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

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/805/20/)

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.

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Source downloaded (UTC): 2026-09-10T01:23:05.700Z to 2026-09-10T01:23:57.518Z

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

### Machine-generated study aids

```json
{
  "summary": "ASC 805-20 governs one piece of the acquisition method: recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest (NCI) in the acquiree. The core rules are that at the acquisition date the acquirer recognizes these items separately from goodwill (if they meet the asset/liability definitions and are part of the exchange, not a separate transaction) and measures them at acquisition-date fair value, subject to a closed list of recognition and measurement exceptions (income taxes, employee benefits, indemnification assets, reacquired rights, share-based payments, held-for-sale assets, certain contingencies, leases, PCD assets, contract assets/liabilities). Private companies and NFPs may elect an accounting alternative that subsumes most customer-related intangibles and all noncompetition agreements into goodwill.",
  "key_points": [
    "As of the acquisition date the acquirer recognizes, separately from goodwill, the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree (805-20-25-1); items must meet the asset/liability definitions (805-20-25-2) and be part of the exchange rather than a separate transaction (805-20-25-3), so expected exit or employee-termination costs are not liabilities at the acquisition date.",
    "Intangible assets are recognized apart from goodwill if identifiable — meeting either the separability criterion or the contractual-legal criterion (805-20-25-10, 805-20-55-2 through 55-5) — which often means recognizing assets the acquiree never recorded, such as internally developed brands, patents, and customer relationships (805-20-25-4); an assembled workforce and items that are not assets are subsumed into goodwill (805-20-55-6 through 55-7).",
    "The measurement principle is acquisition-date fair value (805-20-30-1), with no separate valuation allowance for assets measured at fair value (805-20-30-4) and nonfinancial assets measured at highest and best use even if the acquirer intends defensive or no use (805-20-30-6); exceptions to fair value are listed in 805-20-30-12 (income taxes, employee benefits, indemnification assets, reacquired rights, share-based payment awards, held-for-sale assets, certain contingencies, leases, PCD assets, contract assets and liabilities).",
    "NCI is measured at acquisition-date fair value, using quoted prices for the shares not held by the acquirer when available; per-share values of the acquirer's interest and the NCI may differ because of a control premium or a discount for lack of control (805-20-30-7 through 30-8).",
    "Assets and liabilities arising from contingencies are recognized at acquisition-date fair value if that fair value can be determined during the measurement period (805-20-25-19); otherwise they are recognized only if it is probable an asset existed or a liability had been incurred and the amount can be reasonably estimated (805-20-25-20), measured at that reasonably estimable amount (805-20-30-23), with unrecognized contingencies thereafter accounted for under Topic 450 (805-20-25-20B).",
    "Reacquired rights are identifiable intangible assets measured on the remaining contractual term, ignoring potential renewals (805-20-25-14, 805-20-30-20), amortized over that remaining contractual period (805-20-35-2), with a settlement gain or loss recognized for off-market terms (805-20-25-15); an indemnification asset is recognized when the indemnified item is recognized and measured on the same basis (805-20-25-27 through 25-28) and derecognized only when collected, sold, or lost (805-20-40-3).",
    "Under the private company/NFP accounting alternative, customer-related intangibles are not recognized separately from goodwill unless capable of being sold or licensed independently, and noncompetition agreements are never recognized separately (805-20-25-30); the election requires adopting the Topic 350-20 goodwill amortization alternative (805-20-15-4) and does not extend to contract assets or leases (805-20-25-32 through 25-33)."
  ],
  "categories": [
    "Business combinations",
    "Recognition",
    "Initial measurement",
    "Intangibles and goodwill"
  ],
  "audience_level": "intermediate",
  "student_note": "This is the workhorse subtopic for purchase accounting problems: nearly every exam question turns on which intangibles must be recognized apart from goodwill and which items fall into the exception list rather than being measured at fair value. The most common misunderstanding is assuming everything is at fair value — income taxes, employee benefits, reacquired rights, replacement share-based awards, held-for-sale assets, leases, PCD assets, and contract assets/liabilities follow other GAAP, and planned restructuring or termination costs are never acquisition-date liabilities.",
  "related_topics": [
    "805-10",
    "805-30",
    "805-740",
    "350-30",
    "842-10",
    "606"
  ],
  "key_concepts": [
    "acquisition method",
    "identifiable intangible assets",
    "separability criterion",
    "contractual-legal criterion",
    "noncontrolling interest fair value",
    "reacquired rights",
    "indemnification asset",
    "private company accounting alternative"
  ]
}
```

Source downloaded (UTC): 2026-09-10T01:23:05.700Z to 2026-09-10T01:23:05.700Z

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## ASC 805-20-00: 00 Status

[Read section](https://asc.understandingaccounting.org/asc/805/20/#00-status)

SEC content: no

##### [805-20-00-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-00-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:05.700Z to 2026-09-10T01:23:05.700Z

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The following table identifies the changes made to this Subtopic.

