# ASC 805-958-45: Business Combinations — Not-for-Profit Entities — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/958/#45-other-presentation-matters) 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): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:f2de7daea3340169907bf0ded3528ee14e23181a72f81b39edc96f260e179aec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/805/958/#45-other-presentation-matters) SEC content: no ### Merger of Not-for-Profit Entities ##### [805-958-45-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:5d5e7efb170b44d7e0d1c5be3117b2d8906b5704639c24697a57c558c02d21ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [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) resulting from 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.") is a new reporting entity, with no activities before the [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective."). Thus, the new NFP's initial reporting period begins with the merger date, and the merger itself shall not be reported as activity of the new NFP's initial reporting period. Rather, the combined assets, liabilities, and net assets of the merging entities are included in the statement of financial position as of the beginning of that initial reporting period, if presented. ##### [805-958-45-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:fd5d17f0e2c2a1f38f7f12d53b48d3575794d54bf8d4b8104ae82c081c3eb699 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The new NFP's statement of activities and statement of cash flows for its initial reporting period shall do both of the following: 1. a Include in the reported amounts as of the beginning of the period (the opening amounts), such as cash and cash equivalents at the beginning of the period, the combined amounts of the merging entities' assets, liabilities, and net assets (in total and by classes of net assets) as of the merger date. The following changes shall be reflected in the opening amounts: 1. 1 Accounting changes necessary to adjust a merging entity's financial statements to generally accepted accounting principles (GAAP) in accordance with paragraph [958-805-25-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-7) 2. 2 Accounting changes to conform the individual accounting policies of the merging entities in accordance with paragraph [958-805-30-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-2) 3. 3 Changes to eliminate intra-entity balances in accordance with paragraph [958-805-30-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-4). 2. b Report activity from the merger date through the end of the reporting period. ### Acquisition by a Not-for-Profit Entity ##### [805-958-45-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:8a3b0bd9c20f0396d393ce33702b98bd1c146c76572ee6b4339dbecb42660d9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial statements 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.") (the combined entity) shall report 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.") as activity of the period in which it occurs. #### Statement of Activities ##### [805-958-45-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:b30bfb08612c7866d6019dfb69ca49ba9266f3378595777d5bcb030bb68d31a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) acquirer shall report the excess amount recognized in accordance with the guidance in paragraph [958-805-25-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29) as a separate line item on the face of its statement of activities. The separate line item shall be appropriately described, for example, as _excess of consideration paid over net assets acquired in acquisition of Entity AB_ (or as _excess of liabilities assumed over assets acquired in acquisition of Entity AB_). Example 5 (see paragraphs [958-805-55-59 through 55-61](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-59) ) illustrates one way an acquirer might present that amount in its statement of activities. ##### [805-958-45-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:8867d0ddfe777e99d69ee17586f682d870ab807a428c0d4980bb832372619b21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall report the [inherent contribution](https://asc.understandingaccounting.org/glossary/i/#inherent-contribution "A contribution that results if an entity voluntarily transfers assets (or net assets) or performs services for another entity in exchange for either no assets or for assets of substantially lower value and unstated rights or privileges of a commensurate value are not involved.") recognized in accordance with paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31) as a separate line item on the face of the statement of activities. The separate line item shall be appropriately described, for example, as _excess of assets acquired over liabilities assumed in donation of Entity XY_ or as _contribution received in donation of Entity XY_. In another situation, that excess might be described as _excess of fair value of net assets acquired over consideration paid in acquisition of Entity XY_. ##### [805-958-45-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:08f359e3c20aa07c7da002dd4d50c95ab21dd65582ec7d03f7f8b7a2dd9f35cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall classify the inherent contribution received presented in accordance with the preceding paragraph on the basis of the donor restrictions imposed on the related net assets. In classifying those net assets, an acquirer shall do both of the following: 1. a Include restrictions imposed on the net assets of the [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.") by a donor before the acquisition and those imposed by the donor of the [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.") or [nonprofit activity](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.") acquired, if any, in accordance with Section 958-605-45. 