# ASC 805-30: Business Combinations — Goodwill or Gain from Bargain Purchase, Including Consideration Transferred Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/30/) 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): 2026-09-10T01:24:00.736Z to 2026-09-10T01:24:28.219Z Record version: sha256:a8b9104b1c4e0b57839cebe03b1bd718b61b45c7a37d50a9764aa3a532f428d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30: Business Combinations — Goodwill or Gain from Bargain Purchase, Including Consideration Transferred ### Machine-generated study aids ```json { "summary": "ASC 805-30 covers the piece of the acquisition method that produces goodwill or a bargain purchase gain. Goodwill equals the excess of (a) consideration transferred at acquisition-date fair value plus the fair value of any noncontrolling interest plus the acquisition-date fair value of any previously held equity interest, over (b) the net of the acquisition-date amounts of identifiable assets acquired and liabilities assumed (805-30-30-1); if (b) exceeds (a), the acquirer must first reassess its identification and measurement of all items and then recognize the remaining excess as a gain in earnings. It also governs measurement of consideration transferred, including contingent consideration and share-based payment replacement awards.", "key_points": [ "Goodwill is recognized at the acquisition date as the excess of the sum of consideration transferred (generally acquisition-date fair value), the fair value of any noncontrolling interest, and the acquisition-date fair value of any previously held equity interest over the net of the acquisition-date amounts of identifiable assets acquired and liabilities assumed (805-30-25-1; 805-30-30-1).", "In a bargain purchase, the acquirer must first reassess whether it correctly identified all assets acquired and liabilities assumed and review its measurement procedures (including NCI, previously held interest, and consideration transferred); any remaining excess is recognized as a gain in earnings attributed to the acquirer (805-30-25-2 through 25-4; 805-30-30-5 through 30-6).", "Consideration transferred is the sum of acquisition-date fair values of assets transferred, liabilities incurred to former owners, and equity interests issued, and can include cash, other assets, a business, contingent consideration, equity instruments, options, warrants, and member interests (805-30-30-7); transferred assets retained within the combined entity are carried at carrying amount with no gain or loss (805-30-30-8).", "Contingent consideration is recognized at acquisition-date fair value as part of consideration transferred and classified as a liability, equity, or asset under Subtopics 480-10 and 815-40 (805-30-25-5 through 25-7); post-acquisition, equity-classified amounts are not remeasured while asset/liability-classified amounts are remeasured to fair value each reporting date through earnings unless part of a Topic 815 hedge (805-30-35-1).", "If the acquirer is obligated to replace acquiree share-based payment awards, the portion of the replacement award's fair-value-based measure attributable to precombination vesting is included in consideration transferred, and the remainder (including any excess of the replacement award's measure over the acquiree award's fair value) is postcombination compensation cost (805-30-30-9 through 30-12; 805-30-55-8 through 55-10).", "For employee awards, the precombination portion equals the acquiree award's fair-value-based measure times the ratio of precombination service to the greater of the total service period or the acquiree award's original service period; if the acquirer is not obligated to replace expiring awards, all of the replacement award is postcombination compensation cost (805-30-30-10; 805-30-55-8).", "Required disclosures include a qualitative description of the factors comprising goodwill, the fair value of total consideration and each major class, contingent consideration terms and range of outcomes, goodwill deductible for tax purposes, goodwill by reportable segment, and for a bargain purchase the gain amount, income statement line item, and reasons for the gain (805-30-50-1)." ], "categories": [ "Business combinations", "Initial measurement", "Stock compensation", "Disclosure" ], "audience_level": "intermediate", "student_note": "Exam questions almost always test the goodwill formula (remember NCI is measured at full fair value and any previously held equity interest is remeasured to fair value) and the mandatory reassessment step before booking a bargain purchase gain. A common misunderstanding is thinking contingent consideration classified as equity gets remeasured through earnings — only asset/liability-classified contingent consideration is remeasured (805-30-35-1).", "related_topics": [ "805-10", "805-20", "805-740", "350-20", "718", "958-805" ], "key_concepts": [ "goodwill", "bargain purchase gain", "consideration transferred", "contingent consideration", "noncontrolling interest fair value", "replacement share-based payment awards", "precombination vesting", "business combination achieved in stages" ] } ``` Source downloaded (UTC): 2026-09-10T01:24:00.736Z to 2026-09-10T01:24:00.736Z Record version: sha256:91e0a15bfa4683e8156b0b2835308488777688fe75d7a4a636d22e7f0a7b445e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/30/#00-status) SEC content: no ##### [805-30-00-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:00.736Z to 2026-09-10T01:24:00.736Z Record version: sha256:6cdfb988165f6498eb6c06a5289032e73041e387c603085df2e08c7ad5e538f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
AcquireeAmendedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAmendedAccounting Standards Update No. 2010-0701/28/2010
Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Private CompanyAddedAccounting Standards Update No. 2019-0605/30/2019
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
805-30-15-1AmendedAccounting Standards Update No. 2010-0701/28/2010
805-30-15-2AddedAccounting Standards Update No. 2010-0701/28/2010
805-30-30-7AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-30-9AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-30-10AmendedAccounting Standards Update No. 2010-0802/02/2010
805-30-30-11 through 30-13
AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-35-3AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-50-1 through 50-4
AmendedAccounting Standards Update No. 2025-1112/08/2025
805-30-50-1AmendedAccounting Standards Update No. 2024-0311/04/2024
805-30-50-4AmendedAccounting Standards Update No. 2021-0303/30/2021
