# ASC 805-30-55: Business Combinations — Goodwill or Gain from Bargain Purchase, Including Consideration Transferred — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/30/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:fc3fd9ef5353bf31ddb7c252eb389a47e7e9895fcad5aafa2b4eb20606717018 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/30/#55-implementation-guidance-and-illustrations) SEC content: no ##### [805-30-55-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:68e508b528cd39250a636e61384de32871c894ba7be3d50a515517140c4afebd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f 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 [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 gain from bargain purchase including consideration transferred. #### Implementation Guidance ##### [805-30-55-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:81242d80434c2bdf9c0d133e76bf8070247302663139285e04043af961bdaa73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination achieved without the transfer of consideration, 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.") must substitute the 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.") of its 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.") for the acquisition-date fair value of the consideration transferred to measure goodwill or a gain on a bargain purchase (see paragraphs [805-30-30-1 through 30-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) ). Subtopic 820-10 provides guidance on using valuation techniques to measure fair value. ##### [805-30-55-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:bb8b4c780823786ac519ee31ee227fa8e1f87fbb109c03c353067fcb43a10839 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When two mutual entities combine, the fair value of the equity or member interests in the acquiree (or the fair value of the acquiree) may be more reliably measurable than the fair value of the member interests transferred by the acquirer. In that situation, paragraph [805-30-30-2 through 30-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-2) requires the acquirer to 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 acquirer's equity interests transferred as consideration. In addition, the acquirer in a combination 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.") shall recognize the acquiree's net assets as a direct addition to capital or equity in its statement of financial position, not as an addition to retained earnings, which is consistent with the way in which other types of entities apply the acquisition method. ##### [805-30-55-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:527df5e2716b99c9a17e37d4072767fa709bcc190894262a2bcac27166471784 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although they are similar in many ways to other businesses, mutual entities have distinct characteristics that arise primarily because their members are both customers and owners. Members of mutual entities generally expect to receive benefits for their membership, often in the form of reduced fees charged for goods and services or patronage dividends. The portion of patronage dividends allocated to each member is often based on the amount of business the member did with the mutual entity during the year. ##### [805-30-55-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:e1816d75522220dd0701f7a15ec9bd89d0985488f817df9624f7a7e5b0f828f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A fair value measurement of a mutual entity should include the assumptions that market participants would make about future member benefits as well as any other relevant assumptions market participants would make about the mutual entity. For example, an estimated cash flow model may be used to determine the fair value of a mutual entity. The cash flows used as inputs to the model should be based on the expected cash flows of the mutual entity, which are likely to reflect reductions for member benefits, such as reduced fees charged for goods and services. ##### [805-30-55-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:2396be81d5a4431ed2ac6235c0a7e263c2c8d9283d3449d015b4c02104b2ba8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquirer is obligated to replace the acquiree's share-based payment awards, paragraph [805-30-30-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) requires the acquirer to include either all or a portion of the fair-value-based measure of the replacement awards in the consideration transferred in the business combination. Paragraphs [805-30-55-7 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-7) , [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 on and illustrate how to determine the portion of an award to include in consideration transferred in a business combination and the portion to recognize as compensation cost in the acquirer's postcombination financial statements. ##### [805-30-55-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:e1f49375e397805e33c5c383f91319ff39f70bc46030c4feb5703655fb27ba4f 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 exchanged for the acquiree and the portion that is compensation for postcombination vesting, the acquirer first measures both the replacement awards and the acquiree awards as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") in accordance with the requirements of Topic 718. In most situations, those requirements result in use of the fair-value-based measurement method, but that Topic permits use of the calculated value method or the intrinsic value method in specified circumstances. This discussion focuses on the fair-value-based method, but the guidance in paragraphs [805-30-30-9 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) and the