{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/40/#05-overview-and-background","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"805","topic_title":"Business Combinations","subtopic":"805-40","subtopic_title":"Reverse Acquisitions","section":{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"805-40-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic provides incremental guidance on the application of the acquisition method (as described in paragraph <a href=\"/asc/805/10/#805-10-05-4\" class=\"xref\">805-10-05-4</a>) to a <a href=\"/glossary/b/#business-combination\" class=\"term\" title=\"A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity.\"><span>business combination</span></a> that is a <a href=\"/glossary/r/#reverse-acquisition\" class=\"term\" title=\"An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition.\"><span>reverse acquisition</span></a>.</div> </div>","snippet":"This Subtopic provides incremental guidance on the application of the acquisition method (as described in paragraph 805-10-05-4) to a business combination that is a reverse acquisition.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:241709cd93fe1a5056aadeb3a6fde569f9898dbf080f79b04560ce69747d0248","downloaded_from":"2026-09-10T01:24:31.869Z","last_downloaded_at":"2026-09-10T01:24:31.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479461","source_sha256":"254c4490c24f18092c1c211e6c8af50428c51235463476a5858c4ad95675f7e3"}},{"citation":"805-40-05-2","para":"05-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D0F7CF0-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As one example of a reverse acquisition, a private operating entity may want to become a public entity but not want to register its equity shares. To become a public entity, the private entity will arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity. In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired. However, application of the guidance in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/805/10/#805-10-55-11\" class=\"xref\">805-10-55-11 through 55-15</a></div> results in identifying: </span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_7D0F7EA6-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The public entity as the <a href=\"/glossary/a/#acquiree\" class=\"term\" title=\"The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.\"><span>acquiree</span></a> for accounting purposes (the accounting acquiree) </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_7D0F7FEA-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The private entity as the <a href=\"/glossary/a/#acquirer\" class=\"term\" title=\"The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.\"><span>acquirer</span></a> for accounting purposes (the accounting acquirer). </span></span> </div> </li> </ol> </div> </div>","snippet":"As one example of a reverse acquisition, a private operating entity may want to become a public entity but not want to register its equity shares. To become a public entity, the private entity will arrange for a public e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:90c5d61d3eee2ebc8cf4511c180dd23e8aa4959f8702a89f74555975924c4504","downloaded_from":"2026-09-10T01:24:31.869Z","last_downloaded_at":"2026-09-10T01:24:31.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479461","source_sha256":"254c4490c24f18092c1c211e6c8af50428c51235463476a5858c4ad95675f7e3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6a42d252638a6b6e36dbdd8140df83f3dd5a9ba8b6a33f2f72c193f8c7bebb83","downloaded_from":"2026-09-10T01:24:31.869Z","last_downloaded_at":"2026-09-10T01:24:31.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479461","source_sha256":"254c4490c24f18092c1c211e6c8af50428c51235463476a5858c4ad95675f7e3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c564c3bf5dff5d1dc2a429f19a79ec760bdd428697b355c94b28668963bbf8b","downloaded_from":"2026-09-10T01:24:31.869Z","last_downloaded_at":"2026-09-10T01:24:31.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479461","source_sha256":"254c4490c24f18092c1c211e6c8af50428c51235463476a5858c4ad95675f7e3"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c564c3bf5dff5d1dc2a429f19a79ec760bdd428697b355c94b28668963bbf8b","downloaded_from":"2026-09-10T01:24:31.869Z","last_downloaded_at":"2026-09-10T01:24:31.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479461","source_sha256":"254c4490c24f18092c1c211e6c8af50428c51235463476a5858c4ad95675f7e3"}}