{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/958/#55-implementation-guidance-and-illustrations","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":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"805-958-55-1","para":"55-1","html":"
This implementation guidance addresses the application of the definitions merger of not-for-profit entities and acquisition by a not-for-profit entity in making the determination required by paragraph 958-805-25-1 as to whether a transaction is a merger or an acquisition. Ceding control to a new NFP is the sole definitive criterion for identifying a merger, and one entity obtaining control over the other is the sole definitive criterion for an acquisition. If the participating entities in a combination retain shared control of the new not-for-profit entity (NFP), they have not ceded control. To qualify as a new NFP, the combined entity must have a newly formed governing body; a new NFP often is, but need not be, a new legal entity. The formation of a new NFP is not a pertinent factor in assessing whether one entity has obtained control over another.
","snippet":"This implementation guidance addresses the application of the definitions merger of not-for-profit entities and acquisition by a not-for-profit entity in making the determination required by paragraph 958-805-25-1 as to …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c8dada3a1e8e184b2da33740e506ad630f4cb42049b0268dee9f4b433bfcb936","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-2","para":"55-2","html":"
Other transaction-specific characteristics can help in determining whether a particular combination is a merger, an acquisition, or another form of combination, such as the formation of a joint venture. The other characteristics, discussed in paragraphs
958-805-55-3 through 55-8
, are indicators that often may help in identifying a merger. The participating entities should consider all of those characteristics and any other pertinent factors. Based on the preponderance of the evidence, the parties must make a professional judgment about whether each of the governing bodies has ceded control of those entities to create a new NFP, whether one entity has acquired the other, or whether another form of combination, such as the formation of a joint venture, has occurred.
","snippet":"Other transaction-specific characteristics can help in determining whether a particular combination is a merger, an acquisition, or another form of combination, such as the formation of a joint venture. The other charact…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6ec7ccaccb5ce53f5b539c289e21e592dbb5c79c0ce6320e1a51eff14056e6a2","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-3","para":"55-3","html":"
Determining whether each of the governing bodies of the entities participating in a combination cede control of those entities to a new NFP requires assessing the characteristics of all of the following:
  1. a
    The process leading to the combination
  2. b
    The participants to the combination
  3. c
    The combined entity.
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In a merger, generally no one party dominates or is capable of dominating the negotiations and process leading to the formation of the combined entity. In an acquisition, on the other hand, one party—the acquirer—often dominates that process, and sometimes may in effect dictate the terms of the transaction, including the date the combination occurs.
","snippet":"In a merger, generally no one party dominates or is capable of dominating the negotiations and process leading to the formation of the combined entity. In an acquisition, on the other hand, one party—the acquirer—often d…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8c427f1fad4e446b800bc733c76e081ff6481e828068de1c30cd4d5a0965d6a1","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-5","para":"55-5","html":"
The characteristics of the entities participating in a combination and of the resulting combined entity that can help to distinguish between a merger and an acquisition fit into the following two groups:
  1. a
    Governance and related control powers
  2. b
    Financial capacity.
","snippet":"The characteristics of the entities participating in a combination and of the resulting combined entity that can help to distinguish between a merger and an acquisition fit into the following two groups:\n(a) Governance a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:401661573850abac6a163139c531cfb968e9b5f51237805ae63439229aceac1e","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-6","para":"55-6","html":"
For example, one entity appointing significantly more of the governing board of the newly formed entity, retaining significantly more of its key senior officers, or retaining its bylaws, operating policies, and practices substantially unchanged is more likely to be a feature of an acquisition than of a merger. Similarly, the relative financial strength and relative size of the participants in the combination may help to determine whether one participant is able to dominate the process leading to the combination. For example, if one entity is financially strong and the other is experiencing financial difficulty, the stronger entity may be able to dominate the transaction, which would indicate that the transaction is an acquisition rather than a merger. Similarly, a participant that is substantially larger than each of the others in terms of revenues, assets, and net assets may be able to dominate the transaction. However, relative size, like relative financial strength and the other indicators discussed, is only one characteristic that may help to distinguish between a merger and an acquisition in particular situations—none of the indicators, by itself, is determinative. As discussed in paragraph 958-805-55-1, ceding of control is the sole definitive criterion for a merger.