<table class="asc-table" id="SL6797993-158265"><tbody><tr><td class="entry"><strong class="ph b">Paragraph</strong></td><td class="entry"><strong class="ph b">Action</strong></td><td class="entry"><strong class="ph b">Accounting Standards Update</strong></td><td class="entry"><strong class="ph b">Date</strong></td></tr><tr><td class="entry"></td><td class="entry"></td><td class="entry"></td><td class="entry"></td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/a/#acquiree" class="term" title="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."><span>Acquiree</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-07/" class="xref">Accounting Standards Update No. 2010-07</a></td><td class="entry">01/28/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/a/#acquirer" class="term" title="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."><span>Acquirer</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-03/" class="xref">Accounting Standards Update No. 2025-03</a></td><td class="entry">05/12/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity" class="term" title="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."><span>Acquisition by a Not-for-Profit Entity</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-07/" class="xref">Accounting Standards Update No. 2010-07</a></td><td class="entry">01/28/2010</td></tr><tr><td class="entry"><strong class="ph b">Bargain Purchase Option</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><strong class="ph b">Bargain Renewal Option</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/b/#business" class="term" title="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."><span>Business</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2017-01/" class="xref">Accounting Standards Update No. 2017-01</a></td><td class="entry">01/05/2017</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/b/#business-combination" class="term" title="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."><span>Business Combination</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-07/" class="xref">Accounting Standards Update No. 2010-07</a></td><td class="entry">01/28/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit" class="term" title="(P) December 16, 2027; (N) December 16, 2028818-10-65-1An environmental credit recognized as an asset in accordance with Topic 818 and probable of being used to settle an environmental credit obligation."><span>Compliance Environmental Credit</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#contract" class="term" title="An agreement between two or more parties that creates enforceable rights and obligations."><span>Contract</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#contract-asset" class="term" title="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)."><span>Contract Asset</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#contract-liability" class="term" title="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."><span>Contract Liability</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture" class="term" title="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."><span>Corporate Joint Venture</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2023-05/" class="xref">Accounting Standards Update No. 2023-05</a></td><td class="entry">08/23/2023</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease" class="term" title="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."><span>Direct Financing Lease</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-05/" class="xref">Accounting Standards Update No. 2021-05</a></td><td class="entry">07/19/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease" class="term" title="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."><span>Direct Financing Lease</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/e/#environmental-credit" class="term" title="(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."><span>Environmental Credit</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation" class="term" title="(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."><span>Environmental Credit Obligation</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/e/#exchange" class="term" title="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."><span>Exchange</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/f/#finance-lease" class="term" title="From the perspective of a lessee, a lease that meets one or more of the criteria in paragraph 842-10-25-2."><span>Finance Lease</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><strong class="ph b">Financial Asset</strong> (1st def.)</td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><strong class="ph b">Financial Asset</strong> (1st def.)</td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/f/#financial-asset" class="term" title="Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity."><span>Financial Asset</span></a> (2nd def.)</td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><strong class="ph b">Financial Statements Are Available to Be Issued</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-03/" class="xref">Accounting Standards Update No. 2016-03</a></td><td class="entry">03/07/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/f/#financial-statements-are-available-to-be-issued" class="term" title="Financial statements are considered available to be issued when they are complete in a form and format that complies with GAAP and all approvals necessary for issuance have been obtained, for example, from management, the board of directors, and/or significant shareholders. The process involved in creating and distributing the financial statements will vary depending on an entity's management and corporate governance structure as well as statutory and regulatory requirements."><span>Financial Statements Are Available to Be Issued</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/g/#goodwill" class="term" title="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."><span>Goodwill</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2023-05/" class="xref">Accounting Standards Update No. 2023-05</a></td><td class="entry">08/23/2023</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/g/#goodwill" class="term" title="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."><span>Goodwill</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-07/" class="xref">Accounting Standards Update No. 2010-07</a></td><td class="entry">01/28/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/g/#government-grant" class="term" title="(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."><span>Government Grant</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/g/#grant-related-to-an-asset" class="term" title="(P) December 16, 2028; (N) December 16, 2029832-10-65-2A government grant, or part of a government grant, that is conditioned on the purchase, construction, or acquisition of an asset (for example, a long-lived asset or inventory). Other conditions also may be attached, such as restricting the type or location of the asset, the periods during which the asset is to be acquired or held, or the disposal of the asset."><span>Grant Related to an Asset</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/g/#grant-related-to-income" class="term" title="(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)."><span>Grant Related to Income</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/i/#income-taxes" class="term" title="Domestic and foreign federal (national), state, and local (including franchise) taxes based on income."><span>Income Taxes</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><strong class="ph b">Indirectly Related to the Leased Property</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/j/#joint-venture" class="term" title="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."><span>Joint Venture</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2023-05/" class="xref">Accounting Standards Update No. 2023-05</a></td><td class="entry">08/23/2023</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lease" class="term" title="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."><span>Lease</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lease" class="term" title="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."><span>Lease</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lease-liability" class="term" title="A lessee's obligation to make the lease payments arising from a lease, measured on a discounted basis."><span>Lease Liability</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lease-payments" class="term" title="See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor."><span>Lease Payments</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lease-receivable" class="term" title="A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."><span>Lease Receivable</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lease-term" class="term" title="The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."><span>Lease Term</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lessee" class="term" title="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."><span>Lessee</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/l/#lessor" class="term" title="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."><span>Lessor</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/m/#monetary-assets" class="term" title="Money or a claim to receive a sum of money the amount of which is fixed or determinable without reference to future prices of specific goods or services."><span>Monetary Assets</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease" class="term" title="For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit."><span>Net Investment in the Lease</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><strong class="ph b">Noncancelable Lease Term</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer" class="term" title="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."><span>Nonreciprocal Transfer</span></a> (1st def.)</td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/o/#operating-lease" class="term" title="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."><span>Operating Lease</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#performance-obligation" class="term" title="A promise in a contract with a customer to transfer to the customer either: A good or service (or a bundle of goods or services) that is distinct A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer."><span>Performance Obligation</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#private-company" class="term" title="An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting."><span>Private Company</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#probable" class="term" title="The future event or events are likely to occur."><span>Probable</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#public-business-entity" class="term" title="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."><span>Public Business Entity</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/asc-pdf/GUID-8C0B93FE-237A-4BFA-8880-FE749B3CAFCB.pdf" class="pdf-link" target="_blank" rel="noopener">Maintenance Update 2016-11 (PDF)</a></td><td class="entry">06/27/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#public-business-entity" class="term" title="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."><span>Public Business Entity</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration" class="term" title="Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis."><span>Purchased Financial Assets with Credit Deterioration</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration" class="term" title="Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis."><span>Purchased Financial Assets with Credit Deterioration</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans" class="term" title="(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans."><span>Purchased Seasoned Loans</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-08/" class="xref">Accounting Standards Update No. 2025-08</a></td><td class="entry">11/12/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/r/#reinsurance" class="term" title="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."><span>Reinsurance</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/r/#right-of-use-asset" class="term" title="An asset that represents a lessee's right to use an underlying asset for the lease term."><span>Right-of-Use Asset</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/s/#sales-type-lease" class="term" title="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."><span>Sales-Type Lease</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-05/" class="xref">Accounting Standards Update No. 2021-05</a></td><td class="entry">07/19/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/s/#sales-type-lease" class="term" title="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."><span>Sales-Type Lease</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/s/#standalone-selling-price" class="term" title="The price at which an entity would sell a promised good or service separately to a customer."><span>Standalone Selling Price</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/s/#sublease" class="term" title="A transaction in which an underlying asset is re-leased by the lessee (or intermediate lessor) to a third party (the sublessee) and the original (or head) lease between the lessor and the lessee remains in effect."><span>Sublease</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/t/#transaction-price" class="term" title="The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties."><span>Transaction Price</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/u/#underlying-asset" class="term" title="An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset."><span>Underlying Asset</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset" class="term" title="The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."><span>Unguaranteed Residual Asset</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><strong class="ph b">Variable Interest Entity</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-03/" class="xref">Accounting Standards Update No. 2025-03</a></td><td class="entry">05/12/2025</td></tr><tr><td class="entry"></td><td class="entry"></td><td class="entry"></td><td class="entry"></td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-05-3" class="xref">805-20-05-3</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-05-4" class="xref">805-20-05-4</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1A" class="xref">805-20-15-1A</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2019-06/" class="xref">Accounting Standards Update No. 2019-06</a></td><td class="entry">05/30/2019</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1A" class="xref">805-20-15-1A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-03/" class="xref">Accounting Standards Update No. 2016-03</a></td><td class="entry">03/07/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2" class="xref">805-20-15-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2023-05/" class="xref">Accounting Standards Update No. 2023-05</a></td><td class="entry">08/23/2023</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2" class="xref">805-20-15-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2019-06/" class="xref">Accounting Standards Update No. 2019-06</a></td><td class="entry">05/30/2019</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2" class="xref">805-20-15-2 through 15-4</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-15-4" class="xref">805-20-15-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-03/" class="xref">Accounting Standards Update No. 2021-03</a></td><td class="entry">03/30/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-15-4" class="xref">805-20-15-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2019-06/" class="xref">Accounting Standards Update No. 2019-06</a></td><td class="entry">05/30/2019</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1" class="xref">805-20-25-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2019-06/" class="xref">Accounting Standards Update No. 2019-06</a></td><td class="entry">05/30/2019</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1" class="xref">805-20-25-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2" class="xref">805-20-25-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-02/" class="xref">Accounting Standards Update No. 2024-02</a></td><td class="entry">03/29/2024</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-5" class="xref">805-20-25-5</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-5" class="xref">805-20-25-5</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-8" class="xref">805-20-25-8</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-8" class="xref">805-20-25-8</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-9" class="xref">805-20-25-9</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-9" class="xref">805-20-25-9</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10A" class="xref">805-20-25-10A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-11" class="xref">805-20-25-11</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-12" class="xref">805-20-25-12</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-13" class="xref">805-20-25-13</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15B" class="xref">805-20-25-15B through 25-15D</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16" class="xref">805-20-25-16</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16" class="xref">805-20-25-16</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16" class="xref">805-20-25-16</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17" class="xref">805-20-25-17</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17" class="xref">805-20-25-17</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17" class="xref">805-20-25-17</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28A" class="xref">805-20-25-28A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28B" class="xref">805-20-25-28B</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28C" class="xref">805-20-25-28C</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28D" class="xref">805-20-25-28D</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-25-29" class="xref">805-20-25-29 through 25-33</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-2" class="xref">805-20-30-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-2" class="xref">805-20-30-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-2" class="xref">805-20-30-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4" class="xref">805-20-30-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4A" class="xref">805-20-30-4A</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-08/" class="xref">Accounting Standards Update No. 2025-08</a></td><td class="entry">11/12/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4A" class="xref">805-20-30-4A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4B" class="xref">805-20-30-4B</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-08/" class="xref">Accounting Standards Update No. 2025-08</a></td><td class="entry">11/12/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4B" class="xref">805-20-30-4B</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-6" class="xref">805-20-30-6 through 30-8</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-04/" class="xref">Accounting Standards Update No. 2011-04</a></td><td class="entry">05/12/2011</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10" class="xref">805-20-30-10</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10" class="xref">805-20-30-10</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10" class="xref">805-20-30-10 through 30-12</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10" class="xref">805-20-30-10 through 30-12</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10" class="xref">805-20-30-10 through 30-12</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12" class="xref">805-20-30-12</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-08/" class="xref">Accounting Standards Update No. 2025-08</a></td><td class="entry">11/12/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12" class="xref">805-20-30-12</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12" class="xref">805-20-30-12</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-08/" class="xref">Accounting Standards Update No. 2025-08</a></td><td class="entry">11/12/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12" class="xref">805-20-30-12</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-24" class="xref">805-20-30-24</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-25" class="xref">805-20-30-25</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-26" class="xref">805-20-30-26</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-08/" class="xref">Accounting Standards Update No. 2025-08</a></td><td class="entry">11/12/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-26" class="xref">805-20-30-26</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-27" class="xref">805-20-30-27 through 30-30</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-31" class="xref">805-20-30-31</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-10/" class="xref">Accounting Standards Update No. 2025-10</a></td><td class="entry">12/04/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-30-32" class="xref">805-20-30-32</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2026-02/" class="xref">Accounting Standards Update No. 2026-02</a></td><td class="entry">05/19/2026</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4" class="xref">805-20-35-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-06/" class="xref">Accounting Standards Update No. 2012-06</a></td><td class="entry">10/23/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4A" class="xref">805-20-35-4A</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-06/" class="xref">Accounting Standards Update No. 2012-06</a></td><td class="entry">10/23/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4B" class="xref">805-20-35-4B</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-13/" class="xref">Accounting Standards Update No. 2016-13</a></td><td class="entry">06/16/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4B" class="xref">805-20-35-4B</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-06/" class="xref">Accounting Standards Update No. 2012-06</a></td><td class="entry">10/23/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4C" class="xref">805-20-35-4C</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-06/" class="xref">Accounting Standards Update No. 2012-06</a></td><td class="entry">10/23/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-6" class="xref">805-20-35-6</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-7" class="xref">805-20-35-7</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-35-7" class="xref">805-20-35-7</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1" class="xref">805-20-50-1 through 50-5</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-11/" class="xref">Accounting Standards Update No. 2025-11</a></td><td class="entry">12/08/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1" class="xref">805-20-50-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2019-11/" class="xref">Accounting Standards Update No. 2019-11</a></td><td class="entry">11/26/2019</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1" class="xref">805-20-50-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/asc-pdf/GUID-8C0B93FE-237A-4BFA-8880-FE749B3CAFCB.pdf" class="pdf-link" target="_blank" rel="noopener">Maintenance Update 2016-11 (PDF)</a></td><td class="entry">06/27/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1" class="xref">805-20-50-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4" class="xref">805-20-50-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2015-10/" class="xref">Accounting Standards Update No. 2015-10</a></td><td class="entry">06/12/2015</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A" class="xref">805-20-50-4A</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2015-16/" class="xref">Accounting Standards Update No. 2015-16</a></td><td class="entry">09/25/2015</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A" class="xref">805-20-50-4A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2015-10/" class="xref">Accounting Standards Update No. 2015-10</a></td><td class="entry">06/12/2015</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-50-5" class="xref">805-20-50-5</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2" class="xref">805-20-55-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-55-9" class="xref">805-20-55-9</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-04/" class="xref">Accounting Standards Update No. 2011-04</a></td><td class="entry">05/12/2011</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-55-31" class="xref">805-20-55-31</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-02/" class="xref">Accounting Standards Update No. 2016-02</a></td><td class="entry">02/25/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-65-1" class="xref">805-20-65-1</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-06/" class="xref">Accounting Standards Update No. 2012-06</a></td><td class="entry">10/23/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2" class="xref">805-20-65-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2019-06/" class="xref">Accounting Standards Update No. 2019-06</a></td><td class="entry">05/30/2019</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2" class="xref">805-20-65-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-03/" class="xref">Accounting Standards Update No. 2016-03</a></td><td class="entry">03/07/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2" class="xref">805-20-65-2</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-18/" class="xref">Accounting Standards Update No. 2014-18</a></td><td class="entry">12/23/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-65-3" class="xref">805-20-65-3</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2021-08/" class="xref">Accounting Standards Update No. 2021-08</a></td><td class="entry">10/28/2021</td></tr></tbody></table>

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## ASC 805-20-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/805/20/#05-overview-and-background)

SEC content: no

##### [805-20-05-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-1)

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This Subtopic provides guidance on one aspect of the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4))—the recognition and measurement of all of the following:

1.  a
    
    [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
    
2.  b
    
    Liabilities assumed
    
3.  c
    
    [Noncontrolling interests](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."), if any, 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.").

