{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/40/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"805","topic_title":"Business Combinations","subtopic":"805-40","subtopic_title":"Reverse Acquisitions","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"805-40-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_7D37CFD1-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">All of the measurement principles applicable to <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 combinations</span></a> in Subtopics <a altsource=\"GUID-4F5CD9E3-D073-4C55-8027-07F6D2F8A035.ditamap\" class=\"ditamap\">805-10</a>, <a altsource=\"GUID-4C20CF40-DD8D-4F61-94A7-35C477A5F96C.ditamap\" class=\"ditamap\">805-20</a>, and <a altsource=\"GUID-2B6707CB-355A-4E7A-8901-9529CE2DB325.ditamap\" class=\"ditamap\">805-30</a> apply to 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>. </span></span></div></div>","snippet":"All of the measurement principles applicable to business combinations in Subtopics 805-10, 805-20, and 805-30 apply to a reverse acquisition.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e1fc01b0b780325790939a7191f4ff56e81f5fd2a7a3a1d0d131a898d832dfb","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05a2af86d3687de0cf452f11130a0a49de530975a4c50a4f3f7f078cc6b3b83f","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}},{"block":null,"heading":"Measuring the Consideration Transferred","paragraphs":[{"citation":"805-40-30-2","para":"30-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_7D37D0F9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In a reverse acquisition, the accounting acquirer usually issues no consideration for 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>. Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly, the <a href=\"/glossary/a/#acquisition-date\" class=\"term\" title=\"The date on which the acquirer obtains control of the acquiree.\"><span>acquisition-date</span></a> <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"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.\"><span>fair value</span></a> of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition. Example 1, Case A (see paragraph <a href=\"/asc/805/40/#805-40-55-8\" class=\"xref\">805-40-55-8</a>) illustrates that calculation. The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree. </span></span></div></div>","snippet":"In a reverse acquisition, the accounting acquirer usually issues no consideration for the acquiree. Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly,…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cd488fa36f654609926fd6b0355ce9afdd25931ef067ae0a449766bd60cf32ce","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b2e7280d72cbb3fdc7220764a39c3f55f436d3c779a014c4340b093c1c981462","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}},{"block":null,"heading":"Noncontrolling Interest","paragraphs":[{"citation":"805-40-30-3","para":"30-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_7D37D1E7-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their precombination carrying amounts (see paragraph <a href=\"/asc/805/40/#805-40-45-2\" class=\"xref\">805-40-45-2(a)</a>). Therefore, in a reverse acquisition the noncontrolling interest reflects the noncontrolling shareholders' proportionate interest in the precombination carrying amounts of the legal acquiree's net assets even though the noncontrolling interests in other acquisitions are measured at their fair values at the acquisition date. </span></span></div></div>","snippet":"The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their precombination carrying amounts (see paragraph 805-40-45-2(a)). Therefore, in a reverse acqui…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:179f1ebd1c02cf11c75dbb5ab41fab988c6d447685e26b8474dac0da90184839","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f869df2d0d073f2f47151139f2007772a9fde5fe3b1986d76e713cc07a948fd1","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}},{"block":null,"heading":"Consolidated Financial Statements Following a Reverse Acquisition","paragraphs":[{"citation":"805-40-30-4","para":"30-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">Paragraph <a href=\"/asc/805/40/#805-40-45-1\" class=\"xref\">805-40-45-1</a> provides guidance on required adjustments to the accounting acquirer's legal capital to reflect the legal capital of the legal parent (accounting acquiree) in the consolidated financial statements following a reverse acquisition.</div></div>","snippet":"Paragraph 805-40-45-1 provides guidance on required adjustments to the accounting acquirer's legal capital to reflect the legal capital of the legal parent (accounting acquiree) in the consolidated financial statements f…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6fa0b1cbbce829b7341910f625e713d69a9c2d1af4d51d4c32cf59ece37b6203","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9b5628f42924d8313abe813d9351ca33a419c2cd88c0afe68db1ad1dcb5cea87","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ea456696b429fd4bce70ae3bf0b86fa0d6fa3bb4b917d090a156a8c3ef1a69f3","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ea456696b429fd4bce70ae3bf0b86fa0d6fa3bb4b917d090a156a8c3ef1a69f3","downloaded_from":"2026-09-10T01:24:43.498Z","last_downloaded_at":"2026-09-10T01:24:43.498Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479350","source_sha256":"19050a51fbecbaa1f07d2bd6895b4024c08e0450c26d3683417f49dd2022e87d"}}