","snippet":"For example, one entity appointing significantly more of the governing board of the newly formed entity, retaining significantly more of its key senior officers, or retaining its bylaws, operating policies, and practices…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ade4569625273d56008d0779a312030cccb0e3754c7c2f5175d12a7010ee9bfc","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-7","para":"55-7","html":"
Unlike an acquisition by a not-for-profit entity, a merger generally is accomplished by combining all of the assets and liabilities of the merging entities into a newly formed entity that assumes all of the assets and liabilities of the participating entities without a transfer of cash or other assets to those entities or any of their owners, members, sponsors, or other designated beneficiaries. Also, unlike the formation of a joint venture in which the venturers continue to exist and usually hold a financial interest, the creators of the merged entity cease to exist as autonomous entities and no one holds financial interests in the merged entity. Moreover, the merged entity generally has a perpetual life rather than a life that is limited by the period of the venture or that allows for one or more of the participating entities to opt out of the venture or other arrangement.
","snippet":"Unlike an acquisition by a not-for-profit entity, a merger generally is accomplished by combining all of the assets and liabilities of the merging entities into a newly formed entity that assumes all of the assets and li…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:199aef4290818babb9a96df9224e23041c03fc44732f8125abb5b5dd717e283e","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-8","para":"55-8","html":"
A particular combination of business entities may seem similar in some aspects to a merger of not-for-profit entities. For example, a new entity may be formed to effect a business combination, and no consideration is exchanged in some business combinations. Nevertheless, the guidance in this Subtopic on mergers does not apply in a business combination, and it shall not be applied by analogy.
","snippet":"A particular combination of business entities may seem similar in some aspects to a merger of not-for-profit entities. For example, a new entity may be formed to effect a business combination, and no consideration is exc…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:94a647818b161235a5bb4d7f84ef26152bbfba8db4ba4a8a2a2a2987a91378dc","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4eef99c515f3d8d50b6af1de4709bc9bd645c9262c4a15764efe57e47d62d567","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"805-958-55-9","para":"55-9","html":"
This Example has two Cases, which share the assumptions in paragraphs
958-805-55-10 through 55-14
. The Cases illustrate the application of paragraph 958-805-25-1, which requires an NFP to determine whether a transaction or other event is a merger or acquisition, and the related implementation guidance in paragraphs
958-805-55-1 through 55-8
. The Cases are:
  1. a
    A combination that is a merger (Case A)
  2. b
    A combination that is neither a merger nor an acquisition (Case B).
","snippet":"This Example has two Cases, which share the assumptions in paragraphs 958-805-55-10 through 55-14. The Cases illustrate the application of paragraph 958-805-25-1, which requires an NFP to determine whether a transaction …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:adf62e5458b6a8b0ac86f8b1aabdadcf65618a2032500150d711523bb8959697","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-10","para":"55-10","html":"
A community foundation that is a major grantor to social service entities in its metropolitan area begins a program to encourage its grantees to consider opportunities to improve their services through collaborative arrangements, including mergers, acquisitions, and joint ventures. In January 20X9, the community foundation convenes a meeting of the chief officers and chairpersons of several charities that provide complementary and, to some extent, overlapping services within its metropolitan area. Following that meeting, representatives of Charity A and Charity B see fruitful opportunities for collaborative efforts based on their geographic proximity and service areas; similar missions, programs, and operating practices; and complementary financial strengths with one having a much larger base of current contributors and unpaid volunteers and the other having a larger endowment and base of investment income. Charity A is 30 to 40 percent larger than Charity B in terms of most individual financial measures, including revenues and the fair value of assets and net assets.
","snippet":"A community foundation that is a major grantor to social service entities in its metropolitan area begins a program to encourage its grantees to consider opportunities to improve their services through collaborative arra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:683a219327dd5d58a0773433c3ab53b4787d02349580682c88b1bbbaab01de96","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-11","para":"55-11","html":"
In February 20X9, the governing boards of Charity A and Charity B authorize the formation of an exploratory committee to recommend whether the two charities should combine and, if so, to develop a plan for implementing a combination. The committee consists of three members from Charity A and the executive director and one additional member from Charity B, with administrative support from the legal counsel of each entity. Each of the five committee members has one vote, and a recommendation of the committee requires at least four votes of the members. Its recommendation is to be accompanied by the reasons underlying both the recommendation of the committee and any dissenting votes.