##### [805-20-05-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-2)

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The remaining aspects of the acquisition method are addressed in Subtopics 805-10 and 805-30. Subtopic 805-30 addresses the recognition and measurement 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.") or a gain from a bargain purchase. Subtopic 805-10 addresses all of the following:

1.  a
    
    Identification of 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
    
    Determination of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.")
    
3.  c
    
    Particular types of [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.")
    
4.  d
    
    Measurement period
    
5.  e
    
    Determination of what is part of a business combination.

##### [805-20-05-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-3)

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The guidance in this Subtopic is presented in the following two Subsections:

1.  a
    
    General
    
2.  b
    
    Accounting Alternative.

### Accounting Alternative

##### [805-20-05-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-4)

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The Accounting Alternative Subsections of this Subtopic provide guidance for an entity within the scope of paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) that elects the accounting alternative for the recognition of identifiable intangible assets acquired in a business combination.

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## ASC 805-20-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/805/20/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [805-20-15-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1)

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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 805-10-15.

### Accounting Alternatives

##### [805-20-15-1A](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1A)

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Paragraphs

[805-20-15-2 through 15-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2)

and

[805-20-25-29 through 25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-29)

provide guidance for an entity electing the accounting alternative in this Subtopic. See paragraph [805-20-65-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2) for transition guidance for [private companies](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") and [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.")on applying the accounting alternative in this Subtopic.

##### [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2)

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A private company or not-for-profit entity may make an accounting policy election to apply the accounting alternative in this Subtopic. The guidance in the Accounting Alternative Subsections of this Subtopic applies when a private company or not-for-profit entity is required to recognize or otherwise consider the fair value of intangible assets as a result of any one of the following transactions:

1.  a
    
    Applying the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4)for all entities and Subtopic 958-805 for additional guidance for not-for-profit entities)
    
2.  b
    
    Assessing the nature of the difference between the carrying amount of an investment and the amount of underlying equity in net assets of an investee when applying the equity method of accounting in accordance with Topic 323 on investments—equity method and joint ventures
    
3.  c
    
    Adopting fresh-start reporting in accordance with Topic 852 on reorganizations
    
4.  d
    
    Accounting for 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.") in accordance with Subtopic 805-60.

##### [805-20-15-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-3)

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An entity that elects the accounting alternative shall apply all of the related recognition requirements upon election. The accounting alternative, once elected, shall be applied to all future transactions that are identified in paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2).

##### [805-20-15-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-4)

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An entity that elects this accounting alternative must adopt the accounting alternative for amortizing [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 the Accounting Alternatives Subsections of Topic 350-20 on intangibles—goodwill and other. If the accounting alternative for amortizing goodwill was not adopted previously, it should be adopted on a prospective basis as of the adoption of the accounting alternative in this Subtopic. For example, upon adoption, existing goodwill should be amortized on a straight-line basis over 10 years, or less than 10 years if the entity demonstrates that another useful life is more appropriate. However, an entity that elects the accounting alternative for amortizing goodwill is not required to adopt the accounting alternative in this Subtopic.

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## 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)

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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)

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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)

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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)

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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

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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)

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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)

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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)

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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)

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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)

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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)

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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)

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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)

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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)

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[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)

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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)

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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)

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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)

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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

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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

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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)

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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

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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)

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[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)

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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.

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## ASC 805-20-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/805/20/#30-initial-measurement)

SEC content: no

#### Measurement Principle

##### [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1)

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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 measure 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.") at their [acquisition-date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.")[fair values](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.").

##### [805-20-30-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-2)

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Exceptions to the measurement principle are identified and their accounting treatment is addressed in paragraphs

[805-20-30-10 through 30-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10)

.

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)Exceptions to the measurement principle are identified and their accounting treatment is addressed in paragraphs

[805-20-30-10 through 30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10)

.

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)Exceptions to the measurement principle are identified and their accounting treatment is addressed in paragraphs

[805-20-30-10 through 30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10)

.

#### Measuring the Fair Values of Particular Identifiable Assets and a Noncontrolling Interest in an Acquiree

##### [805-20-30-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-3)

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The following guidance demonstrates the application of the measurement principle in paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) to specific situations 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.") including guidance on measuring the fair values of particular identifiable assets and a noncontrolling interest in an acquiree.

##### [805-20-30-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4)

Pending content: no

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The acquirer shall not recognize a separate valuation allowance as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") for assets acquired in a business combination that are measured at their acquisition-date fair values because the effects of uncertainty about future cash flows are included in the fair value measure, unless the assets acquired are financial assets for which the acquirer shall refer to the guidance in paragraphs

[805-20-30-4A through 30-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4A)

.

##### [805-20-30-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4A)

Pending content: yes

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For acquired financial assets that are not [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis."), the acquirer shall record the purchased financial assets at the acquisition-date fair value. Additionally, for these financial assets within the scope of Topic 326, an allowance shall be recorded with a corresponding charge to credit loss expense as of the reporting date.

Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:

[326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)For acquired financial assets that are not [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")or [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans."), the acquirer shall record the acquired financial assets at the acquisition-date fair value. Additionally, for these financial assets within the scope of Topic 326, an allowance shall be recorded with a corresponding charge to credit loss expense as of the reporting date.

##### [805-20-30-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4B)

Pending content: yes

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For assets accounted for as purchased financial assets with credit deterioration (which includes beneficial interests that meet the criteria in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)), an acquirer shall recognize an allowance in accordance with Topic 326 with a corresponding increase to the amortized cost basis of the financial asset(s) as of the acquisition date.

Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:

[326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)For assets accounted for as purchased financial assets with credit deterioration (which includes beneficial interests that meet the criteria in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)) and purchased seasoned loans, an acquirer shall recognize an allowance in accordance with Topic 326 with a corresponding increase to the amortized cost basis of the financial asset(s) as of the acquisition date.

##### [805-20-30-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-5)

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The acquirer shall measure the acquisition-date fair value of an asset, such as a building or a patent or other intangible asset, that is subject to an operating lease in which the acquiree is the lessor separately from the lease contract. In other words, the fair value of the asset shall be the same regardless of whether it is subject to an operating lease. In accordance with paragraph [805-20-25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-12), the acquirer separately recognizes an asset or a liability if the terms of the lease are favorable or unfavorable relative to market terms.

##### [805-20-30-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-6)

Pending content: no

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To protect its competitive position, or for other reasons, the acquirer may intend not to use an acquired nonfinancial asset actively, or it may not intend to use the asset according to its highest and best use. For example, that might be the case for an acquired research and development intangible asset that the acquirer plans to use defensively by preventing others from using it. Nevertheless, the acquirer shall measure the fair value of the nonfinancial asset in accordance with Subtopic 820-10 assuming its highest and best use by market participants in accordance with the appropriate valuation premise, both initially and for purposes of subsequent impairment testing.

##### [805-20-30-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-7)

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Paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) requires the acquirer to measure a noncontrolling interest in the acquiree at its fair value at the acquisition date. An acquirer sometimes will be able to measure the acquisition-date fair value of a noncontrolling interest on the basis of a quoted price in an active market for the equity shares (that is, those not held by the acquirer). In other situations, however, a quoted price in an active market for the equity shares will not be available. In those situations, the acquirer would measure the fair value of the noncontrolling interest using another valuation technique.

##### [805-20-30-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-8)

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The fair values of the acquirer's interest in the acquiree and the noncontrolling interest on a per-share basis might differ. The main difference is likely to be the inclusion of a control premium in the per-share fair value of the acquirer's interest in the acquiree or, conversely, the inclusion of a discount for lack of control (also referred to as a noncontrolling interest discount) in the per-share fair value of the noncontrolling interest if market participants would take into account such a premium or discount when pricing the noncontrolling interest.

#### Measurement of Assets and Liabilities Arising from Contingencies

##### [805-20-30-9](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-9)

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Paragraphs [805-20-25-18A through 25-20B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) establish the requirements related to recognition of certain assets and liabilities arising from [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur."). Initial measurement of assets and liabilities meeting the recognition criteria in paragraph [805-20-25-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) shall be at acquisition-date fair value. Guidance on the initial measurement of other assets and liabilities from contingencies not meeting the recognition criteria of that paragraph, but meeting the criteria in paragraph [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) is at paragraph [805-20-30-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-23).

##### [805-20-30-9A](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-9A)

Pending content: no

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Contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination shall be measured 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).

#### Exceptions to the Measurement Principle

##### [805-20-30-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10)

Pending content: yes

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Paragraph [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) notes that the Business Combinations Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs

[805-20-30-12 through 30-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12)

specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) measurement principle. The acquirer shall apply the specified GAAP or the specified requirements rather than that measurement principle to determine how to measure the assets or liabilities identified in paragraphs

[805-20-30-12 through 30-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12)

. That will result in some items being measured at an amount other than their acquisition-date fair values.

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)Paragraph [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) notes that the Business Combinations Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs

[805-20-30-12 through 30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12)

specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) measurement principle. The acquirer shall apply the specified GAAP or the specified requirements rather than that measurement principle to determine how to measure the assets or liabilities identified in paragraphs[805-20-30-12 through 30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12)

. That will result in some items being measured at an amount other than their acquisition-date fair values.

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)Paragraph [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) notes that the Business Combinations Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs

[805-20-30-12 through 30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12)

specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) measurement principle. The acquirer shall apply the specified GAAP or the specified requirements rather than that measurement principle to determine how to measure the assets or liabilities identified in paragraphs[805-20-30-12 through 30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12)

. That will result in some items being measured at an amount other than their acquisition-date fair values.

##### [805-20-30-11](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-11)

Pending content: yes

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As noted in paragraph [805-20-25-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17), income taxes, employee benefits, indemnification assets, leases, and [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.") are also exceptions to the recognition principle in paragraph [805-20-25-1](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)As noted in paragraph [805-20-25-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17), income taxes, employee benefits, indemnification assets, leases, [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."), and [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).")are also exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1).