additional guidance cited in the preceding paragraph also apply in situations in which Topic 718 permits use of either the calculated value method or the intrinsic value method for both the acquiree awards and the replacement awards. ##### [805-30-55-8](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:f68dce0ae340a15ee53fe4a08724b55063f3153d80a35716e13212297e7b2efa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of an employee replacement award attributable to precombination vesting is the fair-value-based measure of the acquiree award multiplied by the ratio of the precombination employee's service period to the greater of the total service period or the original service period of the acquiree award. (Example 2, Cases C and D \[see paragraphs [805-30-55-21 through 55-24](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-21) \] illustrate that calculation.) The total service period is the sum of the following amounts: 1. a The part of the employee's [requisite service period](https://asc.understandingaccounting.org/glossary/r/#requisite-service-period "The period or periods during which an employee is required to provide service in exchange for an award under a share-based payment arrangement. The service that an employee is required to render during that period is referred to as the requisite service. The requisite service period for an award that has only a service condition is presumed to be the vesting period, unless there is clear evidence to the contrary. If an award requires future service for vesting, the entity cannot define a prior period as the requisite service period. Requisite service periods may be explicit, implicit, or derived, depending on the terms of the share-based payment award.") for the acquiree award that was completed before the acquisition date 2. b The postcombination employee's requisite service period, if any, for the replacement award. ##### [805-30-55-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:1b4b4438c5ceff72043329430a52721b55712a54d2bc815e52d807a88a208e56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employee's requisite service period includes explicit, implicit, and derived service periods during which employees are required to provide service in exchange for the award (consistent with the requirements of Topic 718). ##### [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:39220a403a2e29aa4341850132e74bf9cbc98ca2329b98407f973d9905dac9a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of a nonemployee replacement award attributable to precombination vesting is based on the fair-value-based measure of the acquiree award multiplied by the percentage that would have been recognized had the grantor paid cash for the goods or services instead of paying with a nonemployee award. For this calculation, the percentage that would have been recognized is the lower of: 1. a The percentage that would have been recognized calculated on the basis of the original vesting requirements of the nonemployee award 2. b The percentage that would have been recognized calculated on the basis of the effective vesting requirements. Effective vesting requirements are equal to the services or goods provided before the acquisition date plus any additional postcombination services or goods required by the replacement award. ##### [805-30-55-10](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:f8c9ef738447e219d6396fb4e8e4a81b70183caf91e86b7aa192593dead34eea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of a nonvested replacement award (for employee and nonemployee) attributable to postcombination vesting, and therefore recognized as compensation cost in the postcombination financial statements, equals the total fair-value-based measure of the replacement award less the amount attributed to precombination vesting. Therefore, the acquirer attributes any excess of the fair-value-based measure of the replacement award over the fair value of the acquiree award to postcombination vesting and recognizes that excess as compensation cost in the postcombination financial statements. ##### [805-30-55-11](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:8a71a21bd926dc2ff9fe65b44f01bdb996e9c3021c222722b477a1c111df3c8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of the accounting policy elected in accordance with paragraph [718-10-35-1D](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-1D) or [718-10-35-3](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-3), the portion of a nonvested replacement award included in consideration transferred shall reflect the acquirer's estimate of the number of replacement awards for which the service is expected to be rendered or the goods are expected to be delivered (that is, an acquirer that has elected an accounting policy to recognize forfeitures as they occur in accordance with paragraph [718-10-35-1D](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-1D) or [718-10-35-3](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-3) should estimate the number of replacement awards for which the service is expected to be rendered or the goods are expected to be delivered when determining the portion of a nonvested replacement award included in consideration transferred). For example, if the fair-value-based measure of the portion of a replacement award attributed to precombination vesting is $100 and the acquirer expects that the service will be rendered for only 95 percent of the instruments awarded, the amount included in consideration transferred in the business combination is $95. Changes in the number of replacement awards for which the service is expected to be rendered or the goods are expected to be delivered are reflected in compensation cost for the periods in which