","snippet":"In February 20X9, the governing boards of Charity A and Charity B authorize the formation of an exploratory committee to recommend whether the two charities should combine and, if so, to develop a plan for implementing a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:418f74ea6bea8f60c03204c6ead2d6ab49ba20c3343c6a12c96928d99805b81d","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-12","para":"55-12","html":"
In July 20X9, after completing its discussions, the committee recommends, with the full support of all five of its members, that Charity A and Charity B combine under an agreement with the following key provisions:
  1. a
    A new NFP named Charity AB is to be formed.
  2. b
    The chief executive officer of Charity B will be offered the position of chief executive officer of Charity AB for a term of at least two years.
  3. c
    The initial Board of Charity AB will consist of 15 members. Charity A will appoint 9 of the initial members, preferably from the members of its existing 25-member board and its current chief executive officer. Charity B will appoint 6 of the initial members, preferably from its existing 50-member board.
  4. d
    The charter of Charity AB will provide for a maximum of 25 board members. The committee recommended that a search be undertaken to add 6 new members within a year, with each new member requiring approval by a minimum of 10 of the 15 initial members.
  5. e
    The headquarters of Charity A and its underlying lease (which has eight remaining years) will be retained.
  6. f
    A transition committee consisting of two members each from the current boards of Charity A and Charity B, under the authority of the chief executive officer of Charity AB, will be appointed to perform the following duties:
    1. 1
      Submit a formal plan of merger to each of the governing boards and, if approved, seek approval from the appropriate state authorities.
    2. 2
      Seek opportunities to sublease the headquarters space of Charity B for the remaining two-year lease term or to utilize that space for program activities.
    3. 3
      Interview existing staff and other candidates for senior management positions.
    4. 4
      Make recommendations about each of the following:
      1. i
        Eliminating program and operating redundancies, including severance packages for any terminated staff.
      2. ii
        Improving the current operating policies and practices of Charity A and Charity B.
      3. iii
        Revising employee benefit plans with the objective of adopting unified plans for Charity AB's employees without diminishing the overall benefits being offered to existing employees.
","snippet":"In July 20X9, after completing its discussions, the committee recommends, with the full support of all five of its members, that Charity A and Charity B combine under an agreement with the following key provisions:\n(a) A…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2707c3a1de337d8ca82901ecdfc1ead3e394077a613053f960ce22aedb34c3a","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-13","para":"55-13","html":"
In discussing revisions of employee benefit plans, the exploratory committee's report notes that the committee interviewed the current chief executive officers of Charity A and Charity B and found both well qualified to serve as the chief executive officer of Charity AB. However, although both chief executive officers are in their early 60s and are eager to assist Charity AB through the initial transition period, the chief executive officer of Charity A had been contemplating retiring within the next year. The committee saw no need to open the chief executive officer search to other candidates.
","snippet":"In discussing revisions of employee benefit plans, the exploratory committee's report notes that the committee interviewed the current chief executive officers of Charity A and Charity B and found both well qualified to …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:395e277a03b8df797aee39c8cd153a87a16af4380fb290587a24cb47849db591","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-14","para":"55-14","html":"
During August 20X9, each of the governing boards of Charity A and Charity B tentatively approves the committee recommendations and appoints its members to the recommended transition committee. The boards also asked their respective nominating committees to make recommendations to each of their boards about the initial members to be appointed to the board of Charity AB. During October, each board approved the plan for their combination, and it was submitted to the state for approval. During November, the plan received the required state approval, and the combination became effective on January 1, 20X0, as proposed.
","snippet":"During August 20X9, each of the governing boards of Charity A and Charity B tentatively approves the committee recommendations and appoints its members to the recommended transition committee. The boards also asked their…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:34d56efc50c3adfcff5ff942a7da6cddd3337266c0cc6f186d4ae3cf80bd8a0a","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-15","para":"55-15","html":"
In this Case, the executive committee recommends (and each of the governing boards of Charity A and B approves) that to minimize costs the corporate charter of Charity A is to be retained as the charter of Charity AB. The assets and liabilities of Charity B are to be transferred to Charity AB and Charity B will cease to exist. On the date the merger becomes effective (as approved by the appropriate state official), the corporate charter will be amended to reflect the new NFP's name and its expanded mission, which is to encompass Charity B's research and advocacy functions as well as the charitable functions of both entities. Thus, in effect, both Charity A and Charity B will cease to exist in their precombination forms.
