{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/40/#55-implementation-guidance-and-illustrations","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":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"805-40-55-1","para":"55-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Section is an integral part of the requirements of this Subtopic. This Section provides illustrations that address the application of accounting requirements for <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> to <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 acquisitions</span></a>.</div> </div>","snippet":"This Section is an integral part of the requirements of this Subtopic. This Section provides illustrations that address the application of accounting requirements for business combinations to reverse acquisitions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c2ccad24e521f7de1de80bead4426f23974c733317f2e0b55803955fd3ed564c","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:864770ef7f34c2c0be9deb9fc23e9a38d23dcbae989897cc830b2fa3699e429d","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"805-40-55-2","para":"55-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following Cases illustrate the guidance in this Subtopic on accounting for a reverse acquisition:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\">A reverse acquisition if all the shares of the legal subsidiary are exchanged (Case A)</div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\">A reverse acquisition if not all of the shares of the legal subsidiary are exchanged and a <a href=\"/glossary/n/#noncontrolling-interest\" class=\"term\" title=\"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.\"><span>noncontrolling interest</span></a> results (Case B).</div></li></ol></div> </div>","snippet":"The following Cases illustrate the guidance in this Subtopic on accounting for a reverse acquisition:\n(a) A reverse acquisition if all the shares of the legal subsidiary are exchanged (Case A)\n(b) A reverse acquisition i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79a82aaa1ec900a4af079eed68b1e167911a9e555030ec1a3cd20c37263b4804","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-3","para":"55-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C651C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In these Cases, Entity B, the legal subsidiary, acquires Entity A, the entity issuing equity instruments and therefore the legal parent, on September 30, 20X6. These Cases ignore the accounting for any income tax effects. </span></span> <span class=\"sfragment\" id=\"sfr_7D6C669F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Cases A and B share all of the following information and assumptions. </span></span> </div> </div>","snippet":"In these Cases, Entity B, the legal subsidiary, acquires Entity A, the entity issuing equity instruments and therefore the legal parent, on September 30, 20X6. These Cases ignore the accounting for any income tax effects…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7f7931aa577f53205638c7a8e38717a4ed407a7b5bffb0e7d43d5afc3948ddf0","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-4","para":"55-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C67E4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The statements of financial position of Entity A and Entity B immediately before the business combination are as follows. </span></span> <ul class=\"ul simple\" id=\"d3e8082-128486__GUID-BC69E40A-5FD1-4AB2-8F55-C4F406B33D29\"> <li class=\"li\" id=\"d3e8082-128486__SL6427696-128486\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-180BA039-4183-4B21-812C-139336DCE136-low.gif\" altsource=\"GUID-180BA039-4183-4B21-812C-139336DCE136-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_7D6C6DA2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> \"Entity A (Legal Parent, Accounting Acquiree) $\" \"Entity B (Legal Subsidiary, Accounting Acquirer) $\" Current assets 500 700 Noncurrent assets \" 1,300 \" \" 3,000 \" Total assets \" 1,800 \" \" 3,700 \" Current liabilities 300 600 Noncurrent liabilities 400 \" 1,100 \" Total liabilities 700 \" 1,700 \" Shareholders' equity Retained earnings 800 \" 1,400 \" Issued equity 100 common shares 300 - 60 common shares - 600 Total shareholders' equity \" 1,100 \" \" 2,000 \" \"Total liabilities and shareholders' equity\" \" 1,800 \" \" 3,700 \" </div></div> </div> </li> </ul> </div> </div>","snippet":"The statements of financial position of Entity A and Entity B immediately before the business combination are as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:02fb0939cad87005275cc4b7ecf15c6f89a9dd8525bff5c3a3dc293fa554c2eb","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-5","para":"55-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C6EF5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">On September 30, 20X6, Entity A issues 2.5 shares in exchange for each common share of Entity B. All of Entity B's shareholders exchange their shares in Entity B. Therefore, Entity A issues 150 common shares in exchange for all 60 common shares of Entity B. </span></span> </div> </div>","snippet":"On September 30, 