##### [805-20-30-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12)

Pending content: yes

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:4864689e2abc345c190a48a9828e4a2c228d7b48a8d3ddac10098839fbc3efa0

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Guidance is presented on all of the following exceptions to the measurement principle:

1.  a
    
    Income taxes
    
2.  b
    
    Employee benefits
    
3.  c
    
    Indemnification assets
    
4.  d
    
    Reacquired rights
    
5.  e
    
    Share-based payment awards
    
6.  f
    
    Assets held for sale
    
7.  g
    
    Certain assets and liabilities arising from contingencies
    
8.  h
    
    Leases
    
9.  i
    
    [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")
    
10.  j
     
     Contract assets and contract liabilities.
     

Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:

[326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)Guidance is presented on all of the following exceptions to the measurement principle:

1.  a
    
    Income taxes
    
2.  b
    
    Employee benefits
    
3.  c
    
    Indemnification assets
    
4.  d
    
    Reacquired rights
    
5.  e
    
    Share-based payment awards
    
6.  f
    
    Assets held for sale
    
7.  g
    
    Certain assets and liabilities arising from contingencies
    
8.  h
    
    Leases
    
9.  i
    
    [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.")
    
10.  j
     
     Contract assets and contract liabilities.
     

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 measurement principle:

1.  a
    
    Income taxes
    
2.  b
    
    Employee benefits
    
3.  c
    
    Indemnification assets
    
4.  d
    
    Reacquired rights
    
5.  e
    
    Share-based payment awards
    
6.  f
    
    Assets held for sale
    
7.  g
    
    Certain assets and liabilities arising from contingencies
    
8.  h
    
    Leases
    
9.  i
    
    [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.")
    
10.  j
     
     Contract assets and contract liabilities
     
11.  k
     
     Grants related to income.
     

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 is presented on all of the following exceptions to the measurement principle:

1.  a
    
    Income taxes
    
2.  b
    
    Employee benefits
    
3.  c
    
    Indemnification assets
    
4.  d
    
    Reacquired rights
    
5.  e
    
    Share-based payment awards
    
6.  f
    
    Assets held for sale
    
7.  g
    
    Certain assets and liabilities arising from contingencies
    
8.  h
    
    Leases
    
9.  i
    
    [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.")
    
10.  j
     
     Contract assets and contract liabilities
     
11.  k
     
     Grants related to income
     
12.  l
     
     [Environmental credit obligations.](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.")

##### [805-20-30-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-13)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:bd0c3c734e9629966584642933eab2a5b678e91f23cd54d1c4decd33e1ef1cb2

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Section 805-740-30 establishes the measurement guidance related to accounting for income taxes in a business combination.

##### [805-20-30-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-14)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:09c54b22c6d4ff1e42af5d5756132a4fcf709a72ccb2d6e75bdbb555952e5a30

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The acquirer shall measure 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

[805-20-30-15 through 30-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15)

would be measured in accordance with that guidance and as specified in those paragraphs.

##### [805-20-30-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:9cc5c8f65ae9a873c0470e33cdcbeaefa0e2a677dc571de9c064431b039f3f46

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Guidance on defined benefit pension plans is presented in Subtopic 715-30. Guidance on defined benefit other postretirement plans is presented in Subtopic 715-60. Paragraphs [805-20-25-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-23) and [805-20-25-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-25) require an acquirer to recognize as part of a business combination an asset or a liability representing the funded status of a single-employer defined benefit pension or postretirement plan. In determining that funded status, the acquirer shall exclude the effects of expected plan amendments, terminations, or curtailments that at the acquisition date it has no obligation to make. The projected benefit obligation assumed shall reflect any other necessary changes in assumptions based on the acquirer's assessment of relevant future events.

##### [805-20-30-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-16)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

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Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The Settlements, Curtailments, and Certain Termination Benefits Subsection of Section 715-30-35 establishes the measurement guidance related to accounting for settlements and curtailments of defined benefit pension plans and certain termination benefits.

##### [805-20-30-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-17)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:cf5ffde4b4140021dd31a95a8128a65d2505d44adc398fdcebf8f91e314b858b

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


See also measurement-related guidance for the following other employee benefit arrangements:

1.  a
    
    One-time termination benefits in connection with exit or disposal activities. See Section 420-10-30.
    
2.  b
    
    Compensated absences. See Section 710-10-25.
    
3.  c
    
    Deferred compensation contracts. See Section 710-10-30.
    
4.  d
    
    Nonretirement postemployment benefits. See Section 712-10-25.

##### [805-20-30-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-18)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:4720683510621062920d64e1b4fedbd3f934bf38531e3439281a904b077ece28

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Paragraph [805-20-25-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) requires that the acquirer 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. That paragraph also requires that, 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 recognize the indemnification asset at the acquisition date measured at its acquisition-date fair value. For an indemnification asset measured at fair value, the effects of uncertainty about future cash flows because of collectibility considerations are included in the fair value measure and a separate valuation allowance is not necessary, as noted in paragraph [805-20-30-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4).

##### [805-20-30-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-19)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:1e53b9c0172bbc75176827c9bed70858cc4f1129143a6f063546164e45642a64

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Paragraph [805-20-25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28) states that in some circumstances, the indemnification may relate to an asset or a liability that is an exception to the recognition or measurement principles, and provides an example of an indemnification that 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. Alternatively, an indemnification may relate to an asset or a liability, for example, one that results from an uncertain tax position that is measured on a basis other than acquisition-date fair value. (Paragraph [805-20-30-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-13) identifies the business-combination-related measurement requirements for income taxes.) Paragraph [805-20-25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28) establishes that 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.

##### [805-20-30-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-20)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:d1064e972ea4f1a574553cf879bd7cda2fa5eb2bec968139122fb5a4fa5da1df

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The acquirer shall measure the value of a reacquired right recognized as an intangible asset in accordance with paragraph [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) on the basis of the remaining contractual term of the related contract regardless of whether market participants would consider potential contractual renewals in determining its fair value.

##### [805-20-30-21](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-21)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:34dc252ea0be91c46ab5eb8752f4a1eecf090a476b13a94cfd01924276c3034c

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The acquirer shall measure a liability or an equity instrument related to the replacement of an acquiree's share-based payment awards with share-based payment awards of the acquirer in accordance with the method in Topic 718. The Business Combinations Topic refers to the result of that method as the fair-value-based measure of the award. Paragraphs

[805-30-30-9 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9)

and

[805-30-55-6 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6)

provide additional guidance.

##### [805-20-30-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-22)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:4dc0355adfad2325e7b2d33d667568a81057fa5f81f37f6aeee7397cd5fac646

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The acquirer shall measure an acquired long-lived asset (or disposal group) that is classified as held for sale at the acquisition date in accordance with Subtopic 360-10, at fair value less cost to sell in accordance with paragraphs [360-10-35-38](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-38) and [360-10-35-43](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-43).

##### [805-20-30-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-23)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:af56c4183aeead49d85f6dcb183e51560759cc4251bb6fb6c46c0650d4ce64b8

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Initial measurement of assets and liabilities meeting the recognition criteria in paragraph [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) shall be at the amount that can be reasonably estimated by applying 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).

##### [805-20-30-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-24)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:d1421d3650af6e839561d6854c12dbab5d2fcce17146b5249d0ea8061be56ef8

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


For [leases](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.") in which the acquiree is a [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."), the acquirer shall measure the [lease liability](https://asc.understandingaccounting.org/glossary/l/#lease-liability "A lessee's obligation to make the lease payments arising from a lease, measured on a discounted basis.") at the present value of the remaining [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor."), as if the acquired lease were a new lease of the acquirer at the acquisition date. The acquirer shall measure the [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.") at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.

##### [805-20-30-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-25)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:5678a91c784ebfdec9da4818791dee4ff82d65a0efed8caa018ea6be1e7631e4

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


For leases in which the acquiree is a lessor of a [sales-type lease](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 a [direct financing lease](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."), the acquirer shall measure its [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") as the sum of both of the following (which will equal the fair value of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") at the acquisition date):

1.  a
    
    The [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") at the present value, discounted using the rate implicit in the lease, of the following, as if the acquired lease were a new lease at the acquisition date:
    
    1.  1
        
        The remaining lease payments
        
    2.  2
        
        The amount the lessor expects to derive from the underlying asset following the end of the lease term that is guaranteed by the lessee or any other third party unrelated to the lessor.
        
2.  b
    
    The [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") as the difference between the fair value of the underlying asset at the acquisition date and the carrying amount of the lease receivable, as determined in accordance with (a), at that date.
    

The acquirer shall take into account the terms and conditions of the lease in calculating the acquisition-date fair value of an underlying asset that is subject to a sales-type lease or a direct financing lease by the acquiree-lessor.

##### [805-20-30-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-26)

Pending content: yes

Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z

Record version: sha256:bfc6ff2a5c266b29bb78f86661d2dbbb992a534ef6e6fd1cb74e45b8adae522d

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


An acquirer shall recognize [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.") (including beneficial interests meeting the conditions in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)) in accordance with Section 326-20-30 for financial instruments measured at amortized cost or Section 326-30-30 for available-for-sale debt securities. Paragraphs

[326-20-55-57 through 55-78](https://asc.understandingaccounting.org/asc/326/20/#326-20-55-57)

illustrate how the guidance is applied for purchased financial assets with credit deterioration measured at amortized cost. Paragraphs

[326-30-55-5 through 55-7](https://asc.understandingaccounting.org/asc/326/30/#326-30-55-5)

illustrate how the guidance is applied to available-for-sale debt securities. An acquirer shall not accrete into interest income the credit losses embedded in the purchase price for purchased financial assets with credit deterioration.

Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:

[326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)

<table class="asc-table" frame="top" id="table_odd_x1v_ghc"><tbody><tr><td class="entry"><em class="ph i"><strong class="ph b">Editor's Note</strong>: The content of paragraph 805-20-30-26 will be amended upon transition, together with a change in the heading noted below.</em></td></tr><tr><td class="entry">&gt; <strong class="ph b">Purchased Financial Assets with Credit Deterioration and Purchased Seasoned Loans</strong></td></tr></tbody></table>

An acquirer shall recognize [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.") (including beneficial interests meeting the conditions in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)) and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.")in accordance with Section 326-20-30 for financial instruments measured at amortized cost or Section 326-30-30 for available-for-sale debt securities. Paragraphs

[326-20-55-57 through 55-78](https://asc.understandingaccounting.org/asc/326/20/#326-20-55-57)

illustrate how the guidance is applied for purchased financial assets with credit deterioration measured at amortized cost. Paragraphs

[326-30-55-5 through 55-7](https://asc.understandingaccounting.org/asc/326/30/#326-30-55-5)

illustrate how the guidance is applied to available-for-sale debt securities. An acquirer shall not accrete into interest income the credit losses embedded in the purchase price for purchased financial assets with credit deterioration and purchased seasoned loans.

