# ASC 805-20-40: Business Combinations — Identifiable Assets and Liabilities, and Any Noncontrolling Interest — 40 Derecognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/805/20/#40-derecognition)

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## ASC 805-20-40: 40 Derecognition

[Read section](https://asc.understandingaccounting.org/asc/805/20/#40-derecognition)

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##### [805-20-40-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-40-1)

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The Business Combinations Topic directly establishes generally accepted accounting principles (GAAP) for business combinations related to recognition and initial measurement. Paragraph [805-10-35-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-1) cites the general requirement for 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.") to 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 GAAP. However, that paragraph also identifies specific items for which the Business Combinations Topic provides guidance. This Section provides guidance on one of those specific items as follows.

##### [805-20-40-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-40-2)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

#### Indemnification Assets

##### [805-20-40-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-40-3)

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The acquirer shall derecognize an indemnification asset recognized in accordance with paragraphs

[805-20-25-27 through 25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27)

only when it collects the asset, sells it, or otherwise loses the right to it.