# ASC 805-50-25: Business Combinations — Related Issues — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/50/#25-recognition) 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): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:02606db6789aaf36964e1b15d0f86a7710832b12d0d38f3fa2fc99c8977f92dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/50/#25-recognition) SEC content: no ### Acquisition of Assets Rather than a Business #### Acquisition Date Recognition of Consideration Exchanged ##### [805-50-25-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:cc24a04fa071efe3928191932f199493a67af4f2dd4646f0dff802dbf9d86294 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assets commonly are acquired in exchange transactions that trigger the initial recognition of the assets acquired and any liabilities assumed. If the consideration given in exchange for the assets (or net assets) acquired is in the form of assets surrendered (such as cash), the assets surrendered shall be derecognized at the date of acquisition. If the consideration given is in the form of liabilities incurred or [equity interests](https://asc.understandingaccounting.org/glossary/e/#equity-interests "Used broadly to mean ownership interests of investor-owned entities; owner, member, or participant interests of mutual entities; and owner or member interests in the net assets of not-for-profit entities.") issued, the liabilities incurred and equity interests issued shall be initially recognized at the date of acquisition. However, if the assets surrendered are nonfinancial assets or [in substance nonfinancial assets](https://asc.understandingaccounting.org/glossary/i/#in-substance-nonfinancial-asset "Paragraphs 610-20-15-5610-20-15-6610-20-15-7610-20-15-8 define an in substance nonfinancial asset.") within the scope of Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, the assets surrendered shall be derecognized in accordance with the guidance in Subtopic 610-20 and the assets acquired shall be treated as noncash consideration in accordance with Subtopic 610-20. ### Transactions between Entities under Common Control #### Transfer Date Recognition ##### [805-50-25-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:53d6e1055dd3106fd15c7939c08c0e891e1e5ed44cf44a8dbe7b8c5061d3fc5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the [equity interests](https://asc.understandingaccounting.org/glossary/e/#equity-interests "Used broadly to mean ownership interests of investor-owned entities; owner, member, or participant interests of mutual entities; and owner or member interests in the net assets of not-for-profit entities.") shall initially recognize the assets and liabilities transferred at the date of transfer. See the Transactions between Entities under Common Control Subsection of Section [805-50-45](https://asc.understandingaccounting.org/asc/805/50/#45-other-presentation-matters) for guidance on the presentation of financial statements for the period of transfer and comparative financial statements for prior years. ### New Basis of Accounting (Pushdown) ##### [805-50-25-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:47d27be4212a3c0f96d2c02c3771981fc09fc43e898deffd426f90479d52e19a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-17](https://asc.understandingaccounting.org/updates/asu-2014-17/). ### Pushdown Accounting ##### [805-50-25-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:744ba7a92554d336a3af59548149e1a29fb8cc8434ef949df1ddfdfa188f4072 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [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.") shall have the option to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") in its separate financial statements when an [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "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.")—an entity or individual—obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of the acquiree. An acquirer might obtain control of an acquiree in a variety of ways, including any of the following: 1. a By transferring cash or other assets 2. b By incurring liabilities 3. c By issuing equity interests 4. d By providing more than one type of consideration 5. e Without transferring consideration, including by contract alone as discussed in paragraph [805-10-25-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-11). ##### [805-50-25-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:08b02abfea573a56f1f9c5a6309d4c337d34062e91c1139baa841c5b2dd47d48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the General Subsections of Subtopic 810-10 on consolidation, related to determining the existence of a controlling financial interest shall be used to identify the acquirer. If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in identifying the acquirer. However, if the acquiree is a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE), the primary beneficiary of the acquiree always is the acquirer. The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying the guidance in the General Subsections of that Subtopic relating to a controlling financial interest or the guidance in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5)The guidance in the General Subsections of Subtopic 810-10 on consolidation, related to determining the existence of a controlling financial interest shall be used to identify the acquirer. If a [business combination](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.") has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in identifying the acquirer. However, if the acquiree is a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE), the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of the acquiree is the acquirer unless the business combination is effected primarily by exchanging equity interests. The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying the guidance in the General Subsections of that Subtopic