{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/50/#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":"805-50","subtopic_title":"Related Issues","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":"Acquisition of Assets Rather than a Business","heading":"Determining Cost","paragraphs":[{"citation":"805-50-30-1","para":"30-1","html":"
Paragraph 805-50-25-1 discusses exchange transactions that trigger the initial recognition of assets acquired and liabilities assumed. Assets are recognized based on their cost to the acquiring entity, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of noncash assets given as consideration differs from the assets' carrying amounts on the acquiring entity's books. For transactions involving nonmonetary consideration within the scope of Topic 845, an acquirer must first determine if any of the conditions in paragraph 845-10-30-3 apply. If the consideration given is nonfinancial assets or in substance nonfinancial assets within the scope of Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, the assets acquired shall be treated as noncash consideration and any gain or loss shall be recognized in accordance with Subtopic 610-20.
","snippet":"Paragraph 805-50-25-1 discusses exchange transactions that trigger the initial recognition of assets acquired and liabilities assumed. Assets are recognized based on their cost to the acquiring entity, which generally in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:019e517bb3fd4f7b6d7dca76cfef9358af05eab7acbea5b64f04191184b60c86","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"citation":"805-50-30-2","para":"30-2","html":"
Asset acquisitions in which the consideration given is cash are measured by the amount of cash paid, which generally includes the transaction costs of the asset acquisition. However, if the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued) and no other generally accepted accounting principles (GAAP) apply (for example, Topic 845 on nonmonetary transactions or Subtopic 610-20), measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. For transactions involving nonmonetary consideration within the scope of Topic 845, an acquirer must first determine if any of the conditions in paragraph 845-10-30-3 apply. If the consideration given is nonfinancial assets or in substance nonfinancial assets within the scope of Subtopic 610-20, the assets acquired shall be treated as noncash consideration and any gain or loss shall be recognized in accordance with Subtopic 610-20.
","snippet":"Asset acquisitions in which the consideration given is cash are measured by the amount of cash paid, which generally includes the transaction costs of the asset acquisition. However, if the consideration given is not in …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:527ecec67db12ed6a6b8d277558a22232c10a55e438f690b782b26a728310281","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6520e27d943d4901d2e831c61f512d134cf9dfb9e5bca7621c7b0b06fc3167dc","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"block":"Acquisition of Assets Rather than a Business","heading":"Allocating Cost","paragraphs":[{"citation":"805-50-30-3","para":"30-3","html":"
Acquiring assets in groups requires not only ascertaining the cost of the asset (or net asset) group but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The cost of such a group is determined using the concepts described in the preceding two paragraphs. The cost of a group of assets acquired in an asset acquisition shall be allocated to the individual assets acquired or liabilities assumed based on their relative fair values and shall not give rise to goodwill. The allocated cost of an asset that the entity does not intend to use or intends to use in a way that is not its highest and best use, such as a brand name, shall be determined based on its relative fair value. See paragraph 805-50-55-1 for an illustration of the relative fair value method to assets acquired outside a business combination.
","snippet":"Acquiring assets in groups requires not only ascertaining the cost of the asset (or net asset) group but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. T…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:26a7de2edf6d0d7bef7906c891b0df4fb62755e0e9962597e969e33172303ef1","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"citation":"805-50-30-4","para":"30-4","html":"
See paragraphs
740-10-25-49 through 25-55
for guidance on the accounting for acquired temporary differences in certain purchase transactions that are not accounted for as business combinations.
","snippet":"See paragraphs 740-10-25-49 through 25-55 for guidance on the accounting for acquired temporary differences in certain purchase transactions that are not accounted for as business combinations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dbfb4dbd1cb19bd6371c71079b95866c24d46c0a160c9ad27c376de1ba5b2759","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:610d8c4a2bcad590003d055f7f1c6e5cae2503692007aacf40070fdb334e26b7","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"block":"Transactions between Entities under Common Control","heading":"Transfer Date Measurement","paragraphs":[{"citation":"805-50-30-5","para":"30-5","html":"
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 shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer. If the carrying amounts of the assets and liabilities transferred differ from the historical cost of the parent of the entities under common control, for example, because pushdown accounting had not been applied, then the financial statements of the receiving entity shall reflect the transferred assets and liabilities at the historical cost of the parent of the entities under common control.
","snippet":"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 shall initially measure the recognized assets and liab…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:daf22fce3e86d021e3a5208ba6bb3490f65423b5527eb1e1a0d7cbf2787b3f62","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"citation":"805-50-30-6","para":"30-6","html":"
In some instances, the entity that receives the net assets or equity interests (the receiving entity) and the entity that transferred the net assets or equity interests (the transferring entity) may account for similar assets and liabilities using different accounting methods. In such circumstances, the carrying amounts of the assets and liabilities transferred may be adjusted to the basis of accounting used by the receiving entity if the change would be preferable. Any such change in accounting method shall be applied retrospectively, and financial statements presented for prior periods shall be adjusted unless it is impracticable to do so. Section 250-10-45 provides guidance if retrospective application is impracticable.
