# ASC 805-50-30: Business Combinations — Related Issues — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/50/#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): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:4f04af8a7047f45a95d107dc7c11cd0b4067c543e615fc978fac903b24cf8b0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/50/#30-initial-measurement) SEC content: no ### Acquisition of Assets Rather than a Business #### Determining Cost ##### [805-50-30-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:019e517bb3fd4f7b6d7dca76cfef9358af05eab7acbea5b64f04191184b60c86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-50-25-1](https://asc.understandingaccounting.org/asc/805/50/#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](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 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](https://asc.understandingaccounting.org/asc/845/10/#845-10-30-3) apply. If the consideration given is 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 acquired shall be treated as noncash consideration and any gain or loss shall be recognized in accordance with Subtopic 610-20. ##### [805-50-30-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:527ecec67db12ed6a6b8d277558a22232c10a55e438f690b782b26a728310281 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](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) 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](https://asc.understandingaccounting.org/asc/845/10/#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. #### Allocating Cost ##### [805-50-30-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:26a7de2edf6d0d7bef7906c891b0df4fb62755e0e9962597e969e33172303ef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/g/#goodwill "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."). 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](https://asc.understandingaccounting.org/asc/805/50/#805-50-55-1) for an illustration of the relative fair value method to assets acquired outside a business combination. ##### [805-50-30-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:dbfb4dbd1cb19bd6371c71079b95866c24d46c0a160c9ad27c376de1ba5b2759 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [740-10-25-49 through 25-55](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-49) for guidance on the accounting for acquired temporary differences in certain purchase transactions that are not accounted for as [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."). ### Transactions between Entities under Common Control #### Transfer Date Measurement ##### [805-50-30-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:daf22fce3e86d021e3a5208ba6bb3490f65423b5527eb1e1a0d7cbf2787b3f62 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 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](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") 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. ##### [805-50-30-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:b58a4597ea3b2aca7a1008efbec5f11c2add04dabe7f6c9f36a0386d537f1e29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ### Formation of a Master Limited Partnership ##### [805-50-30-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:32342da0c146dc1012dac84dd81c98c070287b8b5f297ebed7911452f64318ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/r/#rollup "A way to create a master limited partnership in which two or more legally separate limited partnerships are combined into one master limited partnership.") 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](https://asc.understandingaccounting.org/glossary/d/#dropdown "A transfer of certain net assets from a sponsor or general partner to a master limited partnership in exchange for consideration.") 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](https://asc.understandingaccounting.org/glossary/r/#rollout "A way to create a master limited partnership in which certain assets of a sponsor are placed into a limited partnership and units are distributed to the shareholders."). 4. d A [reorganization](https://asc.understandingaccounting.org/glossary/r/#reorganization "A way to create a master limited partnership in which all of the assets of an entity are placed into a master limited partnership and that entity ceases to exist."). ##### [805-50-30-8](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:f560448a222f22238296269c2fdaf4683df9d49888269e15e53de7443748dc17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In other situations, it is possible that a new basis of accounting would be appropriate. ##### [805-50-30-9](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:f4d22cf4cbf16c4e2130069f728a7049e5b7e734481976153cee9abd8f768eca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ### Pushdown Accounting ##### [805-50-30-10](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:37a2fd8b570874b54fe28fa887749a952b8559a57229b2634913ebb6778f5f01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If 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.") elects the option in this Subtopic 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."), the acquiree shall reflect in its separate financial statements the new basis of accounting established by the [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.") 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. ##### [805-50-30-11](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:f30681b20cf3dcb751b6733f2a8c408e9bbf944db50cda04e70eafc4dc6f26d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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). ##### [805-50-30-12](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:2972e54ec9cdaf51395b1c079c6d87ee04d09c83b7d2d196475d3875fdc9d658 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 recognize in its separate financial statements any acquisition-related liability incurred by the [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.") only if the liability represents an obligation of the acquiree in accordance with other applicable Topics.