20X6, Entity A issues 2.5 shares in exchange for each common share of Entity B. All of Entity B's shareholders exchange their shares in Entity B. Therefore, Entity A issues 150 common shares in exchange …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de3931dfffb107865467a295497cafe3fa7fdf1801c84f9a7fd09c56dd82ac42","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-6","para":"55-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C7050-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The <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 each common share of Entity B at September 30, 20X6, is $40. The quoted market price of Entity A's common shares at that date is $16. </span></span> </div> </div>","snippet":"The fair value of each common share of Entity B at September 30, 20X6, is $40. The quoted market price of Entity A's common shares at that date is $16.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cd0c9c14da10cd7200441b8fe9960451691cf9b6f0567f35bc8163888ef1c6d3","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-7","para":"55-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C71F4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The fair values of Entity A's identifiable assets and liabilities at September 30, 20X6, are the same as their carrying amounts, except that the fair value of Entity A's noncurrent assets at September 30, 20X6, is $1,500. </span></span> </div> </div>","snippet":"The fair values of Entity A's identifiable assets and liabilities at September 30, 20X6, are the same as their carrying amounts, except that the fair value of Entity A's noncurrent assets at September 30, 20X6, is $1,500…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8fa9ce1d4604aaa65b4cfbd721922852aa0973bee7a75b07a1050a78eccf9e4a","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-8","para":"55-8","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Case illustrates the accounting for a reverse acquisition if all of the shares of the legal subsidiary, the accounting acquirer, are exchanged in a business combination. The accounting illustrated in this Case includes the calculation of the fair value of the consideration transferred, the measurement of <a href=\"/glossary/g/#goodwill\" class=\"term\" title=\"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.\"><span>goodwill</span></a> and the calculation of earnings per share (EPS).</div> </div>","snippet":"This Case illustrates the accounting for a reverse acquisition if all of the shares of the legal subsidiary, the accounting acquirer, are exchanged in a business combination. The accounting illustrated in this Case inclu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3fdcda02ad1c44812d47cafdc045c7c1d00d270741c10848df16c1a76dc45e82","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-9","para":"55-9","html":"<div class=\"asc-body\"><div class=\"norm-text\">The calculation of the fair value of the consideration transferred follows.</div> </div>","snippet":"The calculation of the fair value of the consideration transferred follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7df7e2a9f4de868296ab81fd92c096de5775651f606d677a4cded177876b9cb5","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-10","para":"55-10","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C73D9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As a result of the issuance of 150 common shares by Entity A (legal parent, accounting acquiree), Entity B's shareholders own 60 percent of the issued shares of the combined entity, that is, 150 of 250 issued shares. The remaining 40 percent are owned by Entity A's shareholders. If the business combination had taken the form of Entity B issuing additional common shares to Entity A's shareholders in exchange for their common shares in Entity A, Entity B would have had to issue 40 shares for the ratio of ownership interest in the combined entity to be the same. Entity B's shareholders would then own 60 of the 100 issued shares of Entity B—60 percent of the combined entity. As a result, the fair value of the consideration effectively transferred by Entity B and the group's interest in Entity A is $1,600 (40 shares with a per-share fair value of $40). The fair value of the consideration effectively transferred should be based on the most reliable measure. In this Case, the quoted market price of Entity A's shares provides a more reliable basis for measuring the consideration effectively transferred than the estimated fair value of the shares in Entity B, and the consideration is measured using the market price of Entity A's shares―100 shares with a per-share fair value of $16. </span></span> </div> </div>","snippet":"As a result of the issuance of 150 common shares by Entity A (legal parent, accounting acquiree), Entity B's shareholders own 60 percent of the issued shares of the combined entity, that is, 150 of 250 issued shares. The…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5887436a89aa80481d75236a286793d7f88bc180eaf00173c24d70e04bad9cb1","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-11","para":"55-11","html":"<div class=\"asc-body\"><div class=\"norm-text\">Goodwill is measured as follows.