","snippet":"In some instances, the entity that receives the net assets or equity interests (the receiving entity) and the entity that transferred the net assets or equity interests (the transferring entity) may account for similar a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b58a4597ea3b2aca7a1008efbec5f11c2add04dabe7f6c9f36a0386d537f1e29","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3320a25090b9f81e8575959eb08c964f83ba32714f6f29aca953f777cf769b04","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"block":"Formation of a Master Limited Partnership","heading":null,"paragraphs":[{"citation":"805-50-30-7","para":"30-7","html":"
Because of such factors as the consideration of common ownership and changes in control, a new basis of accounting is not appropriate for any of the following transactions that create a master limited partnership:
  1. a
    A rollup in which the general partner of the new master limited partnership was also the general partner in some or all of the predecessor limited partnerships and no cash is involved in the transaction. Transaction costs in a rollup shall be charged to expense.
  2. b
    A dropdown in which the sponsor receives 1 percent of the units in the master limited partnership as the general partner and 24 percent of the units as a limited partner, the remaining 75 percent of the units are sold to the public, and a two-thirds vote of the limited partners is required to replace the general partner.
  3. c
    A rollout.
  4. d
    A reorganization.
","snippet":"Because of such factors as the consideration of common ownership and changes in control, a new basis of accounting is not appropriate for any of the following transactions that create a master limited partnership:\n(a) A …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:32342da0c146dc1012dac84dd81c98c070287b8b5f297ebed7911452f64318ac","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"citation":"805-50-30-8","para":"30-8","html":"
In other situations, it is possible that a new basis of accounting would be appropriate.
","snippet":"In other situations, it is possible that a new basis of accounting would be appropriate.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f560448a222f22238296269c2fdaf4683df9d49888269e15e53de7443748dc17","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"citation":"805-50-30-9","para":"30-9","html":"
The issuance of master limited partnership units to a general partner of a predecessor limited partnership who will not be the general partner of the new master limited partnership in settlement of management contracts or for other services that will not carry over to the new master limited partnership has characteristics of compensation rather than of equity and shall be accounted for accordingly by the new master limited partnership.
","snippet":"The issuance of master limited partnership units to a general partner of a predecessor limited partnership who will not be the general partner of the new master limited partnership in settlement of management contracts o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4d22cf4cbf16c4e2130069f728a7049e5b7e734481976153cee9abd8f768eca","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f26a9b52008dabc7d599a7a9695e35da4aaef4a6e3db1e69f21c7f9072c63fb","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"block":"Pushdown Accounting","heading":null,"paragraphs":[{"citation":"805-50-30-10","para":"30-10","html":"
If an acquiree elects the option in this Subtopic to apply pushdown accounting, the acquiree shall reflect in its separate financial statements the new basis of accounting established by the acquirer for the individual assets and liabilities of the acquiree by applying the guidance in other Subtopics of Topic 805. If the acquirer did not establish a new basis of accounting for the individual assets and liabilities of the acquiree because it was not required to apply Topic 805 (for example, if the acquirer was an individual or an investment company—see Topic 946 on investment companies), the acquiree shall reflect in its separate financial statements the new basis of accounting that would have been established by the acquirer had the acquirer applied the guidance in other Subtopics of Topic 805.
","snippet":"If an acquiree elects the option in this Subtopic to apply pushdown accounting, the acquiree shall reflect in its separate financial statements the new basis of accounting established by the acquirer for the individual a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:37a2fd8b570874b54fe28fa887749a952b8559a57229b2634913ebb6778f5f01","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"citation":"805-50-30-11","para":"30-11","html":"
An acquiree shall recognize goodwill that arises because of the application of pushdown accounting in its separate financial statements. However, bargain purchase gains recognized by the acquirer, if any, shall not be recognized in the acquiree's income statement. The acquiree shall recognize the bargain purchase gains recognized by the acquirer as an adjustment to additional paid-in capital (or net assets of a not-for-profit acquiree).
","snippet":"An acquiree shall recognize goodwill that arises because of the application of pushdown accounting in its separate financial statements. However, bargain purchase gains recognized by the acquirer, if any, shall not be re…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f30681b20cf3dcb751b6733f2a8c408e9bbf944db50cda04e70eafc4dc6f26d8","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},{"citation":"805-50-30-12","para":"30-12","html":"
An acquiree shall recognize in its separate financial statements any acquisition-related liability incurred by the acquirer only if the liability represents an obligation of the acquiree in accordance with other applicable Topics.
","snippet":"An acquiree shall recognize in its separate financial statements any acquisition-related liability incurred by the acquirer only if the liability represents an obligation of the acquiree in accordance with other applicab…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2972e54ec9cdaf51395b1c079c6d87ee04d09c83b7d2d196475d3875fdc9d658","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eeadfc27912dc641571bee4f5f166a1de2c2854828d217be727a161adb34a542","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f04af8a7047f45a95d107dc7c11cd0b4067c543e615fc978fac903b24cf8b0b","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f04af8a7047f45a95d107dc7c11cd0b4067c543e615fc978fac903b24cf8b0b","downloaded_from":"2026-09-10T01:25:07.314Z","last_downloaded_at":"2026-09-10T01:25:07.314Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480027","source_sha256":"d9d7ae9abb7681f844022b65e607cf0a9fbcdc055421f110c7f103400f77ab7c"}}