the changes or forfeitures occur—not as adjustments to the consideration transferred in the business combination. If an acquirer's accounting policy is to account for forfeitures as they occur, the amount excluded from consideration transferred (because the service is not expected to be rendered or the goods are not expected to be delivered) should be attributed to the postcombination vesting and recognized in compensation cost over the employee's requisite service period or the nonemployee's vesting period. Recognition of compensation cost for nonemployees should consider the recognition guidance provided in paragraph [718-10-25-2C](https://asc.understandingaccounting.org/asc/718/10/#718-10-25-2C). That is, recognition of the fair value of the nonemployee share-based payment award should be recognized in the same manner as if the grantor had paid cash for the goods or services instead of paying with or using the share-based payment awards. ##### [805-30-55-12](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:5e5255c3cde0b37854bbd11fcbca6af2376d9a882792fbf9be18cbd71a0b0597 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, the effects of other events, such as modifications or the ultimate outcome of awards with performance conditions, that occur after the acquisition date are accounted for in accordance with Topic 718 in determining compensation cost for the period in which an event occurs. If the replacement award for an employee award has a graded vesting schedule, the acquirer shall recognize the related compensation cost in accordance with its policy election for other awards with graded vesting in accordance with paragraph [718-10-35-8](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-8). ##### [805-30-55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:64f249688932a8f6bd17c19f9c70f44df06a2bb6d449bf32a72fd81eb746294a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The same requirements for determining the portions of a replacement award attributable to precombination and postcombination vesting apply regardless of whether a replacement award is classified as a liability or an equity instrument in accordance with the provisions of paragraphs [718-10-25-6 through 25-19A](https://asc.understandingaccounting.org/asc/718/10/#718-10-25-6). All changes in the fair-value-based measure of awards classified as liabilities after the acquisition date and the related income tax effects are recognized in the acquirer's postcombination financial statements in the period(s) in which the changes occur. #### Illustrations ##### [805-30-55-14](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:7d9fdff0ee003c021bf9d134f3bbea4accebb3cafdbc9e8c50fb677df794108a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) establish the required accounting for a bargain purchase. This Example provides additional guidance on bargain purchases and illustrates its application. ##### [805-30-55-15](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:b10159d018e7ee167704080ea0e37d7ad34a5bc91d355d6f07b1d76c243d9a71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 1, 20X5, the acquiring entity, or Acquirer, acquires 80 percent of the equity interests of the acquiree, or Target, a private entity, in exchange for cash of $150. Because the former owners of Target needed to dispose of their investments in Target by a specified date, they did not have sufficient time to market Target to multiple potential buyers. The management of Acquirer initially measures the separately recognizable identifiable assets acquired and the liabilities assumed as of the acquisition date in accordance with the requirements of the Business Combinations Topic. The identifiable assets are measured at $250, and the liabilities assumed are measured at $50. Acquirer engages an independent consultant who determines that the fair value of the 20 percent [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 Target is $42. The amount of Target's identifiable net assets ($200, calculated as $250 - $50) exceeds the fair value of the consideration transferred plus the fair value of the noncontrolling interest in Target. Therefore, Acquirer reviews the procedures it used to identify and measure the assets acquired and liabilities assumed and to measure the fair value of both the noncontrolling interest in Target and the consideration transferred. After that review, Acquirer decides that the procedures and resulting measures were appropriate. Acquirer measures the gain on its purchase of the 80 percent interest as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-78B784B0-B32E-4F15-AB32-9166A65A0984-low.gif) $ Identifiable net assets acquired ($250 - $50) 200 Less: Fair value of the consideration transferred for Acquirer's 80 percent interest in Target; plus 150 Fair value of noncontrolling interest in Target 42 192 Gain on bargain purchase of 80 percent interest 8 ##### [805-30-55-16](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:27698e624b319a3c5a32f2b3629c743c2b052e4106bbb3fd1620c63622056a38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer would record its acquisition of Target in its consolidated financial statements as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-ACEBDFDE-5D3D-46EB-854C-B950BA3A5B35-low.gif) Identifiable assets acquired $250 Cash $150 Liabilities assumed 50 Gain on the bargain purchase 8 Equity-noncontrolling interest in Target 42 ##### [805-30-55-17](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:156c19052bdb292f96b5b264b2859476924dbf5c98bbc89a71034367685c7fee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the guidance referred to in paragraph [805-30-55-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) for replacement awards that the acquirer was obligated to issue. The Cases assume that all awards are classified as equity and that the awards have only an explicit service period. As discussed in paragraphs [805-30-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-8) , the acquirer also must take any implicit or derived employee's service periods into account in determining the employee's requisite service period for a replacement award. In these Cases, the acquiring entity is referred to as Acquirer and the acquiree is referred to as Target: 1. a Awards that require no postcombination vesting that are exchanged for acquiree awards for which employees: 1. 