</div> </div>","snippet":"Goodwill is measured as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f14b996eee03fad18d00816b097547307aecb6498e0a50f5faad4f15377bcb92","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-12","para":"55-12","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C7596-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Goodwill is measured as the excess of the fair value of the consideration effectively transferred (the group's interest in Entity A) over the net amount of Entity A's recognized identifiable assets and liabilities, as follows. </span></span> <ul class=\"ul simple\" id=\"d3e8130-128486__GUID-D7971E44-E982-43B5-A62C-8FBE7D8CFA28\"> <li class=\"li\" id=\"d3e8130-128486__SL6427697-128486\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-4242E1F3-5446-4094-A968-3CE383748013-low.gif\" altsource=\"GUID-4242E1F3-5446-4094-A968-3CE383748013-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_7D6C7B1E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> $ $ Consideration effectively transferred \" 1,600 \" Net recognized values of Entity A's identifiable assets and liabilities Current assets 500 Noncurrent assets \" 1,500 \" Current liabilities (300) Noncurrent liabilities (400) \" (1,300)\" Goodwill 300 </div></div> </div> </li> </ul> </div> </div>","snippet":"Goodwill is measured as the excess of the fair value of the consideration effectively transferred (the group's interest in Entity A) over the net amount of Entity A's recognized identifiable assets and liabilities, as fo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:03216bf2f3ed21e89603776924d003bdcc42677ddc4f3cdef4e1a88aeed9cc9d","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-13","para":"55-13","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C7C5E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The consolidated statement of financial position immediately after the business combination is as follows. </span></span> <ul class=\"ul simple\" id=\"d3e8130-128486__GUID-BBA6D217-92D5-494B-A2E7-DF8102EB9853\"> <li class=\"li\" id=\"d3e8130-128486__SL6427698-128486\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-F3D97CC2-3FAB-4DF0-8FD0-7E5A8A27814B-low.gif\" altsource=\"GUID-F3D97CC2-3FAB-4DF0-8FD0-7E5A8A27814B-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_7D6C8186-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> $ Current assets ($700 + $500) \" 1,200 \" \"Noncurrent assets ($3,000 + $1,500)\" \" 4,500 \" Goodwill 300 Total assets \" 6,000 \" Current liabilities ($600 + $300) 900 \"Noncurrent liabilities ($1,100 + $400)\" \" 1,500 \" Total liabilities \" 2,400 \" Shareholders' equity Retained earnings \" 1,400 \" Issued equity \"250 common shares ($600 + $1,600)\" \" 2,200 \" Total shareholders' equity \" 3,600 \" Total liabilities and shareholders' equity \" 6,000 \" </div></div> </div> </li> </ul> </div> </div>","snippet":"The consolidated statement of financial position immediately after the business combination is as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4d4b9fecf57630a1fb5e8a7cddc6890e4b8737484cc7c9693109e2c07baa027f","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-14","para":"55-14","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C82D3-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In accordance with paragraph <a href=\"/asc/805/40/#805-40-45-2\" class=\"xref\">805-40-45-2(c) through (d)</a>, the amount recognized as issued equity interests in the consolidated financial statements ($2,200) is determined by adding the issued equity of the legal subsidiary immediately before the business combination ($600) and the fair value of the consideration effectively transferred, measured in accordance with paragraph <a href=\"/asc/805/40/#805-40-30-2\" class=\"xref\">805-40-30-2</a> ($1,600). However, the equity structure appearing in the consolidated financial statements (that is, the number and type of equity interests issued) must reflect the equity structure of the legal parent, including the equity interests issued by the legal parent to effect the combination. </span></span> </div> </div>","snippet":"In accordance with paragraph 805-40-45-2(c) through (d), the amount recognized as issued equity interests in the consolidated financial statements ($2,200) is determined by adding the issued equity of the legal subsidiar…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a16478b60657e645a47946b2091b6d25df67f3d387f0362d34c4fb9f2cb7a9f1","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-15","para":"55-15","html":"<div class=\"asc-body\"><div class=\"norm-text\">The calculation of EPS follows.