","snippet":"In this Case, the executive committee recommends (and each of the governing boards of Charity A and B approves) that to minimize costs the corporate charter of Charity A is to be retained as the charter of Charity AB. Th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a4d9a69892c52b964d62a1fd738c50c143ff504cf197a6029550268057bef834","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-16","para":"55-16","html":"
Paragraph 958-805-55-4 describes the assessments required when determining whether each of the governing bodies of the participating entities in a combination cedes control of those entities to a new NFP. On the basis of the evidence, both Charity A and Charity B participated in the process leading to the combination. Moreover, the evidence indicates that neither charity was experiencing financial difficulties or other circumstances that might allow the other entity to dominate the negotiations leading to and through the approval of the transaction by both charities. Neither charity appointed significantly more of Charity AB's initial governing board. Although the chief executive officer of Charity B is the only key senior officer for which a retention decision has been made, neither charity dominated the selection process of the governing board and senior management, collectively. Lastly, although the corporate charter and bylaws of Charity A were retained, the stated mission of Charity AB includes the operating objectives of Charity B. In addition, the bylaws and operating policies and practices of Charities A and B were similar. Thus, on the basis of the preponderance of the evidence, it is determined that the combination is a merger—that the governing boards of Charity A and Charity B each ceded control to the new NFP, Charity AB, which has a newly formed governing body.
","snippet":"Paragraph 958-805-55-4 describes the assessments required when determining whether each of the governing bodies of the participating entities in a combination cedes control of those entities to a new NFP. On the basis of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e10fd68a8e2e44ae258e769d74de4520c02bc44b5de3c71032ceb87a55a125b5","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-17","para":"55-17","html":"
In this Case, Charity AB is established as a new legal entity with its own charter. Charity A and Charity B will each continue to exist with its current governing body but cease to operate its existing programs. Each has the power to veto nominations for future members of Charity AB's governing body for two years. Each will retain $200,000 in operating cash and all of the investment assets of its donor-restricted endowment funds.
","snippet":"In this Case, Charity AB is established as a new legal entity with its own charter. Charity A and Charity B will each continue to exist with its current governing body but cease to operate its existing programs. Each has…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:28515f5a84e456cc3326442ae7c2dd581d487082cc6187fe9eaa4fb18f017790","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-18","para":"55-18","html":"
Charity A and Charity B each have the right to dissolve Charity AB. If the right is exercised, it will result in a reversion of assets, liabilities, and staff. Upon reversion, all staff will be retained by their respective legacy entity. In addition, the assets and liabilities of Charity AB will be transferred to each legacy entity in a distribution ratio equivalent to the fair value of the net assets contributed by each (which was determined to be about 65:35 at the combination date). Two years following the combination date, Charity A and Charity B will dissolve and transfer their remaining assets to Charity AB unless either exercises its right of withdrawal.
","snippet":"Charity A and Charity B each have the right to dissolve Charity AB. If the right is exercised, it will result in a reversion of assets, liabilities, and staff. Upon reversion, all staff will be retained by their respecti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6c814d283e74d1d6409591cdcc4560dad0f23aef267e3e997c88d87da30ae6cd","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-19","para":"55-19","html":"
In this Case, it appears that Charity A and Charity B may intend to combine after the passage of a two-year period. But neither of their governing boards has ceded control, as defined, and neither entity has obtained control of the other. Therefore, the combination is neither a merger nor an acquisition; rather, on the basis of the preponderance of the evidence, it appears that Charity AB is a joint venture of Charity A and Charity B.
","snippet":"In this Case, it appears that Charity A and Charity B may intend to combine after the passage of a two-year period. But neither of their governing boards has ceded control, as defined, and neither entity has obtained con…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4bd1737ba5d91c023cd9f143b5264af69cddd01babc2a584bc55c263051d7a0a","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-20","para":"55-20","html":"
Charity C provides health and human services to residents of City and two adjoining counties, referred to as Metro Area, a substantial portion of which is provided through its support to grantee agencies in its area. Charity D provides health and human services to residents of County, which adjoins the northern part of Metro Area. The charities share a common mission and operate under the same national brand name; that is, the charities operate as Brand Name of Metro Area and Brand Name of County. Each charity receives contributions from the residents of its service area.