1 Have rendered the required service as of the acquisition date (Case A) 2. 2 Have not rendered all of the required service as of the acquisition date (Case D). 2. b Awards that require postcombination vesting that are exchanged for acquiree awards for which employees: 1. 1 Have rendered the required service as of the acquisition date (Case B) 2. 2 Have not rendered all of the required service as of the acquisition date (Case C). ##### [805-30-55-18](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:2d4190e2ee669fe93cbe9330815b1aabba731ffe360a8a62348729b5698c734b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer issues replacement awards of $110 (fair-value-based measure) at the acquisition date for Target awards of $100 (fair-value-based measure) at the acquisition date. No postcombination vesting is required for the replacement awards, and Target's employees had rendered all of the required service for the acquiree awards as of the acquisition date. ##### [805-30-55-19](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:968716e6daa7bfe6d6f0d898d24b216e8326b7001b159d118589d7c96340e36b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount attributable to precombination vesting is the fair-value-based measure of Target's awards ($100) at the acquisition date; that amount is included in the consideration transferred in the business combination. The amount attributable to postcombination vesting is $10, which is the difference between the total value of the replacement awards ($110) and the portion attributable to precombination vesting ($100). Because no postcombination vesting is required for the replacement awards, Acquirer immediately recognizes $10 as compensation cost in its postcombination financial statements. ##### [805-30-55-20](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:25b239710f5d866d5eb886586d1804282bae3bfd1de025778bc2ec8a88e5de1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require one year of postcombination vesting for share-based payment awards of Target for which employees had completed the requisite service period before the business combination. The fair-value-based measure of both awards is $100 at the acquisition date. When originally granted, Target's awards had a requisite service period of four years. As of the acquisition date, the Target employees holding unexercised awards had rendered a total of seven years of service since the grant date. Even though Target employees had already rendered all of the requisite service, Acquirer attributes a portion of the replacement award to postcombination compensation cost in accordance with paragraphs [805-30-30-12 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-12) because the replacement awards require one year of postcombination vesting. The total service period is five years—the requisite service period for the original acquiree award completed before the acquisition date (four years) plus the requisite service period for the replacement award (one year). The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the ratio of the precombination vesting period (4 years) to the total vesting period (5 years). Thus, $80 ($100 × 4 ÷ 5 years) is attributed to the precombination vesting period and therefore included in the consideration transferred in the business combination. The remaining $20 is attributed to the postcombination vesting period and therefore is recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-21](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:a7c8ee4a68d256929a9e877f6486cf90079991b78b95017bb48dc69bb2b0a025 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require one year of postcombination vesting for share-based payment awards of Target for which employees had not yet rendered all of the required services as of the acquisition date. The fair-value-based measure of both awards is $100 at the acquisition date. When originally granted, the awards of Target had a requisite service period of four years. As of the acquisition date, the Target employees had rendered two years' service, and they would have been required to render two additional years of service after the acquisition date for their awards to vest. Accordingly, only a portion of Target's awards is attributable to precombination vesting. ##### [805-30-55-22](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:263da4c36f5bb1447f2bd9b3537788bd434700722fc0f60b3b556c4fce74e0bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The replacement awards require only one year of postcombination vesting. Because employees have already rendered two years of service, the total requisite service period is three years. