{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/30/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"805","topic_title":"Business Combinations","subtopic":"805-30","subtopic_title":"Goodwill or Gain from Bargain Purchase, Including Consideration Transferred","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Measurement of Goodwill","paragraphs":[{"citation":"805-30-30-1","para":"30-1","html":"
The acquirer shall recognize goodwill as of the acquisition date, measured as the excess of (a) over (b):
  1. a
    The aggregate of the following:
    1. 1
      The consideration transferred measured in accordance with this Section, which generally requires acquisition-date fair value (see paragraph 805-30-30-7)
    2. 2
      The fair value of any noncontrolling interest in the acquiree
    3. 3
      In a business combination achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree.
  2. b
    The net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed measured in accordance with this Topic.
","snippet":"The acquirer shall recognize goodwill as of the acquisition date, measured as the excess of (a) over (b):\n(a) The aggregate of the following:\n(1) The consideration transferred measured in accordance with this Section, wh…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79cebd0e988d178a2e551123462a2956f2a29dd02e985878ffae9d5219ff68f3","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-2","para":"30-2","html":"
In a business combination in which the acquirer and the acquiree (or its former owners) exchange only equity interests, the acquisition-date fair value of the acquiree's equity interests may be more reliably measurable than the acquisition-date fair value of the acquirer's equity interests. If so, the acquirer shall determine the amount of goodwill by using the acquisition-date fair value of the acquiree's equity interests instead of the acquisition-date fair value of the equity interests transferred.
","snippet":"In a business combination in which the acquirer and the acquiree (or its former owners) exchange only equity interests, the acquisition-date fair value of the acquiree's equity interests may be more reliably measurable t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:348508b473700949993f390de47fbf15ccad0e6d5fad674384e9453c164fdba4","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-3","para":"30-3","html":"
To determine the amount of goodwill in a business combination in which no consideration is transferred, the acquirer shall use the acquisition-date fair value of the acquirer's interest in the acquiree determined using a valuation technique in place of the acquisition-date fair value of the consideration transferred (see paragraph 805-30-30-1(a)(1)). Paragraphs
805-30-55-3 through 55-5
provide additional guidance on applying the acquisition method to combinations of mutual entities, including measuring the acquisition-date fair value of the acquiree's equity interests using a valuation technique.
","snippet":"To determine the amount of goodwill in a business combination in which no consideration is transferred, the acquirer shall use the acquisition-date fair value of the acquirer's interest in the acquiree determined using a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5c8cae8d17aff1daf048471d3a053613115a8535ffd12fba2790d1e57ac88aa5","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f2ca617c3a438ab241867cd35906479dfd3a73a157edd1793d076d3823a9c48","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"block":null,"heading":"Required Reassessment of Measurement Procedures in a Bargain Purchase","paragraphs":[{"citation":"805-30-30-4","para":"30-4","html":"
As explained in paragraph 805-30-25-2, an acquirer will occasionally make a bargain purchase, which is a business combination in which the amount in paragraph 805-30-30-1(b) exceeds the aggregate of the amounts specified in (a) in that paragraph.
","snippet":"As explained in paragraph 805-30-25-2, an acquirer will occasionally make a bargain purchase, which is a business combination in which the amount in paragraph 805-30-30-1(b) exceeds the aggregate of the amounts specified…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8ba8637f2b2dc927793b9f7bbabc10ccde3b0bcec286590b4b77b63b1bbdb21f","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-5","para":"30-5","html":"
Paragraph 805-30-25-4 requires the acquirer to reassess whether it has correctly identified all of the assets acquired and all of the liabilities assumed before recognizing a gain on a bargain purchase. As part of that required reassessment, the acquirer shall then review the procedures used to measure the amounts this Topic requires to be recognized at the acquisition date for all of the following:
  1. a
    The identifiable assets acquired and liabilities assumed
  2. b
    The noncontrolling interest in the acquiree, if any
  3. c
    For a business combination achieved in stages, the acquirer's previously held equity interest in the acquiree
  4. d
    The consideration transferred.
","snippet":"Paragraph 805-30-25-4 requires the acquirer to reassess whether it has correctly identified all of the assets acquired and all of the liabilities assumed before recognizing a gain on a bargain purchase. As part of that r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b0666ed459d95db0be9962268464d2ea861c450117a442ddaaf3173ba9c2cb7","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-6","para":"30-6","html":"
The objective of the review is to ensure that the measurements appropriately reflect consideration of all available information as of the acquisition date.
","snippet":"The objective of the review is to ensure that the measurements appropriately reflect consideration of all available information as of the acquisition date.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fc18d7f2e41116250383c38686f931ed0156fded5c40dcacbd5b2af438a568e8","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d277cd84db65d6f581691e212cebf88a5ebd9f9a158ab215e39df6011fce4ef1","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"block":null,"heading":"Consideration Transferred","paragraphs":[{"citation":"805-30-30-7","para":"30-7","html":"
The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree, and the equity interests issued by the acquirer. (However, any portion of the acquirer's share-based payment awards exchanged for awards held by the acquiree's grantees that is included in consideration transferred in the business combination shall be measured in accordance with paragraph 805-20-30-21 rather than at fair value.) Examples of potential forms of consideration include the following:
  1. a
    Cash
  2. b
    Other assets
  3. c
    A business or a subsidiary of the acquirer
  4. d
    Contingent consideration (see paragraphs
    805-30-25-5 through 25-7
    )
  5. e
    Common or preferred equity instruments
  6. f
    Options
  7. g
    Warrants
  8. h
    Member interests of mutual entities.