</div> </div>","snippet":"The calculation of EPS follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9f036e7c74783aa8e7fde2dc735b97e5caa5568547c7cbf92ce69615dc4f25cf","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-16","para":"55-16","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C8404-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entity B's earnings for the annual period ended December 31, 20X5, were $600, and the consolidated earnings for the annual period ended December 31, 20X6, are $800. There was no change in the number of common shares issued by Entity B during the annual period ended December 31, 20X5, and during the period from January 1, 20X6, to the date of the reverse acquisition on September 30, 20X6. EPS for the annual period ended December 31, 20X6, is calculated as follows. </span></span> <ul class=\"ul simple\" id=\"d3e8130-128486__GUID-9114CADE-1E2D-412B-AF2E-253354C1B0AE\"> <li class=\"li\" id=\"d3e8130-128486__SL6427699-128486\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-79CA520B-A93D-463B-A679-381CEB317D82-low.gif\" altsource=\"GUID-79CA520B-A93D-463B-A679-381CEB317D82-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_7D6C88EF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">\"Number of shares deemed to be outstanding for the period from January 1, 20X6, to the acquisition date (that is, the number of common shares issued by Entity A [legal parent, accounting acquiree] in the reverse acquisition)\" 150 \"Number of shares outstanding from the acquisition date to December 31, 20X6\" 250 \"Weighted-average number of common shares outstanding ([150 × 9 ÷ 12] + [250 × 3 ÷ 12])\" 175 EPS (800 ÷ 175) $4.57 </div></div> </div> </li> </ul> </div> </div>","snippet":"Entity B's earnings for the annual period ended December 31, 20X5, were $600, and the consolidated earnings for the annual period ended December 31, 20X6, are $800. There was no change in the number of common shares issu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:28432ebaa8c1aab1dd3c39f0197483ebeba215258af2d7ca62ef2578c89442d2","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-17","para":"55-17","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C8A1D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Restated EPS for the annual period ending December 31, 20X5, is $4.00 (calculated as the earnings of Entity B of 600 divided by the 150 common shares Entity A issued in the reverse acquisition). </span></span> </div> </div>","snippet":"Restated EPS for the annual period ending December 31, 20X5, is $4.00 (calculated as the earnings of Entity B of 600 divided by the 150 common shares Entity A issued in the reverse acquisition).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:314d35b3fed2e084f524184876202b7b223594283bc41ce222782eaf1745d556","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-18","para":"55-18","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Case illustrates the accounting for a reverse acquisition if not all of the shares of the legal subsidiary, the accounting acquirer, are exchanged in a business combination and a <span class=\"sfragment\" id=\"sfr_7D6C8B55-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">noncontrolling interest results. </span></span></div> </div>","snippet":"This Case illustrates the accounting for a reverse acquisition if not all of the shares of the legal subsidiary, the accounting acquirer, are exchanged in a business combination and a noncontrolling interest results.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:763a5d64d06659aae3f61fbd5c461515d2fe891ea312bbb1eca4917b566215e7","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-19","para":"55-19","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C8C5A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Assume the same facts as in Case A except that only 56 of Entity B's 60 common shares are exchanged. Because Entity A issues 2.5 shares in exchange for each common share of Entity B, Entity A issues only 140 (rather than 150) shares. As a result, Entity B's shareholders own 58.3 percent of the issued shares of the combined entity (140 of 240 issued shares). The fair value of the consideration transferred for Entity A, the accounting acquiree, is calculated by assuming that the combination had been effected by Entity B's issuing additional common shares to the shareholders of Entity A in exchange for their common shares in Entity A. That is because Entity B is the accounting acquirer, and paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/805/30/#805-30-30-7\" class=\"xref\">805-30-30-7 through 30-8</a></div> require the acquirer to measure the consideration exchanged for the accounting acquiree. </span></span> </div> </div>","snippet":"Assume the same facts as in Case A except that only 56 of Entity B's 60 common shares are exchanged. Because Entity A issues 2.5 shares in exchange for each common share of Entity B, Entity A issues only 140 (rather than…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9b96062c932a814c1854f63a4abcc80da9b397861fe070de18073eed91936f4b","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-20","para":"55-20","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C8D3D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In calculating the number of shares that Entity B would have had to issue, the noncontrolling interest is ignored. The majority shareholders own 56 shares of Entity B. For that to represent a 58.3 percent equity interest, Entity B would have had to issue an additional 40 shares. The majority shareholders would then own 56 of the 96 issued shares of Entity B and, therefore, 58.3 percent of the combined