805-30-50-4AmendedAccounting Standards Update No. 2019-0605/30/2019
805-30-50-4AmendedAccounting Standards Update No. 2011-0405/12/2011
805-30-55-2AmendedAccounting Standards Update No. 2011-0405/12/2011
805-30-55-6 through 55-13
AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-55-9AAddedAccounting Standards Update No. 2018-0706/20/2018
805-30-55-11AmendedAccounting Standards Update No. 2016-0903/30/2016
805-30-55-17 through 55-24
AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-55-25 through 55-35
AddedAccounting Standards Update No. 2018-0706/20/2018
Source downloaded (UTC): 2026-09-10T01:24:02.525Z to 2026-09-10T01:24:02.525Z Record version: sha256:332ff0a3b46b1931f27d5c769ee2f52af12938dcdd14bcf6fe8ca3aab300c85a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/30/#05-overview-and-background) SEC content: no ##### [805-30-05-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:02.525Z to 2026-09-10T01:24:02.525Z Record version: sha256:7f04adbdb92f69bf3545ff02e11b0bcc342228cd2d1bea2c4044a93f7ca8c90c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 either [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. ##### [805-30-05-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:02.525Z to 2026-09-10T01:24:02.525Z Record version: sha256:c326601f7c6db26800e6b355c98a40a0c0e4715b8293f0d32a63fe0327a04836 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remaining aspects of the acquisition method are addressed in Subtopics 805-10 and 805-20. Subtopic 805-20 addresses the recognition and measurement of identifiable assets acquired, 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."). 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. Source downloaded (UTC): 2026-09-10T01:24:04.452Z to 2026-09-10T01:24:04.452Z Record version: sha256:3282088593b0878ccf5ebe02a81479d3fad42b5658523cb17a7a04eb510e5dbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-30-15-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:04.452Z to 2026-09-10T01:24:04.452Z Record version: sha256:c0ee2b0791012c3d5530e66905fb0e26a816e2908b5b6591325b9fa078299451 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 805-10-15, with specific exceptions noted below. #### Entities ##### [805-30-15-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:04.452Z to 2026-09-10T01:24:04.452Z Record version: sha256:06fdda3ef441f480ce5c4167c00fa6fe0491e545286d1b94f3c19a7ad941165e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to [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.") (NFPs). NFPs apply the guidance in Subtopic 958-805 for measuring goodwill acquired, a contribution received, and consideration transferred. Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:9fc0ee0bd8ed6d1af3b75c267a07a86700370abf044f3d1e2909337eaa988a87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/30/#25-recognition) SEC content: no #### Goodwill Recognition ##### [805-30-25-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:2f86d17edfacf8fcd18b82305459d8670aeca7fb568a8e7d1ac9afd48efbbe5b 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 described in paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1). #### Gain from Bargain Purchase ##### [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:4e66e352efd3c8d573d70ec1b919bcd9b78dd677f8b74dd67bd5ae328c918180 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Occasionally, an acquirer will make a bargain purchase, which is 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 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. If that excess remains after applying the requirements in paragraph [805-30-25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-4), the acquirer shall recognize the resulting gain in earnings on the acquisition date. The gain shall be attributed to the acquirer. Example 1 (see paragraph [805-30-55-14](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-14)) provides an illustration of this guidance. ##### [805-30-25-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:3dfa670cd1bb237c33bc120847b54f048c73f94e18062c4058c7cb0f9d710329 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A bargain purchase might happen, for example, in a business combination that is a forced sale in which the seller is acting under compulsion. However, the recognition or measurement exceptions for particular items identified in paragraphs [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16), and [805-20-30-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) also may result in recognizing a gain (or change the amount of a recognized gain) on a bargain purchase. ##### [805-30-25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:fbfce1032993c2936d9d3fff806dd001fbd289266917fc8452722d9599d028c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Before recognizing a gain on a bargain purchase, the acquirer shall reassess whether it has correctly identified all of the assets acquired and all of the liabilities assumed and shall recognize any additional assets or liabilities that are identified in that review. See paragraphs [805-30-30-4 through 30-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-4) for guidance on the review of measurement procedures in connection with a reassessment required by this paragraph. #### Contingent Consideration ##### [805-30-25-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:d6cf1625d97c4e90f6edbf810a56c202eefc7323926ef874fcfe6be340d53b61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consideration the acquirer transfers in exchange for 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.") includes any asset or liability resulting from a [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.") arrangement. The acquirer shall recognize 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 contingent consideration as part of the consideration transferred in exchange for the acquiree. ##### [805-30-25-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:39422ef18007a1d6f73026ed69c8cef07182ce36d4dee00fc5af4c94584e91c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall classify an obligation to pay contingent consideration as a liability or as equity in accordance with Subtopics 480-10 and 815-40 or other applicable generally accepted accounting principles (GAAP). For example, Subtopic 480-10 provides guidance on whether to classify as a liability a contingent consideration arrangement that is, in substance, a put option written by the acquirer on the market price of the acquirer's shares issued in the business combination. ##### [805-30-25-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:da44d0a2293a5b46d4a898b482465040d5a48da82bbf9773462e49cc42000234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall classify as an asset a right to the return of previously transferred consideration if specified conditions are met. 