relating to a controlling financial interest or the guidance in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . For a business combination that is effected primarily by exchanging equity interests in which a VIE is acquired, the factors in paragraphs [805-10-55-12 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) shall be considered in determining which entity is the accounting acquirer. ##### [805-50-25-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:f5037acbff96c10a23efc825328726f94840521e0c8d0d0d827a89664217a13d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The option to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") may be elected each time there is a change-in-control event in which an [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "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.") obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of 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."). An acquiree shall make an election to apply pushdown accounting before the [financial statements are issued](https://asc.understandingaccounting.org/glossary/f/#financial-statements-are-issued "Financial statements are considered issued when they are widely distributed to shareholders and other financial statement users for general use and reliance in a form and format that complies with GAAP. (U.S. Securities and Exchange Commission [SEC] registrants also are required to consider the guidance in paragraph 855-10-S99-2.)") (for a [Securities and Exchange Commission (SEC) filer](https://asc.understandingaccounting.org/glossary/s/#securities-and-exchange-commission-sec-filer "An entity that is required to file or furnish its financial statements with either of the following: The Securities and Exchange Commission (SEC) With respect to an entity subject to Section 12(i) of the Securities Exchange Act of 1934, as amended, the appropriate agency under that Section. Financial statements for other entities that are not otherwise SEC filers whose financial statements are included in a submission by another SEC filer are not included within this definition.") and a conduit bond obligor for [conduit debt securities](https://asc.understandingaccounting.org/glossary/c/#conduit-debt-securities "Certain limited-obligation revenue bonds, certificates of participation, or similar debt instruments issued by a state or local governmental entity for the express purpose of providing financing for a specific third party (the conduit bond obligor) that is not a part of the state or local government's financial reporting entity. Although conduit debt securities bear the name of the governmental entity that issues them, the governmental entity often has no obligation for such debt beyond the resources provided by a lease or loan agreement with the third party on whose behalf the securities are issued. Further, the conduit bond obligor is responsible for any future financial reporting requirements.") that are traded in a public market) or the [financial statements are available to be issued](https://asc.understandingaccounting.org/glossary/f/#financial-statements-are-available-to-be-issued "Financial statements are considered available to be issued when they are complete in a form and format that complies with GAAP and all approvals necessary for issuance have been obtained, for example, from management, the board of directors, and/or significant shareholders. The process involved in creating and distributing the financial statements will vary depending on an entity's management and corporate governance structure as well as statutory and regulatory requirements.") (for all other entities) for the reporting period in which the change-in-control event occurred. If the acquiree elects the option to apply pushdown accounting, it must apply the accounting as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."). ##### [805-50-25-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:9d48536592f4e30eacc498ee5b3d1754564a8dd71782a0f366e58cd566f0e27d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If 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.") does not elect to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") upon a change-in-control event, it can elect to apply pushdown accounting to its most recent change-in-control event in a subsequent reporting period as a [change in accounting principle](https://asc.understandingaccounting.org/glossary/c/#change-in-accounting-principle "A change from one generally accepted accounting principle to another generally accepted accounting principle when there are two or more generally accepted accounting principles that apply or when the accounting principle formerly used is no longer generally accepted. A change in the method of applying an accounting principle also is considered a change in accounting principle.") in accordance with Topic 250 on accounting changes and error corrections. Pushdown accounting shall be applied as of the acquisition date of the change-in-control event. ##### [805-50-25-8](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:bc7993174266b40d3e7b5e357b79ede2743fb72f4bdda9bc96544918632facf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any subsidiary of an [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.") also is eligible to make an election to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") to its separate financial statements in accordance with the guidance in paragraphs [805-50-25-4 through 25-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-4) irrespective of whether the acquiree elects to apply pushdown accounting. ##### [805-50-25-9](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:350400e6940d799f893e76623734b613cfceaa11cb7558bf7313afeae9869e50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The decision to apply pushdown accounting to a specific change-in-control event if elected by an acquiree is irrevocable.