{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/958/#05-overview-and-background","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":"805-958","subtopic_title":"Not-for-Profit Entities","section":{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"805-958-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_3E91AF1C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Subtopic provides guidance on a transaction or other event </span></span><span class=\"sfragment\" id=\"sfr_3E91B0EF-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">in which a <a href=\"/glossary/n/#not-for-profit-entity\" class=\"term\" title=\"An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.\"><span>not-for-profit entity</span></a> (NFP) that is the reporting entity combines with one or more other NFPs, <a href=\"/glossary/b/#business\" class=\"term\" title=\"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.\"><span>businesses</span></a>, or <a href=\"/glossary/n/#nonprofit-activity\" class=\"term\" title=\"An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.\"><span>nonprofit activities</span></a></span></span><span class=\"sfragment\" id=\"sfr_3E91B297-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">in a transaction that meets the definition of a <a href=\"/glossary/m/#merger-of-not-for-profit-entities\" class=\"term\" title=\"A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.\"><span>merger of not-for-profit entities</span></a></span></span><span class=\"sfragment\" id=\"sfr_3E91B447-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">or an <a href=\"/glossary/a/#acquisition-by-a-not-for-profit-entity\" class=\"term\" title=\"A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.\"><span>acquisition by a not-for-profit entity</span></a>. </span></span>The guidance is presented in the following three Subsections:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\">General</div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\">Merger of Not-for-Profit Entities</div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\">Acquisition by a Not-for-Profit Entity.</div></li></ol></div></div>","snippet":"This Subtopic provides guidance on a transaction or other event in which a not-for-profit entity (NFP) that is the reporting entity combines with one or more other NFPs, businesses, or nonprofit activitiesin a transactio…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e66c509490bb69f5f8e502a339866a595b6b4392b509443c250616972fb4139f","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}},{"citation":"805-958-05-2","para":"05-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">The General Subsections provide overall guidance on the recognition of combinations involving NFPs, and they provide implementation guidance for determining whether a combination between an NFP and one or more businesses, nonprofit activities, or another NFP is a merger or an acquisition.</div></div>","snippet":"The General Subsections provide overall guidance on the recognition of combinations involving NFPs, and they provide implementation guidance for determining whether a combination between an NFP and one or more businesses…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:218fe964fd507ea90bee091908a5d52a148ce4fea17147d244dad531ad4d47e0","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}},{"citation":"805-958-05-3","para":"05-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_3E91B5FC-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Paragraphs presented in <strong class=\"ph b\">bold</strong> type in this Subtopic state the main principles. All paragraphs have equal authority.</span></span></div></div>","snippet":"Paragraphs presented in bold type in this Subtopic state the main principles. All paragraphs have equal authority.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6fb80083c56290e5997e4eb2ddd16ef5ec8562f61558c62328771616f40ad120","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b159fd255c09cce373395483bdf97870fd70bd4fc51e0bad430dd0f7294080cb","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}},{"block":"Merger of Not-for-Profit Entities","heading":null,"paragraphs":[{"citation":"805-958-05-4","para":"05-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">The Merger of Not-for-Profit Entities Subsections establish standards of financial accounting and reporting for transactions or other events that meet the definition of a <a href=\"/glossary/m/#merger-of-not-for-profit-entities\" class=\"term\" title=\"A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.\"><span>merger of not-for-profit entities</span></a>. Specifically, these Subsections establish principles and requirements for how a <a href=\"/glossary/n/#not-for-profit-entity\" class=\"term\" title=\"An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.\"><span>not-for-profit entity</span></a> (NFP) does both of the following:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_3E9CB6C8-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Applies the carryover method in accounting for a merger</span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_3E9CB7E3-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of a merger.</span></span></div></li></ol></div></div>","snippet":"The Merger of Not-for-Profit Entities Subsections establish standards of financial accounting and reporting for transactions or other events that meet the definition of a merger of not-for-profit entities. Specifically, …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:203e61d336db5f5588405ef1c18ef7be13c965f8c4c6768840dd911dda15810f","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c5f2355d7bcf5463c5ccb6581a9a91bf1924c8df6c9d645a9b60f0ec7c67cbea","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}},{"block":"Acquisition by a Not-for-Profit Entity","heading":null,"paragraphs":[{"citation":"805-958-05-5","para":"05-5","html":"<div class=\"asc-body\"><div class=\"norm-text\">The Acquisition by a Not-for-Profit Entity Subsections establish standards of financial accounting and reporting for transactions or other events that meet the definition of an <a href=\"/glossary/a/#acquisition-by-a-not-for-profit-entity\" class=\"term\" title=\"A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.\"><span>acquisition by a not-for-profit entity</span></a>. Those standards are incremental to the guidance in Subtopics <a altsource=\"GUID-4F5CD9E3-D073-4C55-8027-07F6D2F8A035.ditamap\" class=\"ditamap\">805-10</a>, <a altsource=\"GUID-4C20CF40-DD8D-4F61-94A7-35C477A5F96C.ditamap\" class=\"ditamap\">805-20</a>, and <a altsource=\"GUID-E9A4D3BF-818B-40EC-9167-30B8EFF1D642.ditamap\" class=\"ditamap\">805-40</a>. Specifically, these Subsections establish principles and requirements for how a not-for-profit entity does both of the following:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_3EA60FF4-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Applies the acquisition method in accounting for an acquisition, including determining which of the combining entities is the <a href=\"/glossary/a/#acquirer\" class=\"term\" title=\"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.\"><span>acquirer</span></a></span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_3EA610E4-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of an acquisition.</span></span></div></li></ol></div></div>","snippet":"The Acquisition by a Not-for-Profit Entity Subsections establish standards of financial accounting and reporting for transactions or other events that meet the definition of an acquisition by a not-for-profit entity. Tho…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:45c5e580f695383bb3d8ac62d97d54eee4a0ae1e6b14caa9a2a8ee53be9c6785","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fb2252aaba0b801a3213b43d94b83a6af364d4c7de1effcb0f8ff3b0d06b4f0b","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f97fb6963ab24128cfe07ddc800e9effe6994f0e7a9615be969913b0a15ff4d","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f97fb6963ab24128cfe07ddc800e9effe6994f0e7a9615be969913b0a15ff4d","downloaded_from":"2026-09-10T01:27:41.131Z","last_downloaded_at":"2026-09-10T01:27:41.131Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477457","source_sha256":"cdc42b3c6fa0c3c7791efb7b15638c51a6c88ef098036433a93378d31b7b20ae"}}