2. b Report donor-restricted [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") as [donor-restricted support](https://asc.understandingaccounting.org/glossary/d/#donor-restricted-support "Donor-restricted revenues or gains from contributions that increase net assets with donor restrictions (donors include other types of contributors, including makers of certain grants).") even if the restrictions are met in the same reporting period in which the acquisition occurs. That is, the acquirer shall not apply the reporting exception in paragraph [958-605-45-4A](https://asc.understandingaccounting.org/asc/605/958/#605-958-45-4A) to [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") acquired in an acquisition. ##### [805-958-45-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:299797b3dbf7b25928918a78ea0cc686351829178e040782fcf2eea0bbdbb3fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Thus, the inherent contribution received may increase net assets with donor restrictions, [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants)."), or some combination of those items. Example 6 (see paragraphs [958-805-55-62 through 55-67](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-62) ) illustrates the application of the preceding paragraph's guidance on reporting [donor-imposed restrictions](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.") on an inherent contribution received. ##### [805-958-45-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:e4aa3bcc6767892656914ffeb50b2163e074a3984f001151e46cd64b699f9353 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer that transfers assets as consideration for an acquired nonprofit activity or business shall assess whether that transaction satisfies a donor-imposed restriction (see the following paragraph) or otherwise results in a change in its net asset classifications (see paragraph [958-805-45-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-10)). ##### [805-958-45-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:148780cf104f39f54f542c354a4f4f212e134e14b98d0260784a80745b327cfa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, transferring consideration in an acquisition might satisfy a donor-imposed restriction on the acquirer's net assets that were restricted for acquisition of land, buildings, works of art, or other long-lived assets if the acquiree has the qualifying assets. If so, the acquirer may either report the expiration of those restrictions separately or aggregate and report them together with other similar expirations of donor-imposed restrictions during the period in which the acquisition occurs. ##### [805-958-45-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:f1f5473b137ee2c15994281dddc605237431dc98a8c5f329def69cfd3c17dfad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If transferring consideration results in changes in net asset classifications other than those described in the preceding paragraph, an NFP acquirer shall report those changes separately from both any other [reclassification of net assets](https://asc.understandingaccounting.org/glossary/r/#reclassification-of-net-assets "Simultaneous increase of one class of net assets and decrease of another. A reclassification of net assets usually results from a donor-imposed restriction (donors include other types of contributors, including makers of certain grants) being satisfied or otherwise lapsing.") and any expiration of those restrictions during the period in which the acquisition occurs. For example, an acquirer that transfers as consideration its assets with no associated donor restrictions and acquires assets from the acquiree that have associated donor restrictions shall recognize a reclassification of net assets in its statement of activities. #### Statement of Cash Flows ##### [805-958-45-11](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:839c0e7c17e2a412eea74ad68d58fd6f163856118dba5b22f9a55e3bb60e08be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall report the entire amount of any net cash flows related to an acquisition (cash paid as consideration, if any, less acquired cash of the acquiree) in the statement of cash flows as an [investing activity](https://asc.understandingaccounting.org/glossary/i/#investing-activities "Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services by the entity (other than materials that are part of the entity's inventory). Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale, as discussed in paragraphs 230-10-45-12 and 230-10-45-21."), except for cash payments made to settle a contingent consideration liability arising from the acquisition that are not paid soon after the business combination. Example 7 (see paragraphs [958-805-55-68 through 55-70](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-68) ) illustrates this requirement. In addition, cash payments made soon after the acquisition date of the business combination by an acquirer to settle a contingent consideration liability shall be classified as investing activities. ##### [805-958-45-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:25286dbb8aa46e4857492e543a96c213d0e9a5cc16604d396d454a526fcebffe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash payments, or the portion of the payments, not made soon after the acquisition date of a business combination by the NFP acquirer to settle a contingent consideration liability up to the amount of the contingent consideration liability recognized at the acquisition date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle the contingent consideration liability shall be classified as cash outflows for financing activities. Cash payments, or the portion of the payments, not made soon after the acquisition date of a business combination by the NFP acquirer to settle a contingent consideration liability that exceed the amount of the contingent consideration liability recognized at the acquisition date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle the contingent consideration liability shall be classified as cash outflows for operating activities.