","snippet":"Charity C provides health and human services to residents of City and two adjoining counties, referred to as Metro Area, a substantial portion of which is provided through its support to grantee agencies in its area. Cha…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d809e877010a528288f01e40def12742e12cd67b8eb1cb902e986d18dae65f3f","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-21","para":"55-21","html":"
In 20X1, the regions served by both charities were experiencing sharp economic declines, and contributions to both charities were declining as a result. To create efficiencies, the charities entered into two joint operating agreements. Under the first agreement, they conduct joint annual fundraising campaigns. Under the second, Charity C provides all information technology and marketing services to Charity D for a nominal fee.
","snippet":"In 20X1, the regions served by both charities were experiencing sharp economic declines, and contributions to both charities were declining as a result. To create efficiencies, the charities entered into two joint operat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f12aa8776c794c95dfd3fe5bd8d84571718084c622d5ec92eae5e1655ed6724a","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-22","para":"55-22","html":"
By January 20X4, Charity D has successfully implemented three innovative program services, but it has not been able to improve its declining contribution revenues. Despite some staff layoffs, it continues to experience significant operating deficits. In March 20X4, the chief executive officers of the two charities encouraged their respective executive committees to explore opportunities to combine and restructure their operations and governance. In July 20X4, the executive committees of both charities formed a joint strategy committee to investigate opportunities to create the best charity for the combined service area and to develop recommendations for accomplishing that objective.
","snippet":"By January 20X4, Charity D has successfully implemented three innovative program services, but it has not been able to improve its declining contribution revenues. Despite some staff layoffs, it continues to experience s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:01be03c52dc9d54687244e30f7668f5a40aadfd14b39120ecefd31ca1c9c55b0","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-23","para":"55-23","html":"
The strategy committee members include the chief executive officers and 6 directors from each charity and 10 community leaders from the area. It is chaired by the chief executive officer of a major corporation in the area who also is a director of Charity C. In January 20X5, although the strategy committee's work was ongoing, the executive committees of both charities unanimously approved and advanced to the full governing board of each charity the committee's recommendations for the governance model for a new charity to be formed by consolidating and dissolving both of the existing charities and its recommendations for the new charity's name, mission, vision, and business model. That business model is the same as the model Charity D had adopted in 20X2, under which it successfully implemented three new programs. Charity C wanted to leverage the experiences of Charity D.
","snippet":"The strategy committee members include the chief executive officers and 6 directors from each charity and 10 community leaders from the area. It is chaired by the chief executive officer of a major corporation in the are…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8aa6e352842c2a436f286755380901569ad1fb957db80f5319db04224f3ea838","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-24","para":"55-24","html":"
On November 1, 20X5, the governing boards of both charities approved the strategy committee's plan of consolidation. The chief executive officers of both charities executed a joint memorandum of understanding, which includes the following statements:
  1. a
    The charities will create a new NFP named Charity E upon completing the due diligence process and obtaining approvals of the state authorities and Internal Revenue Service (IRS) qualification as a tax exempt public charity, which will be concluded no later than December 31, 20X5. Charity E incorporates Charity C's name into its own.
  2. b
    The bylaws of Charity E will establish a board of directors of up to 30 members.
  3. c
    The board of directors of Charity C will nominate 15 of the initial members of the board of Charity E. (All 15 nominees selected were current members of the board of directors of which 13 were also members of the executive committee.) The board of directors of Charity D will nominate five of the initial members.
  4. d
    Charity E will have four local community committees representing four geographic areas, one of which is County. Each committee will provide advice to the board of directors for local decision-making consistent with Charity E's mission and vision. At each election after the installation of the initial board, each local community committee may nominate up to four candidates for a one-year renewable term on the board of Charity E. The board will select a minimum of two members from each local community committee, for a total of eight additional members.
  5. e
    Amendments to the articles of incorporation or bylaws, significant transactions (a merger, reorganization, termination, or sale of substantially all assets), and reductions in the authority and responsibilities of local community committees will require an affirmative vote of at least 60 percent of the board of directors.
  6. f
    Each charity's board of directors will appoint five members to a joint transition committee, with the charge of and authority to implement the plan of consolidation.