##### [805-20-30-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-27)

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An acquirer shall measure 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.

##### [805-20-30-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-28)

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An acquirer shall measure the contract assets and contract liabilities of the acquired contract as if the acquirer had originated the acquired contract. Topic 606 specifies when certain assessments and estimates should be made, for example, as of contract inception or on a recurring basis. At the acquisition date, the acquirer shall make those assessments as of the dates required by Topic 606.

##### [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29)

Pending content: no

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An acquirer may use one or more of the following practical expedients when applying paragraphs

[805-20-30-27 through 30-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-27)

at the acquisition date:

1.  a
    
    For contracts that were modified before the acquisition date, an acquirer may reflect the aggregate effect of all modifications that occur before the acquisition date when:
    
    1.  1
        
        Identifying the satisfied and unsatisfied [performance obligations](https://asc.understandingaccounting.org/glossary/p/#performance-obligation "A promise in a contract with a customer to transfer to the customer either: A good or service (or a bundle of goods or services) that is distinct A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.")
        
    2.  2
        
        Determining the [transaction price](https://asc.understandingaccounting.org/glossary/t/#transaction-price "The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.")
        
    3.  3
        
        Allocating the transaction price to the satisfied and unsatisfied performance obligations.
        
2.  b
    
    For all contracts, for purposes of allocating the transaction price, an acquirer may determine the [standalone selling price](https://asc.understandingaccounting.org/glossary/s/#standalone-selling-price "The price at which an entity would sell a promised good or service separately to a customer.") at the acquisition date (instead of the contract inception date) of each performance obligation in the contract.

##### [805-20-30-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-30)

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For any of the practical expedients in paragraph [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29) that an acquirer uses, the acquirer shall apply that expedient on an acquisition-by-acquisition basis. Each practical expedient that is elected shall be applied consistently to all contracts acquired in the same business combination. In addition, the acquirer shall provide the disclosures in paragraph [805-20-50-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-5).

##### [805-20-30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-31)

Pending content: yes

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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)Deferred income recognized in accordance with paragraph [805-20-25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28D) shall be measured 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.

##### [805-20-30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-32)

Pending content: yes

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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 measure an environmental credit obligation liability assumed in a business combination in accordance with the initial measurement requirements of Topic 818. Paragraph [818-30-30-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-1) specifies that an environmental credit obligation liability may have a funded portion and an unfunded portion. When measuring the funded portion in accordance with paragraph [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2), an acquirer shall consider only [environmental credits](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 the business combination that will be classified as [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An environmental credit recognized as an asset in accordance with Topic 818 and probable of being used to settle an environmental credit obligation."). If applicable, the unfunded portion of an environmental credit obligation liability measured in accordance with paragraph [818-30-30-3(b)](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3) shall consider only the acquiree’s existing purchase commitments and unconditional rights.

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## ASC 805-20-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/805/20/#35-subsequent-measurement)

SEC content: no

#### Guidance on Specific Business-Combination-Related Items

##### [805-20-35-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-1)

Pending content: no

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This Topic directly establishes generally accepted accounting principles (GAAP) 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.") 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 generally accepted accounting principles (GAAP). However, that paragraph also identifies specific items for which this Topic provides guidance. This Subtopic provides guidance on several of those specific items as follows.

##### [805-20-35-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-2)

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A reacquired right recognized as 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.)") in accordance with paragraph [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) shall be amortized over the remaining contractual period of the contract in which the right was granted. An acquirer that subsequently sells a reacquired right to a third party shall include the carrying amount of the intangible asset in determining the gain or loss on the sale.

##### [805-20-35-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-3)

Pending content: no

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An acquirer shall develop a systematic and rational basis for subsequently measuring and accounting for assets and liabilities arising from [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") depending on their nature.

##### [805-20-35-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4)

Pending content: no

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At each subsequent reporting date, the acquirer shall measure an indemnification asset that was recognized in accordance with paragraphs

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

at the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") on the same basis as the indemnified liability or asset, subject to any contractual limitations on its amount, except as noted in paragraph [805-20-35-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4B), and, for an indemnification asset that is not subsequently measured at its fair value, management's assessment of the collectibility of the indemnification asset.

##### [805-20-35-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4A)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2012-06](https://asc.understandingaccounting.org/updates/asu-2012-06/).

##### [805-20-35-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4B)

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An indemnification asset recognized at the acquisition date in accordance with paragraphs

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

as a result of a government-assisted acquisition of a financial institution involving an indemnification agreement shall be subsequently measured on the same basis as the indemnified item. For example, if the expected cash flows on indemnified assets increase such that a previously recorded valuation allowance is reversed, an entity shall account for the associated decrease in the indemnification assets immediately in earnings.

##### [805-20-35-4C](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4C)

Pending content: no

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Contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination shall be measured subsequently in accordance with the guidance for contingent consideration arrangements in paragraph [805-30-35-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1).

#### Additional Guidance on Subsequent Measurement of Assets Acquired, Liabilities Assumed or Incurred, and Any Noncontrolling Interests in a Business Combination

##### [805-20-35-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-5)

Pending content: no

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Additional guidance on subsequently measuring and accounting for assets acquired in a business combination is addressed in Subtopic 350-30, which prescribes the accounting for [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.")[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.)") acquired in a business combination, including recognition of intangible assets used in research and development activities, regardless of whether those assets have an alternative future use, and their classification as indefinite-lived until the completion or abandonment of the associated research and development efforts.

##### [805-20-35-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-6)

Pending content: no

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Leasehold improvements acquired in a business combination shall be amortized over the shorter of the useful life of the assets and the remaining [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") at the date of acquisition. However, if the lease transfers ownership of the underlying asset to the lessee, or the lessee is reasonably certain to exercise an option to purchase the underlying asset, the lessee shall amortize the leasehold improvements to the end of their useful life.

##### [805-20-35-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-7)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Topic 944on insurance provides guidance on the subsequent accounting for 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 acquired in a business combination.

##### [805-20-35-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-8)

Pending content: no

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Additional guidance on accounting for changes in a parent's ownership interest in a subsidiary after [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") is obtained is provided in paragraphs

[810-10-45-22 through 45-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-22)

and Example 1 (see paragraph [810-10-55-4B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4B)).

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## ASC 805-20-40: 40 Derecognition

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

SEC content: no

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

Pending content: no

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Effective as of: not established by retrieval timestamps.


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)

Pending content: no

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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.

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## ASC 805-20-50: 50 Disclosure

[Read section](https://asc.understandingaccounting.org/asc/805/20/#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

##### [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


Paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) identifies one of the objectives of disclosures about 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."). To meet that objective, 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 all of the following information for each business combination that occurs during the reporting period:

1.  a
    
    For indemnification assets, all of the following:
    
    1.  1
        
        The amount 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.")
        
    2.  2
        
        A description of the arrangement and the basis for determining the amount of the payment
        
    3.  3
        
        An estimate of the range of outcomes (undiscounted) or, if a range cannot be estimated, that fact and the reasons why a range cannot be estimated. If the maximum amount of the payment is unlimited, the acquirer shall disclose that fact.
        
2.  b
    
    For acquired receivables not subject to the requirements of Subtopic 326-20 relating to purchased financial assets with credit deterioration, all of the following:
    
    1.  1
        
        The [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 receivables (unless those receivables arise from [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.") by the lessor for which the acquirer shall disclose the amounts recognized as of the acquisition date)
        
    2.  2
        
        The gross contractual amounts receivable
        
    3.  3
        
        The best estimate at the acquisition date of the contractual cash flows not expected to be collected.
        
    
    The disclosures shall be provided by major class of receivable, such as loans, net investment in sales-type or direct financing leases in accordance with Subtopic 842-30 on leases—lessor, and any other class of receivables.
    
3.  c
    
    The amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed (see Example 5 \[paragraph [805-10-55-37](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37)\]).
    
4.  d
    
    For contingencies, the following disclosures shall be included in the note that describes the business combination:
    
    1.  1
        
        For assets and liabilities arising from contingencies recognized at the acquisition date:
        
        1.  i
            
            The amounts recognized at the acquisition date and the measurement basis applied (that is, at fair value or at an amount recognized in accordance with Topic 450 and Section 450-20-25)
            
        2.  ii
            
            The nature of the contingencies.
            
        
        An acquirer may aggregate disclosures for assets or liabilities arising from contingencies that are similar in nature.
        
    2.  2
        
        For contingencies that are not recognized at the acquisition date, the disclosures required by Topic 450 if the criteria for disclosures in that Topic are met.
        
    
    An acquirer may aggregate disclosures for assets and liabilities arising from contingencies that are similar in nature.
    
5.  e
    
    For each business combination in which the acquirer holds less than 100 percent of the equity interests 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.") at the acquisition date, both of the following:
    
    1.  1
        
        The fair value of the noncontrolling interest in the acquiree at the acquisition date
        
    2.  2
        
        The valuation technique(s) and significant inputs used to measure the fair value of the noncontrolling interest.
        

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)Paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) identifies one of the objectives of disclosures about 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."). To meet that objective, 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 in interim and annual reporting periods all of the following information for each business combination that occurs during the reporting period:

1.  a
    
    For indemnification assets, all of the following:
    
    1.  1
        
        The amount 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.")
        
    2.  2
        
        A description of the arrangement and the basis for determining the amount of the payment
        
    3.  3
        
        An estimate of the range of outcomes (undiscounted) or, if a range cannot be estimated, that fact and the reasons why a range cannot be estimated. If the maximum amount of the payment is unlimited, the acquirer shall disclose that fact.
        
