### [805-20-25-28C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28C) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:6094c70f1ed9ad786f9123ea69d4eb8f62627904a23bdd5666e38ccea56bb692 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize a contract asset or contract liability in accordance with Topic 606 on revenue from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). This includes a contract asset or contract liability from the following: 1. a Contracts with customers 2. b Other contracts to which the provisions of Topic 606 apply. ##### [805-20-25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28D) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:d8127aa04c99572bb8c90774b0457af30bc36794f003fd62340c8660210b682d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2028; (N) December 16, 2029Transition guidance: [832-10-65-2](https://asc.understandingaccounting.org/asc/832/10/#832-10-65-2)For a grant related to income, an acquirer shall recognize deferred income in accordance with Topic 832 on [government grants](https://asc.understandingaccounting.org/glossary/g/#government-grant "(P) December 16, 2028; (N) December 16, 2029832-10-65-2A transfer of a monetary asset or a tangible nonmonetary asset, other than in an exchange transaction (including an exchange transaction that may be at a significant discount to fair value), from a government to an entity except for a not-for-profit entity and an employee benefit plan within the scope of Topics 960, 962, and 965 on plan accounting.") at the acquisition date, unless an entity has fully complied with the conditions attached to a government grant, in which case the acquirer shall not recognize deferred income. ### Accounting Alternatives ##### [805-20-25-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:28d8374628fd606c9b165987797501a08d37b23c8ddd8a69b5df7ffac3c1353c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subsection applies to entities within the scope of paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) that elect the accounting alternative for the recognition of identifiable intangible assets acquired in a business combination. #### Identifiable Intangible Assets ##### [805-20-25-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:ed2747ab55cc2e52fd28af69343ea5c81abdf783fdbb94449ec4a55a001cf0ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [intangible asset](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.)") is [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.") if it meets either the separability criterion or the contractual-legal criterion described in the definition of identifiable. However, under the accounting alternative, 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 not recognize separately from [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.") the following intangible assets: 1. a Customer-related intangible assets unless they are capable of being sold or licensed independently from other assets of a business 2. b Noncompetition agreements. ##### [805-20-25-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:4d00fb383401a1f10d1ef9d4480d746aac0f00f8b9c3bcc3687020570399c66a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Customer-related intangible assets often would not meet criterion (a) in paragraph [805-20-25-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-30) for recognition. Customer-related intangible assets that would meet that criterion for recognition under this accounting alternative are those that are capable of being sold or licensed independently from the other assets of a business. Examples of customer-related intangible assets are listed in paragraph [805-20-55-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-20). Many of the customer-related intangible assets that would meet criterion (a) for recognition also would be considered contract-based intangible assets as described in paragraph [805-20-55-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-31). Customer-related intangible assets that may meet that criterion for recognition include but are not limited to: 1. a Mortgage servicing rights 2. b Commodity supply contracts 3. c Core deposits 4. d Customer information (for example, names and contact information). ##### [805-20-25-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:ca1bee962c4d4166c3459caebf9f3d18cb1bec4fc47fe0c0743f682d3ddc2e11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance)."), as used in Topic 606 on revenue from contracts with customers, are not considered to be customer-related intangible assets for purposes of applying this accounting alternative. Therefore, contract assets are not eligible to be subsumed into goodwill and shall be recognized separately. ##### [805-20-25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:3ed018cbf049e3db90fd04c7ecc0e19ca1370a708c38fdebc91ca66dc965c61b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") is not considered to be a customer-related intangible asset for purposes of applying this accounting alternative. Therefore, favorable and unfavorable leases are not eligible to be subsumed into goodwill and shall be recognized separately.