  7. g
    Until the consolidation is complete, each charity's board of directors agrees to do the following:
    1. 1
      Use reasonable efforts to conduct their activities consistent with their current mission allowing for changes consistent with moving to the business model, mission, and vision of Charity E.
    2. 2
      Preserve their tax-exempt status and relationships with contributors and grantee agencies.
    3. 3
      Not materially amend or modify their articles of incorporation or bylaws.
  8. h
    During the first three years after the combination, Charity E will do the following:
    1. 1
      Use the business model (direct-services based) to increase its capacity for making sustained change to address key social needs.
    2. 2
      Fund and maintain no less than four geographic sites, with one in County, to allow for community involvement in campaign, community impact programs, marketing, and public policy.
    3. 3
      Fund and maintain the financial and program commitments of both of the consolidating charities to their respective grantee agencies, subject to available funding.
    4. 4
      Strive to expand Brand Name program of Charity D and its strategies throughout Charity E's service area. Given the success of that program, its current staff will be given full opportunity and consideration to lead the Brand Name program for Charity E.
    5. 5
      Not reduce significantly the current staff of the charities. It is understood that reassignments or realignments are probable. Any reductions of the staff of Charity D will be made in consultation with its former chief executive officer, who will become the vice president for program services and strategic development of Charity E.
  9. i
    The obligations of Charity D, which are outlined in the memorandum of understanding, are subject to approval by its board of directors. The obligations of Charity C, which also are outlined in the memorandum of understanding, are subject to approval by its executive committee.
","snippet":"On November 1, 20X5, the governing boards of both charities approved the strategy committee's plan of consolidation. The chief executive officers of both charities executed a joint memorandum of understanding, which incl…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b343c7a8bd49a04e30451e01c7ebf309f41b876df9c8a18b0071b4ea2c10180b","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-25","para":"55-25","html":"
The following table summarizes certain facts for each of the combining charities and the initial staffing of the combined Charity E.
","snippet":"The following table summarizes certain facts for each of the combining charities and the initial staffing of the combined Charity E.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0499a981564173819457c6921c99baa5cdc269a8c9d319e52d4b418cca27d387","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-26","para":"55-26","html":"
Some factors in this Example might suggest that the combination is a merger. For example, the evidence indicates that each charity participated in the process leading to the combination. That is, their governing boards both approved the formation of the strategy committee, both were represented on that committee, and both had the opportunity to accept or reject the recommendations of the committee. In addition, the legal dissolution of both charities to form Charity E resulted in a new NFP with a newly formed governing body, to which the governing boards of both charities ceded control of their operations and net assets, at least in legal form.
","snippet":"Some factors in this Example might suggest that the combination is a merger. For example, the evidence indicates that each charity participated in the process leading to the combination. That is, their governing boards b…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:820a50076ad5c3e75e1d2bcae470f537dc53ea4d2bf40a9b80d61ba9fff929b3","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-27","para":"55-27","html":"
However, other factors indicate that one charity acquired the other, that is, that the governing board of the financially stronger and larger Charity C dominated the terms of the combination and did not, in substance, cede control of its operations and net assets to the governing board of Charity E. Those factors include the following:
  1. a
    Charity C's dominance in the selection of 15 of the 20 members of the initial board of directors of Charity E. It also seems that the governing power center of Charity C—its executive committee—continues to control because 13 of its members continued as members of the initial 20-member board of Charity E and, together with the other 2 board members from that charity, would have a strong (if not dominating) voice in selecting at least 6 of the minimum of 8 members yet to be selected from the nominees of the 4 local community committees.
  2. b
    Charity C's dominance in the selection of the key senior officers. The table in paragraph 958-805-55-25 indicates that early on it was decided that the chief executive officer of Charity C would be retained as chief executive officer and president of Charity E, that the chief executive officer of Charity D of County would become one of Charity E's vice presidents, and that there was no need to open the chief executive officer search process to external parties.
  3. c
    Charity C's dominance in terms of financial capability and viability. Charity D has been experiencing financial difficulties and since 20X1 has been somewhat dependent on Charity C to provide back-office and information technology support for a below-cost fee.
