# ASC 805-20-S99: Business Combinations — Identifiable Assets and Liabilities, and Any Noncontrolling Interest — SEC 99 SEC Materials Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/20/#sec-99-sec-materials) 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): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:fb61c0828048e6423b03c96b7827863662fd12813796d1658690d72ceb199c15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-99-sec-materials) SEC content: yes ##### [805-20-S99-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:abcc9d5c0f96afbd612823f608b6f922fc92a4d7bf75e69d2a22407fdc850b41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-22](https://asc.understandingaccounting.org/updates/asu-2010-22/). ##### [805-20-S99-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:121e39bc7a0b5467d28be6407e16e1980db4ffe4ff7d98d101ff73ff1b4cd84a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-22](https://asc.understandingaccounting.org/updates/asu-2010-22/). #### SEC Staff Guidance ##### [805-20-S99-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:f23f2b0efc10697be3cd9fc58308454697e8690ffbf008b9f0915f03f8afa00f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Staff Announcement: Use of Residual Method to Value Acquired Assets Other than Goodwill. - Paragraph [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10) discusses the recognition of identifiable intangible assets acquired in a business combination. The SEC staff is aware of instances in which registrants have asserted that certain intangible assets that arise from legal or contractual rights cannot be separately and directly valued (hereinafter referred to as a "direct value method") because the nature of the particular asset makes it fundamentally indistinguishable from goodwill in a business combination (for example, cellular/spectrum licenses, cable franchise agreements, and so forth). Accordingly, some have applied a policy of assigning purchase price to all other identifiable assets and liabilities as provided in Topic 805, with the remaining residual amount being allocated to the "indistinguishable" intangible asset. In those instances, there is either no goodwill recognized or the amount of goodwill recognized uses a technique other than the one specified in paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1). These methods have been referred to as "the residual method" of valuing intangible assets and have been used in the telecommunications, broadcasting, and cable industries. - Some have asserted that the residual method provides an acceptable approach for determining the fair value of the intangible asset to which the residual is assigned, either because it approximates the value that would be attained from a direct value method or because they believe that other methods of valuation are not practicable under the circumstances. Others have indicated that the residual method should be used as a proxy for fair value of the intangible asset in these situations, since the fair value of the intangible asset in question is not determinable. When it is or has been used in assigning purchase price, the residual method is also often used in impairment tests. - The SEC staff believes that the residual method does not comply with the requirements of Topic 805. Except for certain exceptions noted in paragraphs [805-20-30-10 through 30-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) , identifiable intangible assets that meet the recognition criteria shall be recorded at fair value. Paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) discusses the initial measurement of goodwill. - The SEC staff notes that a fundamental distinction between other recognized intangible assets and goodwill is that goodwill is both defined and measured as an excess or residual asset, while other recognized intangible assets are required to be measured at fair value. The SEC staff does not believe that the application of the residual method to the valuation of intangible assets can be assumed to produce amounts representing the fair values of those assets. The SEC staff also notes that valuation difficulty does not provide relief from the requirements in paragraphs [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) and [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) to separately recognize intangible assets at fair value apart from goodwill. Furthermore, the SEC staff notes that the same types of assets being valued using the residual method by some entities are being valued using a direct value method by other entities. Accordingly, the SEC staff believes the residual method should no longer be used to value intangible assets other than goodwill. Rather, a direct value method should be used to determine the fair value of all intangible assets required to be recognized at fair value under Topic 805. - Impairment testing of intangible assets similarly should not rely on a residual method and should, instead, comply with the provisions of Topic 350.