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. Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:f9f6e69ae8050ada3d69d2f52b69421c934e789ed3e658dec7cc34c748c5f798 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/30/#35-subsequent-measurement) SEC content: no #### Contingent Consideration ##### [805-30-35-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:3e09da7eea1c2696d8a406f16bf0f6f0641faeed0c5307b0956562cae9e0da0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some changes in 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 [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.") that 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.") recognizes after the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") may be the result of additional information about facts and circumstances that existed at the acquisition date that the acquirer obtained after that date. Such changes are measurement period adjustments in accordance with paragraphs [805-10-25-13 through 25-18](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) and Section 805-10-30. However, changes resulting from events after the acquisition date, such as meeting an earnings target, reaching a specified share price, or reaching a milestone on a research and development project, are not measurement period adjustments. The acquirer shall account for changes in the fair value of contingent consideration that are not measurement period adjustments as follows: 1. a Contingent consideration classified as equity shall not be remeasured and its subsequent settlement shall be accounted for within equity. 2. b Contingent consideration classified as an asset or a liability shall be remeasured to fair value at each reporting date until the contingency is resolved. The changes in fair value shall be recognized in earnings unless the arrangement is a hedging instrument for which Topic 815 requires the changes to be initially recognized in other comprehensive income. ##### [805-30-35-1A](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:5ffc176aa0f59c615c1cc81c529b3950b0f575894e18d0c1ab6a1c78757d55e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 the preceding paragraph. #### Goodwill ##### [805-30-35-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:d2c51b2908ca7e0c5655ace58e7ac01d2383c465064d2e0d5bf448b711e80285 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The subsequent 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.") is addressed in Subtopic 350-20. #### Replacement Share-Based Payment Awards ##### [805-30-35-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:1f515205f54ed60c421cefe2e531b18da6874ea9704092dd9ab8c51b8d0480ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 718 provides guidance on subsequent measurement and accounting for the portion of replacement share-based payment awards issued by an acquirer that is attributable to future goods or services. Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:439146d75e219609567c089f05538ef4ea2825ead65778b5c56bf4964c684ec0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/30/#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 ##### [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:29b5825351fca9a20e3d2cfcf037666263850b9c7ce2b6efbb37337406e08426 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f 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 A qualitative description of the factors that make up the [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.") recognized, such as expected synergies from combining operations of 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.") and the acquirer, intangible assets that do not qualify for separate recognition, or other factors. 2. b 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 the total consideration transferred and the acquisition-date fair value of each major class of consideration, such as the following: 1. 1 Cash 2. 2 Other tangible or intangible assets, including 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 subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability for [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.") 4. 4 Equity interests of the acquirer, including the number of instruments or interests issued or issuable and the method of determining the fair value of those instruments or interests. 3. c For contingent consideration arrangements, 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. 4. d The total amount of goodwill that is expected to be deductible for tax purposes. 5. e If the acquirer is required to disclose segment information in accordance with Subtopic 280-10, the amount of goodwill by reportable segment. If the assignment of goodwill to reporting units required by paragraphs [350-20-35-41 through 35-44](https://asc.understandingaccounting.org/asc/350/20/#350-20-35-41) has not been completed as of the date the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose that fact. 6. f In a bargain purchase (see paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) ), both of the following: 1. 1 The amount of any gain recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) and the line item in the income statement in which the gain is recognized 2. 2 A description of the reasons why the transaction resulted in a gain. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)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 all of the following information for each business combination that occurs during the reporting period: 1. a A qualitative description of the factors that make up the [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.") recognized, such as expected synergies from combining operations of 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.") and the acquirer, intangible assets that do not qualify for separate recognition, or other factors. 2. b 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 the total consideration transferred and the acquisition-date fair value of each major class of consideration, such as the following: 1. 1 Cash 2. 2 Other tangible or intangible assets, including 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 subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability for [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.") 4. 