","snippet":"However, other factors indicate that one charity acquired the other, that is, that the governing board of the financially stronger and larger Charity C dominated the terms of the combination and did not, in substance, ce…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3396fd90958638e663d1711740ef2dc775ce620b27a1970c0973ebfa4df85530","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-28","para":"55-28","html":"
In addition, it appears that Charity C wanted to preserve and obtain certain aspects of Charity D's operations and resources, including the following:
  1. a
    Charity D's expertise in implementing new programs developed and promoted by the national entity
  2. b
    Charity D's existing donor relationships
  3. c
    Charity D's residual net assets.
","snippet":"In addition, it appears that Charity C wanted to preserve and obtain certain aspects of Charity D's operations and resources, including the following:\n(a) Charity D's expertise in implementing new programs developed and …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d9f9c5175df1081dc786c31e8156a04ea926685f279c4c48e391f2f67fa7e1d","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-29","para":"55-29","html":"
Charity C also apparently wanted to restructure its governance to have a much smaller governing board of 20 to 30 high-impact community leaders (like the members of its existing executive committee). Charity C's wishes concerning aspects of Charity D's operations and resources and restructuring its governance do not relate directly to the indicators that help to distinguish a merger from an acquisition. But those additional factors are part of what is considered in making a judgment on the basis of the preponderance of the evidence, as this Subtopic requires.
","snippet":"Charity C also apparently wanted to restructure its governance to have a much smaller governing board of 20 to 30 high-impact community leaders (like the members of its existing executive committee). Charity C's wishes c…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d97bd996d40920b880b4cf6bf8c0de5b5179fcd7323857640379dc5630f1f138","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-30","para":"55-30","html":"
On the basis of the preponderance of the evidence, it is determined that Charity C acquired Charity D. The acquisition was achieved by, in effect, a gift of Charity D to Charity C. Although each charity legally dissolved, the substance of the combination is much the same as if Charity C first restructured its board of directors along the lines desired and then absorbed Charity D and added five of its nominees to the restructured board.
","snippet":"On the basis of the preponderance of the evidence, it is determined that Charity C acquired Charity D. The acquisition was achieved by, in effect, a gift of Charity D to Charity C. Although each charity legally dissolved…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:18a6d51181e70b7a4a92856865dbc6b6410b117e7d36dce60722afe4000d2aa6","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-31","para":"55-31","html":"
Despite the process and legal form used, the economic substance of the transaction is judged to be one in which the central governing power residing in the executive committee of Charity C was not surrendered; that is, the governing body of Charity C did not cede control of the entity to the governing body of Charity E. The transaction is an acquisition in which the economic substance and existence of Charity C (the acquirer) continues, although with a different name and expanded operations.
","snippet":"Despite the process and legal form used, the economic substance of the transaction is judged to be one in which the central governing power residing in the executive committee of Charity C was not surrendered; that is, t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c803312cd19e8f47e2b21214fdb11e29dc74d94a234b18e7b96ca64906fd3d8a","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:22425fa259a2dcd4ca10a6707ffe5ad34b096ad40040166ffb4295e090cb373a","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"block":"Merger of Not-for-Profit Entities","heading":"Illustrations","paragraphs":[{"citation":"805-958-55-32","para":"55-32","html":"
This Example illustrates some of the disclosures required for a merger of not-for-profit entities in paragraphs
958-805-50-1 through 50-6
. The Example assumes that three not-for-profit entities (NFPs) merge to create a new NFP. NFP F, NFP G, and NFP H merge to create NFP I, which is a public entity.
","snippet":"This Example illustrates some of the disclosures required for a merger of not-for-profit entities in paragraphs 958-805-50-1 through 50-6. The Example assumes that three not-for-profit entities (NFPs) merge to create a n…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c21b53caba38f72e55ebb04ad8311b5ffa016a4534ab09b35edeedbf4a61adbd","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-33","para":"55-33","html":"
Although this Example presents the illustrative notes separately, NFP I might present the disclosures illustrated in a single note. The required supplemental information is presented in a separate schedule outside the notes. This Example illustrates the following disclosures:
  1. a
    Description of the merger
  2. b
    Significant asset not required to be recognized
  3. c
    Conforming accounting policies
  4. d
    Major classes of assets, liabilities, and net assets
  5. e
    Required supplemental information.
","snippet":"Although this Example presents the illustrative notes separately, NFP I might present the disclosures illustrated in a single note. The required supplemental information is presented in a separate schedule outside the no…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0a7e028b949cdadfe8cca273b1c2360bdc6ae386264856375bcf71e76bbd9bc1","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-34","para":"55-34","html":"
The following note illustrates the disclosures required by paragraphs 958-805-50-2(a) through (c).