2.  b
    
    For acquired receivables not subject to the requirements of Subtopic 326-20 relating to purchased financial assets with credit deterioration, all of the following:
    
    1.  1
        
        The [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 receivables (unless those receivables arise from [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.") by the lessor for which the acquirer shall disclose the amounts recognized as of the acquisition date)
        
    2.  2
        
        The gross contractual amounts receivable
        
    3.  3
        
        The best estimate at the acquisition date of the contractual cash flows not expected to be collected.
        
    
    The disclosures shall be provided by major class of receivable, such as loans, net investment in sales-type or direct financing leases in accordance with Subtopic 842-30 on leases—lessor, and any other class of receivables.
    
3.  c
    
    The amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed (see Example 5 \[paragraph [805-10-55-37](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37)\]).
    
4.  d
    
    For contingencies, the following disclosures shall be included in the note that describes the business combination:
    
    1.  1
        
        For assets and liabilities arising from contingencies recognized at the acquisition date:
        
        1.  i
            
            The amounts recognized at the acquisition date and the measurement basis applied (that is, at fair value or at an amount recognized in accordance with Topic 450 and Section 450-20-25)
            
        2.  ii
            
            The nature of the contingencies.
            
        
        An acquirer may aggregate disclosures for assets or liabilities arising from contingencies that are similar in nature.
        
    2.  2
        
        For contingencies that are not recognized at the acquisition date, the disclosures required by Topic 450 if the criteria for disclosures in that Topic are met.
        
    
    An acquirer may aggregate disclosures for assets and liabilities arising from contingencies that are similar in nature.
    
5.  e
    
    For each business combination in which the acquirer holds less than 100 percent of the equity interests 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.") at the acquisition date, both of the following:
    
    1.  1
        
        The fair value of the noncontrolling interest in the acquiree at the acquisition date
        
    2.  2
        
        The valuation technique(s) and significant inputs used to measure the fair value of the noncontrolling interest.

##### [805-20-50-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-2)

Pending content: yes

Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z

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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 paragraph [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) 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 paragraph [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) in the aggregate in interim and annual reporting periods.

##### [805-20-50-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-3)

Pending content: yes

Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z

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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 [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) 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 [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1)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

##### [805-20-50-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4)

Pending content: yes

Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z

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Effective as of: not established by retrieval timestamps.


Paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) identifies the second objective of disclosures about the effects of business combinations that occurred in the current or previous reporting periods. To meet the objective in that paragraph, the acquirer shall disclose the information in paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively.

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)Paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) identifies the second objective of disclosures about the effects of business combinations that occurred in the current or previous reporting periods. To meet the objective in that paragraph, in interim and annual reporting periods the acquirer shall disclose the information in paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively.

##### [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


If the initial accounting for a business combination is incomplete (see paragraphs

[805-10-25-13 through 25-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13)

) for particular assets, liabilities, noncontrolling interests, or items of consideration and the amounts recognized in the financial statements for the business combination thus have been determined only provisionally, the acquirer shall disclose the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively to meet the objective in paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5):

1.  a
    
    The reasons why the initial accounting is incomplete
    
2.  b
    
    The assets, liabilities, equity interests, or items of consideration for which the initial accounting is incomplete
    
3.  c
    
    The nature and amount of any measurement period adjustments recognized during the reporting period in accordance with paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17), including separately the amount of adjustment to current-period income statement line items relating to the income effects that would have been recognized in previous periods if the adjustment to provisional amounts were recognized as of the acquisition date. Alternatively, an acquirer may present those amounts separately on the face of the income statement.
    

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 initial accounting for a business combination is incomplete (see paragraphs

[805-10-25-13 through 25-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13)

) for particular assets, liabilities, noncontrolling interests, or items of consideration and the amounts recognized in the financial statements for the business combination thus have been determined only provisionally, the acquirer shall disclose in interim and annual reporting periods the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively to meet the objective in paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5):

1.  a
    
    The reasons why the initial accounting is incomplete
    
2.  b
    
    The assets, liabilities, equity interests, or items of consideration for which the initial accounting is incomplete
    
3.  c
    
    The nature and amount of any measurement period adjustments recognized during the reporting period in accordance with paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17), including separately the amount of adjustment to current-period income statement line items relating to the income effects that would have been recognized in previous periods if the adjustment to provisional amounts were recognized as of the acquisition date. Alternatively, an acquirer may present those amounts separately on the face of the income statement.

#### Exceptions to the Measurement Principle

##### [805-20-50-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-5)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


For any of the practical expedients in paragraph [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29) that an acquirer uses, the acquirer shall disclose all of the following information:

1.  a
    
    The expedients that have been used
    
2.  b
    
    To the extent reasonably possible, a qualitative assessment of the estimated effect of applying each of those expedients.
    

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 any of the practical expedients in paragraph [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29) that an acquirer uses, the acquirer shall disclose all of the following information in interim and annual reporting periods:

1.  a
    
    The expedients that have been used
    
2.  b
    
    To the extent reasonably possible, a qualitative assessment of the estimated effect of applying each of those expedients.

Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z

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Effective as of: not established by retrieval timestamps.


## ASC 805-20-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/805/20/#55-implementation-guidance-and-illustrations)

SEC content: no

##### [805-20-55-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-1)

Pending content: no

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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 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.") to [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 and liabilities and to [noncontrolling interests](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.").

#### Implementation Guidance

##### [805-20-55-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z

Record version: sha256:cc26ae5972e6dd45ea2193f996e6d3cf5ffad838999612e1a645d5cd6ff32462

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Effective as of: not established by retrieval timestamps.


Paragraph [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10) establishes that an intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion described in the definition of identifiable. 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.)") that meets the contractual-legal criterion is identifiable even if the asset is not transferable or separable from 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.") or from other rights and obligations. For example:

1.  a
    
    An acquiree leases a manufacturing facility to a [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.") under 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.") that has terms that are favorable relative to market terms. The lease terms explicitly prohibit transfer of the [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.") (through either sale or [sublease](https://asc.understandingaccounting.org/glossary/s/#sublease "A transaction in which an underlying asset is re-leased by the lessee (or intermediate lessor) to a third party (the sublessee) and the original (or head) lease between the lessor and the lessee remains in effect.")). The amount by which the lease terms are favorable compared with the pricing of current market transactions for the same or similar items is an intangible asset that meets the contractual-legal criterion for recognition 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."), even though 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.") cannot sell or otherwise transfer the lease contract. See also paragraph [805-20-25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-12).
    
2.  b
    
    An acquiree owns and operates a nuclear power plant. The license to operate that power plant is an intangible asset that meets the contractual-legal criterion for recognition separately from goodwill, even if the acquirer cannot sell or transfer it separately from the acquired power plant. An acquirer may recognize the [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 operating license and the fair value of the power plant as a single asset for financial reporting purposes if the useful lives of those assets are similar.
    
3.  c
    
    An acquiree owns a technology patent. It has licensed that patent to others for their exclusive use outside the domestic market, receiving a specified percentage of future foreign revenue in exchange. Both the technology patent and the related license agreement meet the contractual-legal criterion for recognition separately from goodwill even if selling or exchanging the patent and the related license agreement separately from one another would not be practical.

##### [805-20-55-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-3)

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The separability criterion means that an acquired intangible asset is capable of being separated or divided from the acquiree and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability. An intangible asset that the acquirer would be able to sell, license, or otherwise exchange for something else of value meets the separability criterion even if the acquirer does not intend to sell, license, or otherwise exchange it.

##### [805-20-55-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-4)

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An acquired intangible asset meets the separability criterion if there is evidence of exchange transactions for that type of asset or an asset of a similar type, even if those transactions are infrequent and regardless of whether the acquirer is involved in them. For example, customer and subscriber lists are frequently licensed and thus meet the separability criterion. Even if an acquiree believes its customer lists have characteristics different from other customer lists, the fact that customer lists are frequently licensed generally means that the acquired customer list meets the separability criterion. However, a customer list acquired 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.") would not meet the separability criterion if the terms of confidentiality or other agreements prohibit an entity from selling, leasing, or otherwise exchanging information about its customers.

##### [805-20-55-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-5)

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An intangible asset that is not individually separable from the acquiree or combined entity meets the separability criterion if it is separable in combination with a related contract, identifiable asset, or liability. For example:

1.  a
    
    Market participants exchange deposit liabilities and related depositor relationship [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.)") in observable exchange transactions. Therefore, the acquirer should recognize the depositor relationship intangible asset separately from goodwill.
    
2.  b
    
    An acquiree owns a registered trademark and documented but unpatented technical expertise used to manufacture the trademarked product. To transfer ownership of a trademark, the owner is also required to transfer everything else necessary for the new owner to produce a product or service indistinguishable from that produced by the former owner. Because the unpatented technical expertise must be separated from the acquiree or combined entity and sold if the related trademark is sold, it meets the separability criterion.

##### [805-20-55-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-6)

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The acquirer subsumes into goodwill the value of an acquired intangible asset that is not identifiable as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."). For example, an acquirer may attribute value to the existence of an assembled workforce, which is an existing collection of employees that permits the acquirer to continue to operate an acquired business from the acquisition date. An assembled workforce does not represent the intellectual capital of the skilled workforce―the (often specialized) knowledge and experience that employees of an acquiree bring to their jobs. Because the assembled workforce is not an identifiable asset to be recognized separately from goodwill, any value attributed to it is subsumed into goodwill.

##### [805-20-55-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-7)

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The acquirer also subsumes into goodwill any value attributed to items that do not qualify as assets at the acquisition date. For example, the acquirer might attribute value to potential contracts the acquiree is negotiating with prospective new customers at the acquisition date. Because those potential contracts are not themselves assets at the acquisition date, the acquirer does not recognize them separately from goodwill. The acquirer should not subsequently reclassify the value of those contracts from goodwill for events that occur after the acquisition date. However, the acquirer should assess the facts and circumstances surrounding events occurring shortly after the acquisition to determine whether a separately recognizable intangible asset existed at the acquisition date.

##### [805-20-55-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-8)

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After initial recognition, an acquirer accounts for intangible assets acquired in a business combination in accordance with the provisions of Subtopics 350-30and 360-10. However, as described in paragraph [350-10-15-4](https://asc.understandingaccounting.org/asc/350/10/#350-10-15-4), the accounting for some acquired intangible assets after initial recognition is prescribed in other standards.