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the ratio of the precombination vesting period (2 years) to the greater of the total service period (3 years) or the original service period of Target's award (4 years). Thus, $50 ($100 x 2 ÷ 4 years) is attributable to precombination vesting and therefore included in the consideration transferred for the acquiree. The remaining $50 is attributable to postcombination vesting and therefore recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-23](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:a71aa7c72669828666f716f6fcbe3dd01cb0febde2c0ea8d406d4a1a0c4d1695 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Case C, except that Acquirer exchanges replacement awards that require no postcombination vesting for share-based payment awards of Target for which employees had not yet rendered all of the requisite service as of the acquisition date. The terms of the replaced Target awards did not eliminate any remaining requisite service period upon a change in control. (If the Target awards had included a provision that eliminated any remaining requisite service period upon a change in control, the guidance in Case A would apply.) The fair-value-based measure of both awards is $100. Because employees have already rendered two years of service and the replacement awards do not require any postcombination vesting, the total service period is two years. ##### [805-30-55-24](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:4e00497ca39eabf7b3bee442a12b501061c32023a3a7bb2fbf0d5b8c19283ce4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the fair-value-based measure of the replacement awards attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the ratio of the precombination vesting period (2 years) to the greater of the total service period (2 years) or the original service period of Target's award (4 years). Thus, $50 ($100 x 2 ÷ 4 years) is attributable to precombination vesting and therefore included in the consideration transferred for the acquiree. The remaining $50 is attributable to postcombination vesting. Because no postcombination vesting is required to vest in the replacement award, Acquirer recognizes the entire $50 immediately as compensation cost in the postcombination financial statements. ##### [805-30-55-25](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:cbe5fc59803b9d7cd9bc530b2d373019e4d8fdb91cf2daf74d32b832107757bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the guidance referred to in paragraph [805-30-55-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) for replacement awards that the acquirer was obligated to issue and the attribution guidance for a nonemployee replacement award to precombination and postcombination vesting referenced in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). ##### [805-30-55-26](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:86ffc4a72e1a897248a9e5b7f17da3e6bd3597fbf710dbae98496123dfaf080e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In these Cases, the acquiring entity is referred to as Acquirer and the acquiree is referred to as Target: 1. a Awards that require no postcombination vesting that are exchanged for acquiree awards for which grantees: 1. 1 Have met the vesting condition as of the acquisition date (Case A) 2. 2 Have not met the vesting condition as of the acquisition date (Case D). 2. b Awards that require postcombination vesting that are exchanged for acquiree awards for which grantees: 1. 1 Have met the vesting condition as of the acquisition date (Case B) 2. 2 Have not met the vesting condition as of the acquisition date (Case C). ##### [805-30-55-27](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:0dfdb2a33385282f793b27ce10011755e5c6ed95c41fb7cdcb46d986281791f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cases assume the following: 1. a All awards are classified as equity. 2. b The only vesting condition included in the awards, if any, involves the delivery of engines. 3. c Target and Acquirer typically pay cash as each engine is delivered to their suppliers. ##### [805-30-55-28](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:4a288204046384346ad62d389ac2569b8b4952b9bdf24e7a81796561e84c75c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer issues replacement awards of $110 (fair-value-based measure) at the acquisition date for Target awards of $100 (fair-value-based measure) at the acquisition date. No postcombination vesting is required for the replacement awards, and Target's grantee has delivered all the engines necessary for the acquiree awards as of the acquisition date. ##### [805-30-55-29](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:e79bdc939700f968068b55af6c7235372443386fb3692ac2507c024008ac6528 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount attributable to precombination vesting is the fair-value-based measure of Target's awards ($100) at the acquisition date; that amount is included in the consideration transferred in the business combination. The amount attributable to postcombination vesting is $10, which is the difference between the total value of the replacement awards ($110) and the portion attributable to precombination vesting ($100). Because no postcombination vesting is required for the replacement awards, Acquirer immediately recognizes $10 as compensation cost in its postcombination financial statements. ##### [805-30-55-30](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:77edb6094dde1a5669458d819b3302ca80c854b82961e6bca52e16bde6cfc79b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require the delivery of another 10 engines postcombination for share-based payment awards of Target for which the grantee had met the necessary vesting condition to deliver 40 engines before the business combination. The fair-value-based measure of both awards is $100 at the acquisition date. Even though the grantee already had met the vesting condition for the acquiree's award, Acquirer attributes a portion of the replacement award to postcombination compensation cost in accordance with paragraphs [805-30-30-12 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-12) because the replacement awards require