# ASC 805-60-25: Business Combinations — Joint Venture Formations — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/60/#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): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:3fdb79e2de79e4b44297a7452054fc9d156595d1b67a6e4e6c0970e1d0a2f464 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/60/#25-recognition) SEC content: no ##### [805-60-25-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:f34a6a162e109fecf37bb03b39e6b3417f69c0a06c87d974f9b9cbcaa9200219 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall determine whether a transaction or an event is a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") formation by applying the definition of joint venture (or [corporate joint venture](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.")) and the guidance in paragraph [805-60-25-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-3) on its [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction."). If the transaction or event is not a joint venture formation, the reporting entity shall account for the transaction or event in accordance with other generally accepted accounting principles (GAAP). ##### [805-60-25-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:4d98ebefa20655079bc74119b439038ecf5a233f663006374c60538debb8c065 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting for joint venture formations as described in this Subtopic requires that a joint venture establish upon formation a new basis of accounting for its assets and liabilities in accordance with Subtopic 805-20 on [identifiable](https://asc.understandingaccounting.org/glossary/i/#identifiable "An asset is identifiable if it meets either of the following criteria: It is separable, that is, capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability, regardless of whether the entity intends to do so. It arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.") assets and liabilities, and any [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "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."). A joint venture shall recognize [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."), if any, in accordance with paragraph [805-60-25-13](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-13). Unlike the acquisition method, accounting for the formation of a joint venture does not include the identification of 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."). This Section includes the following requirements: 1. a Determining the formation date 2. b Determining whether multiple arrangements should be accounted for as a single formation transaction 3. c Determining what is part of the joint venture formation 4. d Accounting for the formation of a joint venture, as applicable: 1. 1 New basis of accounting 2. 2 Private company accounting alternatives 3. 3 Goodwill 4. 4 Measurement period 5. 5 Transfers of [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity."). #### Determining the Formation Date ##### [805-60-25-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:b944506ff2b474b879534d83cf8ebff55b694e735f1c87642c6ce7453531be82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The joint venture formation date is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the [legal entity](https://asc.understandingaccounting.org/glossary/l/#legal-entity "Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.") formation date. A joint venture’s formation date is the measurement date for the formation transaction. A joint venture shall determine a single formation date and account for its formation as of that date. A joint venture shall consider the pertinent facts and circumstances in identifying its formation date. All contributions received, or that are receivable, as of the formation date, including consideration of the guidance in paragraphs [805-60-25-4 through 25-5](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-4) on multiple arrangements that should be accounted for as a single formation transaction, constitute the joint venture formation transaction. #### Determining Whether Multiple Arrangements Should Be Accounted for as a Single Formation Transaction ##### [805-60-25-4](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:804d7821c5711ad901eeff7119d473eea33f7b1559c88f444b1087c9cbc72443 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Multiple arrangements may establish the formation of a joint venture and constitute the joint venture formation transaction. Circumstances sometimes indicate that the multiple arrangements should be accounted for as a single transaction. In determining whether to account for the multiple arrangements as a single transaction that establishes the formation, a joint venture shall consider the terms and conditions of the arrangements and their economic effects. Any of the following may indicate that the joint venture should account for the multiple arrangements as a single transaction that established the formation of the joint venture: 1. a The multiple arrangements are entered into at the same time or in contemplation of one another. 2. b The multiple arrangements form a single transaction designed to achieve an overall commercial effect. 3. c The occurrence of one arrangement is dependent on the occurrence of at least one other arrangement. 4. d One arrangement considered on its own is not economically justified, but the multiple arrangements are economically justified when considered together. ##### [805-60-25-5](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:876eec14f3bdab10c9ef63a9a344676089f40cefe2679b33c9b1bc143b1dfc0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If multiple arrangements are accounted for as a single transaction in accordance with paragraph [805-60-25-4](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-4), then the formation date shall be the measurement date for all arrangements that form part of the single formation transaction. A joint venture shall recognize identifiable assets and liabilities that are part of that single transaction when they satisfy the recognition criteria described in paragraph [805-60-25-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-2). #### Determining What Is Part of the Joint Venture Formation ##### [805-60-25-6](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:49813d444b67455848b2f345b595e47178531bb357e2ade70ae810b60c0e1c87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture and its [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") (the venturers) may enter into an arrangement upon formation that is separate from