# ASC 805-40-30: Business Combinations — Reverse Acquisitions — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/40/#30-initial-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:ea456696b429fd4bce70ae3bf0b86fa0d6fa3bb4b917d090a156a8c3ef1a69f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/40/#30-initial-measurement) SEC content: no ##### [805-40-30-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:5e1fc01b0b780325790939a7191f4ff56e81f5fd2a7a3a1d0d131a898d832dfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the measurement principles applicable to [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.") in Subtopics 805-10, 805-20, and 805-30 apply to a [reverse acquisition](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "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."). #### Measuring the Consideration Transferred ##### [805-40-30-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:cd488fa36f654609926fd6b0355ce9afdd25931ef067ae0a449766bd60cf32ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a reverse acquisition, the accounting acquirer usually issues no consideration 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."). Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly, the [acquisition-date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") [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 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 [805-40-55-8](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-8)) 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. #### Noncontrolling Interest ##### [805-40-30-3](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:179f1ebd1c02cf11c75dbb5ab41fab988c6d447685e26b8474dac0da90184839 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-2)). 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. #### Consolidated Financial Statements Following a Reverse Acquisition ##### [805-40-30-4](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:6fa0b1cbbce829b7341910f625e713d69a9c2d1af4d51d4c32cf59ece37b6203 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-40-45-1](https://asc.understandingaccounting.org/asc/805/40/#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 following a reverse acquisition.