##### [805-20-55-9](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-9)

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The identifiability criteria determine whether an intangible asset is recognized separately from goodwill. However, the criteria neither provide guidance for measuring the fair value of an intangible asset nor restrict the assumptions used in measuring the fair value of an intangible asset. For example, the acquirer would take into account the assumptions that market participants would use when pricing the intangible asset, such as expectations of future contract renewals, in measuring fair value. It is not necessary for the renewals themselves to meet the identifiability criteria. (However, see paragraph [805-20-30-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-20), which establishes an exception to the fair value measurement principle for reacquired rights recognized in a business combination.)

##### [805-20-55-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-10)

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Paragraphs

[350-30-35-21 through 35-28](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-21)

provide guidance for determining whether indefinite-lived intangible assets should be combined into a single unit of account to test for impairment if they are operated as a single asset and essentially are inseparable from one another.

##### [805-20-55-11](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-11)

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The following guidance presents examples of identifiable intangible assets acquired in a business combination. Some of the examples may have characteristics of assets other than intangible assets. The acquirer should account for those assets in accordance with their substance. The examples are not intended to be all-inclusive.

##### [805-20-55-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-12)

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Intangible assets designated with the symbol # are those that arise from contractual or other legal rights. Those designated with the symbol \* do not arise from contractual or other legal rights but are separable. Intangible assets designated with the symbol # might also be separable, but separability is not a necessary condition for an asset to meet the contractual-legal criterion.

##### [805-20-55-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-13)

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The guidance is organized as follows:

1.  a
    
    Marketing-related intangible assets
    
2.  b
    
    Customer-related intangible assets
    
3.  c
    
    Artistic-related intangible assets
    
4.  d
    
    Contract-based intangible assets
    
5.  e
    
    Technology-based intangible assets.

##### [805-20-55-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-14)

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Marketing-related intangible assets are primarily used in the marketing or promotion of products or services. Examples of marketing-related intangible assets are:

1.  a
    
    Trademarks, trade names, service marks, collective marks, certification marks #
    
2.  b
    
    Trade dress (unique color, shape, package design) #
    
3.  c
    
    Newspaper mastheads #
    
4.  d
    
    Internet domain names #
    
5.  e
    
    Noncompetition agreements. #

##### [805-20-55-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-15)

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Guidance on trademarks, trade names, service marks, collective marks, certification marks, and internet domain names follows.

##### [805-20-55-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-16)

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Trademarks are words, names, symbols, or other devices used in trade to indicate the source of a product and to distinguish it from the products of others. A service mark identifies and distinguishes the source of a service rather than a product. Collective marks identify the goods or services of members of a group. Certification marks certify the geographical origin or other characteristics of a good or service.

##### [805-20-55-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-17)

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Trademarks, trade names, service marks, collective marks, and certification marks may be protected legally through registration with governmental agencies, continuous use in commerce, or by other means. If it is protected legally through registration or other means, a trademark or other mark acquired in a business combination is an intangible asset that meets the contractual-legal criterion. Otherwise, a trademark or other mark acquired 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.") can be recognized separately from goodwill if the separability criterion is met, which normally it would be.

##### [805-20-55-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-18)

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The terms _brand_ and _brand name_, often used as synonyms for trademarks and other marks, are general marketing terms that typically refer to a group of complementary assets such as a trademark (or service mark) and its related trade name, formulas, recipes, and technological expertise. This Subtopic does not preclude an entity from recognizing, as a single asset separately from goodwill, a group of complementary intangible assets commonly referred to as a brand if the assets that make up that group have similar useful lives.

##### [805-20-55-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-19)

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An internet domain name is a unique alphanumeric name that is used to identify a particular numeric internet address. Registration of a domain name creates an association between that name and a designated computer on the internet for the period of the registration. Those registrations are renewable. A registered domain name acquired in a business combination meets the contractual-legal criterion.

##### [805-20-55-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-20)

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Examples of customer-related intangible assets are:

1.  a
    
    Customer lists \*
    
2.  b
    
    Order or production backlog #
    
3.  c
    
    Customer contracts and related customer relationships #
    
4.  d
    
    Noncontractual customer relationships. \*

##### [805-20-55-21](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-21)

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A customer list consists of information about customers, such as their names and contact information. A customer list also may be in the form of a database that includes other information about the customers, such as their order histories and demographic information. A customer list generally does not arise from contractual or other legal rights. However, customer lists are frequently leased or exchanged. Therefore, a customer list acquired in a business combination normally meets the separability criterion.

##### [805-20-55-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-22)

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An order or production backlog arises from contracts such as purchase or sales orders. An order or production backlog acquired in a business combination meets the contractual-legal criterion even if the purchase or sales orders are cancelable.

##### [805-20-55-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-23)

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If an entity establishes relationships with its customers through contracts, those customer relationships arise from contractual rights. Therefore, customer contracts and the related customer relationships acquired in a business combination meet the contractual-legal criterion, even if confidentiality or other contractual terms prohibit the sale or transfer of a contract separately from the acquiree.

##### [805-20-55-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-24)

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A customer contract and the related customer relationship may represent two distinct intangible assets. Both the useful lives and the pattern in which the economic benefits of the two assets are consumed may differ.

##### [805-20-55-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-25)

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A customer relationship exists between an entity and its customer if the entity has information about the customer and has regular contact with the customer, and the customer has the ability to make direct contact with the entity. Customer relationships meet the contractual-legal criterion if an entity has a practice of establishing contracts with its customers, regardless of whether a contract exists at the acquisition date. Customer relationships also may arise through means other than contracts, such as through regular contact by sales or service representatives. As noted in paragraph [805-20-55-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-22), an order or a production backlog arises from contracts such as purchase or sales orders and therefore is considered a contractual right. Consequently, if an entity has relationships with its customers through these types of contracts, the customer relationships also arise from contractual rights and therefore meet the contractual-legal criterion.

##### [805-20-55-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-26)

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See Example 1 (paragraph [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52)) for illustrations of customer contract and customer relationship intangible assets acquired in a business combination.

##### [805-20-55-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-27)

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A customer relationship acquired in a business combination that does not arise from a contract may nevertheless be identifiable because the relationship is separable. Exchange transactions for the same asset or a similar asset that indicate that other entities have sold or otherwise transferred a particular type of noncontractual customer relationship would provide evidence that the noncontractual customer relationship is separable. For example, relationships with depositors are frequently exchanged with the related deposits and therefore meet the criteria for recognition as an intangible asset separately from goodwill.

##### [805-20-55-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-28)

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See Example 1 (paragraph [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52)) for illustrations of customer contract and customer relationship intangible assets acquired in a business combination.

##### [805-20-55-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-29)

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Examples of artistic-related intangible assets are:

1.  a
    
    Plays, operas, ballets #
    
2.  b
    
    Books, magazines, newspapers, other literary works #
    
3.  c
    
    Musical works such as compositions, song lyrics, advertising jingles #
    
4.  d
    
    Pictures, photographs #
    
5.  e
    
    Video and audiovisual material, including motion pictures or films, music videos, television programs. #

##### [805-20-55-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-30)

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Artistic-related assets acquired in a business combination are identifiable if they arise from contractual or legal rights such as those provided by copyright. The holder can transfer a copyright, either in whole through an assignment or in part through a licensing agreement. An acquirer is not precluded from recognizing a copyright intangible asset and any related assignments or license agreements as a single asset, provided they have similar useful lives.

##### [805-20-55-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-31)

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Contract-based intangible assets represent the value of rights that arise from contractual arrangements. Customer contracts are one type of contract-based intangible asset. If the terms of a contract give rise to a liability (for example, if the terms of a customer contract are unfavorable relative to market terms), the acquirer recognizes it as a liability assumed in the business combination. Examples of contract-based intangible assets are:

1.  a
    
    Licensing, royalty, standstill agreements #
    
2.  b
    
    Advertising, construction, management, service or supply contracts #
    
3.  c
    
    Operating lease agreements of a lessor #
    
4.  d
    
    Construction permits #
    
5.  e
    
    Franchise agreements #
    
6.  f
    
    Operating and broadcast rights #
    
7.  g
    
    Servicing contracts such as mortgage servicing contracts #
    
8.  h
    
    Employment contracts #
    
9.  i
    
    Use rights such as drilling, water, air, timber cutting, and route authorities. #

##### [805-20-55-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-32)

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Guidance on servicing contracts, employment contracts, and use rights follows.

##### [805-20-55-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-33)

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Contracts to service financial assets are one type of contract-based intangible asset. Although servicing is inherent in all financial assets, it becomes a distinct asset or liability by either of the following:

1.  a
    
    If the transfer of the servicer's financial assets met the requirements for sale accounting
    
2.  b
    
    Through the separate acquisition or assumption of a servicing obligation that does not relate to financial assets of the combined entity.

##### [805-20-55-34](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-34)

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Topic 860 provides guidance on accounting for servicing contracts.

##### [805-20-55-35](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-35)

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If mortgage loans, credit card receivables, or other financial assets are acquired in a business combination with the servicing obligation, the inherent servicing rights are not a separate intangible asset because the fair value of those servicing rights is included in the measurement of the fair value of the acquired financial asset.

##### [805-20-55-36](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-36)

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Employment contracts that are beneficial contracts from the perspective of the employer because the pricing of those contracts is favorable relative to market terms are one type of contract-based intangible asset.

##### [805-20-55-37](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-37)

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Use rights such as drilling, water, air, timber cutting, and route authorities are contract-based intangible assets to be accounted for separately from goodwill. Particular use rights may have characteristics of tangible, rather than intangible, assets. For example, [mineral rights](https://asc.understandingaccounting.org/glossary/m/#mineral-rights "The legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits.") are tangible assets. An acquirer should account for use rights based on their nature.

##### [805-20-55-38](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-38)

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Examples of technology-based intangible assets are:

1.  a
    
    Patented technology #
    
2.  b
    
    Computer software and mask works #
    
3.  c
    
    Unpatented technology \*
    
4.  d
    
    Databases, including title plants \*
    
5.  e
    
    Trade secrets, such as secret formulas, processes, recipes. #

##### [805-20-55-39](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-39)

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Guidance on computer software and mask works, databases, including title plants, and trade secrets such as secret formulas, processes, and recipes follows.

