# ASC 805-30-30: Business Combinations — Goodwill or Gain from Bargain Purchase, Including Consideration Transferred — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/30/#30-initial-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:4b1836fcdf71b19d80a5e52443b07b8c6d5f0528b80b4a621db5a6d6cab48c79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/30/#30-initial-measurement) SEC content: no #### Measurement of Goodwill ##### [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:79cebd0e988d178a2e551123462a2956f2a29dd02e985878ffae9d5219ff68f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 [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.") as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."), 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](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.") (see paragraph [805-30-30-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-7)) 2. 2 The fair value of 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.") 3. 3 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.") 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](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 and the liabilities assumed measured in accordance with this Topic. ##### [805-30-30-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:348508b473700949993f390de47fbf15ccad0e6d5fad674384e9453c164fdba4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-30-30-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:5c8cae8d17aff1daf048471d3a053613115a8535ffd12fba2790d1e57ac88aa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1)). Paragraphs [805-30-55-3 through 55-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-3) provide additional guidance on applying the acquisition method to combinations of [mutual entities](https://asc.understandingaccounting.org/glossary/m/#mutual-entity "An entity other than an investor-owned entity that provides dividends, lower costs, or other economic benefits directly and proportionately to its owners, members, or participants. Mutual insurance entities, credit unions, and farm and rural electric cooperatives are examples of mutual entities."), including measuring the acquisition-date fair value of the acquiree's equity interests using a valuation technique. #### Required Reassessment of Measurement Procedures in a Bargain Purchase ##### [805-30-30-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:8ba8637f2b2dc927793b9f7bbabc10ccde3b0bcec286590b4b77b63b1bbdb21f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As explained in paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#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)](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) exceeds the aggregate of the amounts specified in (a) in that paragraph. ##### [805-30-30-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:4b0666ed459d95db0be9962268464d2ea861c450117a442ddaaf3173ba9c2cb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-25-4](https://asc.understandingaccounting.org/asc/805/30/#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. ##### [805-30-30-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:fc18d7f2e41116250383c38686f931ed0156fded5c40dcacbd5b2af438a568e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the review is to ensure that the measurements appropriately reflect consideration of all available information as of the acquisition date. #### Consideration Transferred ##### [805-30-30-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:ca35c14c8139a2e198e274352a43773a292d1d6c461dfa32555713d02bb1bc7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/20/#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](https://asc.understandingaccounting.org/glossary/b/#business "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.") or a subsidiary of the acquirer 4. d [Contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.") (see paragraphs [805-30-25-5 through 25-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-5) ) 5. e Common or preferred equity instruments 6. f Options 7. g Warrants 8. h Member interests of mutual entities. ##### [805-30-30-8](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:8d699eec92d27f6e0e6c7548dba9d0dfe0c44568d3396123d8a1bfb7c6436958 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-30-30-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:8c298482b13628aca31a08d05a5c55bf7949529e0fa1b9ed1a593e3cd02f1842 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-30-30-10](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:41f431f443439171051137865541e9089cc2e107b4825e51bdabd9dac66b89cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-30-30-11](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:9ea476e415853c261203a0d6c59386eb09cdfd58298f000f65bc08e61bcc76e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-30-30-12](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:24e35af0d124e2122301a01372236dd0f0b480df63b09b686e2fdaac5d4830e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-30-30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:769d95f811cc13d99b0b207c8fdad9d238b7fc3d35e99a0b4547da6a21ae4d17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-30-55-6 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) , [805-740-25-10 through 25-11](https://asc.understandingaccounting.org/asc/740/805/#740-805-25-10) , [805-740-45-5 through 45-6](https://asc.understandingaccounting.org/asc/740/805/#740-805-45-5) , and Example 2 (see paragraph [805-30-55-17](https://asc.understandingaccounting.org/asc/805/30/#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.