entity. As a result, the fair value of the consideration transferred for Entity A, the accounting acquiree, is $1,600 (that is, 40 shares each with a fair value of $40). That is the same amount as when all 60 of Entity B's shareholders tender all 60 of its common shares for exchange. The recognized amount of the group's interest in Entity A, the accounting acquiree, does not change if some of Entity B's shareholders do not participate in the exchange. </span></span> </div> </div>","snippet":"In calculating the number of shares that Entity B would have had to issue, the noncontrolling interest is ignored. The majority shareholders own 56 shares of Entity B. For that to represent a 58.3 percent equity interest…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:21536bdb2f7764c51279eaffad35fcb834c3006f489b56bbc519e5edb9df93e3","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-21","para":"55-21","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C8E13-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The noncontrolling interest is represented by the 4 shares of the total 60 shares of Entity B that are not exchanged for shares of Entity A. Therefore, the noncontrolling interest is 6.7 percent. The noncontrolling interest reflects the noncontrolling shareholders' proportionate interests in the precombination carrying amounts of the net assets of Entity B, the legal subsidiary. Therefore, the consolidated statement of financial position is adjusted to show a noncontrolling interest of 6.7 percent of the precombination carrying amounts of Entity B's net assets (that is, $134 or 6.7 percent of $2,000). </span></span> </div> </div>","snippet":"The noncontrolling interest is represented by the 4 shares of the total 60 shares of Entity B that are not exchanged for shares of Entity A. Therefore, the noncontrolling interest is 6.7 percent. The noncontrolling inter…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a8e35f61b300c57d5fe5bc0f1cc63bf8170e43a47e4b00d3c55e97caff4b663c","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-22","para":"55-22","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C8EE4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The consolidated statement of financial position at September 30, 20X6, reflecting the noncontrolling interest is as follows. </span></span> <ul class=\"ul simple\" id=\"d3e8191-128486__GUID-783F69C3-C795-46EE-ADC0-E7A0ECDE3193\"> <li class=\"li\" id=\"d3e8191-128486__SL6427700-128486\"> <div class=\"p\"> <div class=\"fig figure fignone\"> <img src=\"/asc-img/GUID-85941C6C-8DD0-4747-9BAC-DA612B092E03-low.gif\" altsource=\"GUID-85941C6C-8DD0-4747-9BAC-DA612B092E03-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_7D6C9234-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\"> $ Current assets ($700 + $500) \" 1,200 \" \"Noncurrent assets ($3,000 + $1,500)\" \" 4,500 \" Goodwill 300 Total assets \" 6,000 \" Current liabilities ($600 + $300) 900 \"Noncurrent liabilities ($1,100 + $400)\" \" 1,500 \" Total liabilities \" 2,400 \" Shareholders' equity \"Retained earnings ($1,400 × 93.3%)\" \" 1,306 \" Issued equity \"240 common shares ($560 + $1,600)\" \" 2,160 \" Noncontrolling interest 134 Total shareholders' equity \" 3,600 \" Total liabilities and shareholders' equity \" 6,000 \" </div></div> </div> </li> </ul> </div> </div>","snippet":"The consolidated statement of financial position at September 30, 20X6, reflecting the noncontrolling interest is as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cdcfd4aff78290e36ce99d98044a8f73ef99d3d2f03118262f5cdddcd42969a5","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},{"citation":"805-40-55-23","para":"55-23","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_7D6C9307-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The noncontrolling interest of $134 has 2 components. The first component is the reclassification of the noncontrolling interest's share of the accounting acquirer's retained earnings immediately before the acquisition ($1,400 × 6.7% or $93.80). The second component represents the reclassification of the noncontrolling interest's share of the accounting acquirer's issued equity ($600 × 6.7% or $40.20). </span></span> </div> </div>","snippet":"The noncontrolling interest of $134 has 2 components. The first component is the reclassification of the noncontrolling interest's share of the accounting acquirer's retained earnings immediately before the acquisition (…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5936230ce080407c563381f7786001f82d408060df4648901f46d7ab8da0cac9","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f2bb07ffacb7a6f2ea21646836eafefc97264860b3b8bb5aee296bcfd29f277","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e52b9599c120a077008d893f442eb94f656cb82cf8822c972ce15d8a6b5c5ead","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e52b9599c120a077008d893f442eb94f656cb82cf8822c972ce15d8a6b5c5ead","downloaded_from":"2026-09-10T01:24:49.395Z","last_downloaded_at":"2026-09-10T01:24:49.395Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479299","source_sha256":"afd2593dd7214d07b1439d8f4d5f209286ae2a7b11280485e321edfdf8867a9d"}}