##### [805-20-55-40](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-40)

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Computer software and program formats acquired in a business combination that are protected legally, such as by patent or copyright, meet the contractual-legal criterion for identification as intangible assets.

##### [805-20-55-41](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-41)

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Mask works are software permanently stored on a read-only memory chip as a series of stencils or integrated circuitry. Mask works may have legal protection. Mask works with legal protection that are acquired in a business combination meet the contractual-legal criterion for identification as intangible assets.

##### [805-20-55-42](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-42)

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Databases are collections of information, often stored in electronic form, such as on computer disks or files. A database that includes original works of authorship may be entitled to copyright protection. A database acquired in a business combination that is protected by copyright meets the contractual-legal criterion. However, a database typically includes information created as a consequence of an entity's normal operations, such as customer lists, or specialized information, such as scientific data or credit information. Databases that are not protected by copyright can be, and often are, exchanged, licensed, or leased to others in their entirety or in part. Therefore, even if the future economic benefits from a database do not arise from legal rights, a database acquired in a business combination meets the separability criterion.

##### [805-20-55-43](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-43)

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Title plants constitute a historical record of all matters affecting title to parcels of land in a particular geographical area. Title plant assets are bought and sold, either in whole or in part, in exchange transactions or are licensed. Therefore, title plant assets acquired in a business combination meet the separability criterion.

##### [805-20-55-44](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-44)

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A trade secret is “information, including a formula, pattern, recipe, compilation, program, device, method, technique, or process that (1) derives independent economic value, actual or potential, from not being generally known and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy," according to _The New Role of Intellectual Property in Commercial Transactions_ (Simensky and Breyer 1998).

##### [805-20-55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-45)

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If the future economic benefits from a trade secret acquired in a business combination are legally protected, that asset meets the contractual-legal criterion. Otherwise, trade secrets acquired in a business combination are identifiable only if the separability criterion is met, which is likely to be the case.

##### [805-20-55-46](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-46)

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

##### [805-20-55-47](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-47)

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

##### [805-20-55-48](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-48)

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

##### [805-20-55-49](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-49)

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

##### [805-20-55-50](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-50)

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An entity that has agreed to a business combination may develop a plan to terminate certain employees. The plan will be implemented only if the combination is consummated, but the entity assesses the likelihood of the combination to be probable. In this circumstance, when terminated, the employees will be entitled to termination benefits under a preexisting plan or contractual relationship. The termination of the employees also may affect the entity's assumptions in estimating its obligations for pension benefits, other postretirement benefits, and postemployment benefits; that is, the termination of the employees may trigger curtailment losses or the recording of a contractual termination benefit.

##### [805-20-55-51](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-51)

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The liability for the contractual termination benefits and the curtailment losses under employee benefit plans that will be triggered by the consummation of the business combination shall not be recognized when it is probable that the business combination will be consummated; rather it shall be recognized when the business combination is consummated.

#### Illustrations

##### [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52)

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The following Cases illustrate the guidance in paragraphs

[805-20-55-23 through 55-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-23)

on recognition of customer contract and customer relationship intangible assets acquired in a business combination:

1.  a
    
    Five-year supply agreement (Case A)
    
2.  b
    
    One customer, contract in one of two lines of business (Case B)
    
3.  c
    
    Purchase and sales orders (Case C)
    
4.  d
    
    Cancelable contracts (Case D).

##### [805-20-55-53](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-53)

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In each of the Cases, the Acquirer acquires Target in a business combination on December 31, 20X5.

##### [805-20-55-54](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-54)

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Target has a five-year agreement to supply goods to Customer. Both Target and Acquirer believe that Customer will renew the agreement at the end of the current contract. The agreement is not separable. The agreement, whether cancelable or not, meets the contractual-legal criterion. Additionally, because Target establishes its relationship with Customer through a contract, not only the agreement itself but also Target's customer relationship with Customer meet the contractual-legal criterion.

##### [805-20-55-55](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-55)

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Target manufactures goods in two distinct lines of business: sporting goods and electronics. Customer purchases both sporting goods and electronics from Target. Target has a contract with Customer to be its exclusive provider of sporting goods but has no contract for the supply of electronics to Customer. Both Target and Acquirer believe that only one overall customer relationship exists between Target and Customer. The contract to be Customer's exclusive supplier of sporting goods, whether cancelable or not, meets the contractual-legal criterion. Additionally, because Target establishes its relationship with Customer through a contract, the customer relationship with Customer meets the contractual-legal criterion. Because Target has only one customer relationship with Customer, the fair value of that relationship incorporates assumptions about Target's relationship with Customer related to both sporting goods and electronics. However, if Acquirer determines that the customer relationships with Customer for sporting goods and for electronics are separate from each other, Acquirer would assess whether the customer relationship for electronics meets the separability criterion for identification as an intangible asset.

##### [805-20-55-56](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-56)

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Target does business with its customers solely through purchase and sales orders. At December 31, 20X5, Target has a backlog of customer purchase orders from 60 percent of its customers, all of whom are recurring customers. The other 40 percent of Target's customers also are recurring customers. However, as of December 31, 20X5, Target has no open purchase orders or other contracts with those customers. Regardless of whether they are cancelable or not, the purchase orders from 60 percent of Target's customers meet the contractual-legal criterion. Additionally, because Target has established its relationship with 60 percent of its customers through contracts, not only the purchase orders but also Target's customer relationships meet the contractual-legal criterion. Because Target has a practice of establishing contracts with the remaining 40 percent of its customers, its relationship with those customers also arises through contractual rights and therefore meets the contractual-legal criterion even though Target does not have contracts with those customers at December 31, 20X5.

##### [805-20-55-57](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-57)

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Target has a portfolio of one-year motor insurance contracts that are cancelable by policyholders. Because Target establishes its relationships with policyholders through insurance contracts, the customer relationship with policyholders meets the contractual-legal criterion. The guidance in Subtopic 350-30 applies to the customer relationship intangible asset.

##### [805-20-55-58](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-58)

Pending content: no

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

##### [805-20-55-59](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-59)

Pending content: no

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

##### [805-20-55-60](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-60)

Pending content: no

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

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## ASC 805-20-65: 65 Transition and Open Effective Date Information

[Read section](https://asc.understandingaccounting.org/asc/805/20/#65-transition-and-open-effective-date-information)

SEC content: no

##### [805-20-65-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-1)

Pending content: no

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Paragraph superseded on 07/02/2014 after the end of the transition period stated in Accounting Standards Update No. 2012-06, _Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution_.

#### Transition Related to Accounting Standards Updates No. 2014-18, <em class="ph i">Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination,</em> and No. 2019-06, <em class="ph i">Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities</em>

##### [805-20-65-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2)

Pending content: no

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The following represents the transition information related to Accounting Standards Updates No. 2014-18, _Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination,_and No. 2019-06, _Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities,_referenced in paragraph [805-20-15-1A](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1A):

1.  a
    
    Upon adoption of the Accounting Alternative Subsections of this Subtopic, that guidance shall be effective prospectively to the first transaction that is identified in paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) after the adoption of the accounting alternative.
    
2.  b
    
    Customer-related intangible assets and noncompetition agreements that exist as of the beginning of the period of adoption shall continue to be subsequently measured in accordance with Topic 350 on intangibles—goodwill and other. That is, existing customer-related intangible assets and noncompetition agreements should not be subsumed into goodwill upon adoption of the Accounting Alternative Subsections of this Subtopic.
    
3.  c
    
    [Subparagraph superseded by Accounting Standards Update No. 2016-03](https://asc.understandingaccounting.org/updates/asu-2016-03/).
    
4.  d
    
    A private company or not-for-profit entity that makes an accounting policy election to apply the guidance in the Accounting Alternative Subsections of this Subtopic for the first time need not justify that the use of the accounting alternative is preferable as described in paragraph [250-10-45-2](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-2).

##### [805-20-65-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-3)

Pending content: no

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Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2021-08, _Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers._

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## ASC 805-20-S00: SEC 00 Status

[Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-00-status)

SEC content: yes

##### [805-20-S00-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S00-1)

Pending content: no

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The following table identifies the changes made to this Subtopic.

<table class="asc-table" id="SL6784911-161531"><tbody><tr><td class="entry"><strong class="ph b">Paragraph</strong></td><td class="entry"><strong class="ph b">Action</strong></td><td class="entry"><strong class="ph b">Accounting Standards Update</strong></td><td class="entry"><strong class="ph b">Date</strong></td></tr><tr><td class="entry"></td><td class="entry"></td><td class="entry"></td><td class="entry"></td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-S50-1" class="xref">805-20-S50-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-03/" class="xref">Accounting Standards Update No. 2012-03</a></td><td class="entry">08/27/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-S55-1" class="xref">805-20-S55-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-03/" class="xref">Accounting Standards Update No. 2012-03</a></td><td class="entry">08/27/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-S55-2" class="xref">805-20-S55-2</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-03/" class="xref">Accounting Standards Update No. 2012-03</a></td><td class="entry">08/27/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-1" class="xref">805-20-S99-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-22/" class="xref">Accounting Standards Update No. 2010-22</a></td><td class="entry">08/19/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-2" class="xref">805-20-S99-2</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-22/" class="xref">Accounting Standards Update No. 2010-22</a></td><td class="entry">08/19/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-3" class="xref">805-20-S99-3</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-04/" class="xref">Accounting Standards Update No. 2010-04</a></td><td class="entry">01/15/2010</td></tr></tbody></table>

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## ASC 805-20-S30: SEC 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-30-initial-measurement)

SEC content: yes

#### Use of Residual Method to Value Acquired Assets Other Than Goodwill

##### [805-20-S30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S30-1)

Pending content: no

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See paragraph [805-20-S99-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-3), SEC Staff Announcement: Use of the Residual Method to Value Acquired Assets Other than Goodwill, for SEC Staff views regarding the use of the residual method.

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## ASC 805-20-S50: SEC 50 Disclosure

[Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-50-disclosure)

SEC content: yes

##### [805-20-S50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S50-1)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/).

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## ASC 805-20-S55: SEC 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-55-implementation-guidance-and-illustrations)

SEC content: yes

##### [805-20-S55-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S55-1)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/).

##### [805-20-S55-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-S55-2)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/).

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## 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

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[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

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[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

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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.