4 Equity interests of the acquirer, including the number of instruments or interests issued or issuable and the method of determining the fair value of those instruments or interests. 3. c For contingent consideration arrangements, 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. 4. d The total amount of goodwill that is expected to be deductible for tax purposes. 5. e If the acquirer is required to disclose segment information in accordance with Subtopic 280-10, the amount of goodwill by reportable segment. If the assignment of goodwill to reporting units required by paragraphs [350-20-35-41 through 35-44](https://asc.understandingaccounting.org/asc/350/20/#350-20-35-41) has not been completed as of the date the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose that fact. 6. f In a bargain purchase (see paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) ), both of the following: 1. 1 The amount of any gain recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) and the line item in the income statement in which the gain is recognized 2. 2 A description of the reasons why the transaction resulted in a gain. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. 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 A qualitative description of the factors that make up the [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.") recognized, such as expected synergies from combining operations of 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.") and the acquirer, intangible assets that do not qualify for separate recognition, or other factors. 2. b 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 the total consideration transferred and the acquisition-date fair value of each major class of consideration, such as the following: 1. 1 Cash 2. 2 Other tangible or intangible assets, including 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 subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability for [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.") 4. 4 Equity interests of the acquirer, including the number of instruments or interests issued or issuable and the method of determining the fair value of those instruments or interests. 3. c For contingent consideration arrangements, 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. 4. d The total amount of goodwill that is expected to be deductible for tax purposes. 5. e If the acquirer is required to disclose segment information in accordance with Subtopic 280-10, the amount of goodwill by reportable segment. If the assignment of goodwill to reporting units required by paragraphs [350-20-35-41 through 35-44](https://asc.understandingaccounting.org/asc/350/20/#350-20-35-41) has not been completed as of the date the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose that fact. 6. f In a bargain purchase (see paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) ), both of the following: 1. 1 The amount of any gain recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) and the line item in the income statement in which the gain is recognized 2. 2 A description of the reasons why the transaction resulted in a gain. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ##### [805-30-50-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:2884958ee6ca23454237c8f62ca0e3096b852d1b084c092f41e52e8c9554999e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f 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 [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) 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 [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) in the aggregate in interim and annual reporting periods. ##### [805-30-50-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:146ecfbbd2b9f93641c8c470af9707b03411492e294ae8f0761b5450fa6c1879 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f 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 [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) 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 [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1)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 ##### [805-30-50-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:ab8f96aeb31877845c44b0f9971b02dfb5b0345c8f3f9ad2418a16b8bcc18496 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f 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 following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively: 1. a For each reporting period after the acquisition date until the entity collects, sells, or otherwise loses the right to a contingent consideration asset, or until the entity settles a contingent consideration liability or the liability is cancelled or expires, all of the following: 1. 1 Any changes in the recognized amounts, including any differences arising upon settlement 2. 2 Any changes in the range of outcomes (undiscounted) and the reasons for those changes 3. 3 The disclosures required by Section 820-10-50. 2. b A reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period as required by paragraph [350-20-50-1](https://asc.understandingaccounting.org/asc/350/20/#350-20-50-1). A [private company](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.") or [not-for-profit entity](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.") that adopts the accounting alternative for amortizing goodwill in Subtopic 350-20 is not required to disclose the reconciliation. 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, 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: 1. a For each reporting period after the acquisition date until the entity collects, sells, or otherwise loses the right to a contingent consideration asset, or until the entity settles a contingent consideration liability or the liability is cancelled or expires, all of the following: 1. 1 Any changes in the recognized amounts, including any differences arising upon settlement 2. 2 Any changes in the range of outcomes (undiscounted) and the reasons for those changes 3. 3 The disclosures required by Section 820-10-50. 2. b A reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period as required by paragraph [350-20-50-1](https://asc.understandingaccounting.org/asc/350/20/#350-20-50-1). A [private company](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.") or [not-for-profit entity](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.") that adopts the accounting alternative for amortizing goodwill in Subtopic 350-20 is not required to disclose the reconciliation. 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.