the delivery of an additional 10 engines. ##### [805-30-55-31](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:0c39c28f533ea37a0c360e98e126028eb93549815cc94ccf28d06192e1143c5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the percentage that would have been recognized for the award. The percentage that would have been recognized is the lower of the calculation on the basis of the original vesting requirements and the percentage that would have been recognized on the basis of the effective vesting requirements as described in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). The percentage that would have been recognized on the basis of the original vesting requirements equals 100 percent, which is calculated as 40 engines delivered divided by 40 engines required to be delivered. The percentage that would have been recognized on the basis of the effective vesting requirements equals 80 percent, which is calculated as 40 engines delivered divided by 50 engines (the sum of 40 engines delivered plus 10 engines required postcombination). Thus, $80 ($100 × 80%) is attributed to the precombination vesting period and therefore is included in the consideration transferred in the business combination. The remaining $20 is attributed to the postcombination vesting period and therefore is recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-32](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:b0d9d1f83bc080df13f2417c7ea14aea7127916670039c9c86885e74674cb7fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require the delivery of 10 engines postcombination for share-based payment awards of Target for which the grantee had not met the necessary vesting condition to deliver 40 engines before the business combination. The fair-value-based measure of both awards is $100 at the acquisition date. As of the acquisition date, Target grantee has delivered 20 engines, and Target grantee would have been required to deliver an additional 20 engines after the acquisition date for its awards to vest. Accordingly, only a portion of Target's awards is attributable to precombination vesting. ##### [805-30-55-33](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:1c45746a94d1577f8eb90e94eb769b4c8f556a1d9245067b6cead7ddac9d1007 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the percentage that would have been recognized on the award. The percentage that would have been recognized is the lower of the percentage that would have been recognized on the basis of the original vesting requirements and the percentage that would have been recognized on the basis of the effective vesting requirements as described in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). The percentage that would have been recognized on the basis of the original vesting requirements equals 50 percent, which is calculated as 20 engines delivered divided by 40 engines required to be delivered. The percentage that would have been recognized on the basis of the effective vesting requirements equals 66.67 percent, which is calculated as 20 engines delivered divided by 30 engines (the sum of 20 engines delivered plus 10 engines required postcombination). Thus, $50 ($100 × 50%) is attributed to precombination vesting and therefore is included in the consideration transferred in the business combination. The remaining $50 is attributed to the postcombination vesting and therefore is recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-34](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:a486789ccb91944c62eda03033b715c696728019e350b9194647ce872a2f2a38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Case C, except that Acquirer exchanges replacement awards that require no postcombination vesting for share-based payment awards of Target for which the grantee had not met the necessary vesting condition to deliver 40 engines before the business combination. The terms of the replaced Target awards did not eliminate the vesting condition upon a change in control. (If the Target awards had included a provision that eliminated the vesting condition upon a change in control, the guidance in Case A \[see paragraph [805-30-55-28](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-28)\] would apply.) The fair-value-based measure of both awards is $100. ##### [805-30-55-35](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:5e178306848a4b6be425716c2a55969ee38269f730423107c6a162de11fc1ce0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the percentage that would have been recognized on the award. The percentage that would have been recognized is the lower of the percentage that would have been recognized on the basis of the original vesting requirements and the percentage that would have been recognized on the basis of the effective vesting requirements as described in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). The percentage that would have been recognized on the basis of the original vesting requirements equals 50 percent, which is calculated as 20 engines delivered divided by 40 engines required to be delivered. The percentage that would have been recognized on the basis of the effective vesting requirements equals 100 percent, which is calculated as 20 engines delivered divided by 20 engines (the sum of 20 engines delivered plus zero engines required postcombination). Thus, $50 ($100 × 50%) is attributed to the precombination vesting and is therefore included in the consideration transferred in the business combination. The remaining $50 is attributed to the postcombination vesting. Because no postcombination vesting is required to vest in the replacement award, Acquirer recognizes the entire $50 immediately as compensation cost in the postcombination financial statements.