This Subtopic has its own discrete scope, which is separate and distinct from the pervasive scope for this Topic as outlined in Section
805-10-15.
The guidance in the Acquisition of Assets Rather than a Business Subsections applies to all entities.
The guidance in the Acquisition of Assets Rather than a Business Subsections applies to a transaction or event in which
assets acquired and liabilities assumed do not constitute a business. The guidance in the Transactions between Entities under Common Control Subsections applies to all entities.
The guidance in the Transactions between Entities under Common Control Subsections applies to combinations between entities or
businesses under common control.
The following are examples of those types of transactions: - a
An entity charters a newly formed entity and then transfers some or all of its net assets to that newly chartered entity.
- b
A parent transfers the net assets of a wholly owned subsidiary into the parent and liquidates the subsidiary. That transaction is a change in legal organization but not a change in the reporting entity.
- c
A parent transfers its controlling interest in several partially owned subsidiaries to a new wholly owned subsidiary. That also is a change in legal organization but not in the reporting entity.
- d
A parent exchanges its ownership interests or the net assets of a wholly owned subsidiary for additional shares issued by the parent's less-than-wholly-owned subsidiary, thereby increasing the parent's percentage of ownership in the less-than-wholly-owned subsidiary but leaving all of the existing noncontrolling interest outstanding. - e
A parent's less-than-wholly-owned subsidiary issues its shares in exchange for shares of another subsidiary previously owned by the same parent, and the noncontrolling shareholders are not party to the exchange. That is not a business combination from the perspective of the parent. - f
A limited liability company is formed by combining entities under common control.
- g
Two or more not-for-profit entities (NFPs) that are effectively controlled by the same board members transfer their net assets to a new entity, dissolve the former entities, and appoint the same board members to the newly combined entity.
The guidance in the Transactions between Entities under Common Control Subsections does not apply to the initial measurement by a primary beneficiary of the assets, liabilities, and noncontrolling interests of a VIE if the primary beneficiary of a VIE and the VIE are under common control. Guidance for such a VIE is provided in Section
810-10-30.
Mergers and acquisitions between or among two or more NFPs, all of which benefit a particular group of citizens, shall not be considered common control transactions solely because those entities benefit a particular group. The mission, operations, and historical sources of support of two or more NFPs may be closely linked to benefiting a particular group of citizens. However, that group neither owns nor controls the NFPs.