the formation of the joint venture. For example, a joint venture may enter into an arrangement with a venturer to compensate the venturer or others (such as employees of the venturers) for future services. A joint venture shall apply the guidance in paragraphs [805-10-55-24 through 55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) when determining whether a transaction involving payments to be made by the joint venture to the venturers or others is separate from or part of a joint venture formation. A joint venture shall identify any amounts that are separate from the formation of the joint venture and shall recognize the identifiable assets and liabilities that are determined to be part of the joint venture formation. Separate transactions shall be accounted for in accordance with other relevant GAAP. ##### [805-60-25-7](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:7673115dd410c89c61b04a5ad1bd5580518915e3465ba312b07d197d1a0808b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall not apply by analogy the guidance in paragraphs [805-10-55-20 through 55-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) (for a transaction that in effect settles preexisting relationships between the acquirer and the acquiree) or paragraph [805-10-25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-23) (for acquisition-related costs and transactions that reimburse the acquiree or its former owners for paying the acquirer’s acquisition-related costs). ##### [805-60-25-8](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:1cd682d5c684539ccbf559c010516f23887568e98e055403f75b571365200b8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, upon formation, a joint venture issues share-based payment awards to replace awards held by grantees of the contributed entities, then the joint venture shall apply the guidance in paragraphs [805-30-30-9 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) to allocate the fair-value-based measure of replacement share-based payment awards between preformation vesting and postformation compensation cost. Paragraphs [805-60-55-2 through 55-14](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-2) provide illustrations of the accounting for the issuance of replacement share-based payment awards in a joint venture formation. ##### [805-60-25-9](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:7561a1a3ba815ef3418172631241b1f6b53226d6cc71ba965d70e95112afc826 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the purposes of applying the business combinations guidance on arrangements that include contingent payments to employees or selling shareholders and replacement share-based payment awards referenced in paragraphs [805-60-25-6 through 25-8](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-6): 1. a The joint venture shall be viewed as analogous to the acquirer in a business combination. 2. b The venturers shall be viewed as analogous to the selling shareholders. 3. c The recognized businesses and/or assets shall be viewed as analogous to an acquiree. #### Accounting for the Formation of a Joint Venture ##### [805-60-25-10](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:90063c866591f0e3f369e02082e1e4e73868a074de0e9293e192fedfedd3acdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the formation date, a joint venture shall account for its formation by establishing a new basis of accounting for its identifiable assets and liabilities, and any noncontrolling interest, in accordance with Subtopic 805-20. ##### [805-60-25-11](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:bf8caa3e63fe97f76917a672d8aa4155ddbc6d495f64f86aa8c99014c486e427 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall account for its formation in accordance with this Subtopic regardless of whether the assets or group of assets recognized by the joint venture constitute a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") in accordance with Subtopic 805-10. ##### [805-60-25-12](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:c710f38da915e94761b4d64a6a11519e2c8ce92e319dc71243f5796ee6716d6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture that is a [private company](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") may elect to apply the accounting alternative for the recognition of identifiable intangible assets described in paragraphs [805-20-25-30 through 25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-30). In accordance with paragraph [805-20-15-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-4), a joint venture that elects to apply this accounting alternative must adopt the accounting alternative for amortizing goodwill in the Accounting Alternatives Subsections of Subtopic 350-20. ##### [805-60-25-13](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:26201f9b669b53056d642be8a76fef8814668c7ef10075266e251e344c70202f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accounting for its formation, a joint venture shall recognize goodwill as of the formation date, when applicable. The presence of more than an insignificant amount of goodwill is expected to be unusual if, at formation, the assets or group of assets recognized by the joint venture do not constitute a business in accordance with Subtopic 805-10. Paragraph [805-60-30-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-2) describes how a joint venture should measure goodwill upon its formation. ##### [805-60-25-14](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:c3a31cef702501f4c24badea17c84fe8cb5f4051e671bdd9f6651817ba5c236e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the initial accounting for a joint venture formation is incomplete by the end of the reporting period in which the formation date occurs, the joint venture may apply the measurement period guidance in paragraphs [805-10-25-13 through 25-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) for the items for which the accounting is incomplete. Joint ventures that apply the measurement period guidance shall disclose the information described in paragraph [805-60-50-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-50-3). ##### [805-60-25-15](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:bfd37ec3837c0c054aab4c4fd64cdfcb817d9af2651ed431c56c0ab44d1bd8a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a venturer transfers financial assets that are within the scope of Subtopic 860-10 to the joint venture upon formation, then the joint venture shall determine whether the transfer results in the recognition of the transferred financial assets by the joint venture by applying the guidance in Subtopic 860-10.