","snippet":"The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ca35c14c8139a2e198e274352a43773a292d1d6c461dfa32555713d02bb1bc7b","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-8","para":"30-8","html":"
The consideration transferred may include assets or liabilities of the acquirer that have carrying amounts that differ from their fair values at the acquisition date (for example, nonmonetary assets or a business of the acquirer). If so, the acquirer shall remeasure the transferred assets or liabilities to their fair values as of the acquisition date and recognize the resulting gains or losses, if any, in earnings. However, sometimes the transferred assets or liabilities remain within the combined entity after the business combination (for example, because the assets or liabilities were transferred to the acquiree rather than to its former owners), and the acquirer therefore retains control of them. In that situation, the acquirer shall measure those assets and liabilities at their carrying amounts immediately before the acquisition date and shall not recognize a gain or loss in earnings on assets or liabilities it controls both before and after the business combination.
","snippet":"The consideration transferred may include assets or liabilities of the acquirer that have carrying amounts that differ from their fair values at the acquisition date (for example, nonmonetary assets or a business of the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8d699eec92d27f6e0e6c7548dba9d0dfe0c44568d3396123d8a1bfb7c6436958","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-9","para":"30-9","html":"
An acquirer may exchange its share-based payment awards for awards held by grantees of the acquiree. This Topic refers to such awards as replacement awards. Exchanges of share options or other share-based payment awards in conjunction with a business combination are modifications of share-based payment awards in accordance with Topic 718. If the acquirer is obligated to replace the acquiree awards, either all or a portion of the fair-value-based measure of the acquirer's replacement awards shall be included in measuring the consideration transferred in the business combination. The acquirer is obligated to replace the acquiree awards if the acquiree or its grantees have the ability to enforce replacement. For example, for purposes of applying this requirement, the acquirer is obligated to replace the acquiree's awards if replacement is required by any of the following:
  1. a
    The terms of the acquisition agreement
  2. b
    The terms of the acquiree's awards
  3. c
    Applicable laws or regulations.
","snippet":"An acquirer may exchange its share-based payment awards for awards held by grantees of the acquiree. This Topic refers to such awards as replacement awards. Exchanges of share options or other share-based payment awards …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8c298482b13628aca31a08d05a5c55bf7949529e0fa1b9ed1a593e3cd02f1842","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-10","para":"30-10","html":"
In situations in which acquiree awards would expire as a consequence of a business combination and the acquirer replaces those awards even though it is not obligated to do so, all of the fair-value-based measure of the replacement awards shall be recognized as compensation cost in the postcombination financial statements. That is, none of the fair-value-based measure of those awards shall be included in measuring the consideration transferred in the business combination.
","snippet":"In situations in which acquiree awards would expire as a consequence of a business combination and the acquirer replaces those awards even though it is not obligated to do so, all of the fair-value-based measure of the r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:41f431f443439171051137865541e9089cc2e107b4825e51bdabd9dac66b89cd","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-11","para":"30-11","html":"
To determine the portion of a replacement award that is part of the consideration transferred for the acquiree, the acquirer shall measure both the replacement awards granted by the acquirer and the acquiree awards as of the acquisition date in accordance with Topic 718. The portion of the fair-value-based measure of the replacement award that is part of the consideration transferred in exchange for the acquiree equals the portion of the acquiree award that is attributable to precombination vesting.
","snippet":"To determine the portion of a replacement award that is part of the consideration transferred for the acquiree, the acquirer shall measure both the replacement awards granted by the acquirer and the acquiree awards as of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ea476e415853c261203a0d6c59386eb09cdfd58298f000f65bc08e61bcc76e0","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-12","para":"30-12","html":"
The acquirer shall attribute a portion of a replacement award to postcombination vesting if it requires postcombination vesting, regardless of whether grantees had rendered all of the service or delivered all of the goods required in exchange for their acquiree awards before the acquisition date. The portion of a nonvested replacement award attributable to postcombination vesting equals the total fair-value-based measure of the replacement award less the amount attributed to precombination vesting. Therefore, the acquirer shall attribute any excess of the fair-value-based measure of the replacement award over the fair value of the acquiree award to postcombination vesting.
","snippet":"The acquirer shall attribute a portion of a replacement award to postcombination vesting if it requires postcombination vesting, regardless of whether grantees had rendered all of the service or delivered all of the good…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:24e35af0d124e2122301a01372236dd0f0b480df63b09b686e2fdaac5d4830e5","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},{"citation":"805-30-30-13","para":"30-13","html":"
Paragraphs
805-30-55-6 through 55-13
,
805-740-25-10 through 25-11
,
805-740-45-5 through 45-6
, and Example 2 (see paragraph 805-30-55-17) provide additional guidance and illustrations on distinguishing between the portion of a replacement award that is attributable to precombination vesting, which the acquirer includes in the consideration transferred in the business combination, and the portion that is attributed to postcombination vesting, which the acquirer recognizes as compensation cost in its postcombination financial statements.
","snippet":"Paragraphs 805-30-55-6 through 55-13, 805-740-25-10 through 25-11, 805-740-45-5 through 45-6, and Example 2 (see paragraph 805-30-55-17) provide additional guidance and illustrations on distinguishing between the portion…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:769d95f811cc13d99b0b207c8fdad9d238b7fc3d35e99a0b4547da6a21ae4d17","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a9a501361d8fdf166129c9d42ae061efa719497ab1bed197ad599684ad2738ad","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b1836fcdf71b19d80a5e52443b07b8c6d5f0528b80b4a621db5a6d6cab48c79","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b1836fcdf71b19d80a5e52443b07b8c6d5f0528b80b4a621db5a6d6cab48c79","downloaded_from":"2026-09-10T01:24:15.431Z","last_downloaded_at":"2026-09-10T01:24:15.431Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479637","source_sha256":"2bb2662df84c61235f0a58086192590bc1a26d5a1e978ffb26e0cf2864aa7e21"}}