# ASC 805-958-05: Business Combinations — Not-for-Profit Entities — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/958/#05-overview-and-background) 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): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:4f97fb6963ab24128cfe07ddc800e9effe6994f0e7a9615be969913b0a15ff4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/958/#05-overview-and-background) SEC content: no ##### [805-958-05-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:e66c509490bb69f5f8e502a339866a595b6b4392b509443c250616972fb4139f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on a transaction or other event in which a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "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.") (NFP) that is the reporting entity combines with one or more other NFPs, [businesses](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."), or [nonprofit activities](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "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.")in a transaction that meets the definition of a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "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.")or an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "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."). The guidance is presented in the following three Subsections: 1. a General 2. b Merger of Not-for-Profit Entities 3. c Acquisition by a Not-for-Profit Entity. ##### [805-958-05-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:218fe964fd507ea90bee091908a5d52a148ce4fea17147d244dad531ad4d47e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-05-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:6fb80083c56290e5997e4eb2ddd16ef5ec8562f61558c62328771616f40ad120 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs presented in **bold** type in this Subtopic state the main principles. All paragraphs have equal authority. ### Merger of Not-for-Profit Entities ##### [805-958-05-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:203e61d336db5f5588405ef1c18ef7be13c965f8c4c6768840dd911dda15810f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "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."). Specifically, these Subsections establish principles and requirements for how a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "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.") (NFP) does both of the following: 1. a Applies the carryover method in accounting for a merger 2. b Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of a merger. ### Acquisition by a Not-for-Profit Entity ##### [805-958-05-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:45c5e580f695383bb3d8ac62d97d54eee4a0ae1e6b14caa9a2a8ee53be9c6785 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "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."). Those standards are incremental to the guidance in Subtopics 805-10, 805-20, and 805-40. Specifically, these Subsections establish principles and requirements for how a not-for-profit entity does both of the following: 1. a Applies the acquisition method in accounting for an acquisition, including determining which of the combining entities is 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.") 2. b Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of an acquisition.