","snippet":"The following note illustrates the disclosures required by paragraphs 958-805-50-2(a) through (c).\nNFP I was formed on June 15, 20X1, as the result of a merger of three local not-for-profit entities—NFP F, NFP G, and NFP…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:be1b7e94b5c0f3e9f8018e64888ce9f083427b063d298c8c89a33d193623ebc5","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-35","para":"55-35","html":"
The following note illustrates the disclosures required by paragraph 958-805-50-2(d)(2).
","snippet":"The following note illustrates the disclosures required by paragraph 958-805-50-2(d)(2).\nAt June 15, 20X1, NFP F had a conditional promise receivable of $1.4 million from a donor to be used to construct a new after-schoo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd4b03ff9b33702d3b667376029eeef1a08d99d778199204856028c8b343cd07","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-36","para":"55-36","html":"
The following note illustrates the disclosure required by paragraph 958-805-50-2(e).
","snippet":"The following note illustrates the disclosure required by paragraph 958-805-50-2(e).\nNFP G and NFP H have a policy to report donor-restricted contributions whose restrictions are met in the same reporting period as suppo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1fff47e77fc71a63eee7fcddaef8186f13a00705b385b96dd2cb9fd75acb0e55","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-37","para":"55-37","html":"
The following note illustrates the disclosures required by paragraph 958-805-50-2(d).
","snippet":"The following note illustrates the disclosures required by paragraph 958-805-50-2(d).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b25b3f79bafed56ca994e3d3715ce7751877962610ebfaac187ed09b26da670f","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-38","para":"55-38","html":"
The following supplemental information is required by paragraph 958-805-50-3. If NFP I presents comparative financial information in the annual reporting period following the year in which the merger occurs, the supplemental pro forma information would be presented in the financial report of that year as well.
","snippet":"The following supplemental information is required by paragraph 958-805-50-3. If NFP I presents comparative financial information in the annual reporting period following the year in which the merger occurs, the suppleme…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b6afa5dab2c6798e128cf881d0cc2bb6fadf08f11380da6c8d8b15928d5588c3","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:20e508ac4092504487096113792622516e69faabccdab338c6740d1689a1f86c","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"block":"Acquisition by a Not-for-Profit Entity","heading":"Implementation Guidance","paragraphs":[{"citation":"805-958-55-39","para":"55-39","html":"
This Subsection provides implementation guidance, which is incremental to the guidance in Sections 805-10-55 and 805-20-55, on all of the following:
  1. a
    Definition of a business and a nonprofit activity
  2. b
    Identifying the acquirer
  3. c
    Intangible assets that are identifiable
  4. d
    Transactions between entities under common control.
","snippet":"This Subsection provides implementation guidance, which is incremental to the guidance in Sections 805-10-55 and 805-20-55, on all of the following:\n(a) Definition of a business and a nonprofit activity\n(b) Identifying t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bf66cd663b136a59b85ea3853091db0e58eb0890760fe7ec42c702149dc6f1b7","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-40","para":"55-40","html":"
Paragraph 805-10-15-4 uses the term business to differentiate an acquisition of an integrated set of activities and assets that is within the scope of Topic 805 from an acquisition of a group of assets that is outside its scope. This Subtopic uses that same definition. In addition to the term business, this Subtopic also uses the term nonprofit activity to differentiate an acquisition of an integrated set of activities and assets that is within its scope from an acquisition of a group of assets that is outside its scope. It builds on the definition of a business in defining a nonprofit activity; each is defined as an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits. The nature of the benefits provided distinguishes a business from a nonprofit activity. Thus, in applying the guidance in paragraphs
805-10-55-3A through 55-9
, references to a business or businesses also refer to a not-for-profit activity or not-for-profit activities, and references to the three elements of input, process, and output also include outputs that provide or have the ability to provide goods or services to beneficiaries, customers, or members that fulfill the purpose or mission for which a not-for-profit entity (NFP) exists.
","snippet":"Paragraph 805-10-15-4 uses the term business to differentiate an acquisition of an integrated set of activities and assets that is within the scope of Topic 805 from an acquisition of a group of assets that is outside it…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b6a147b2fe6e10ec63a3d4a7d8244574a023577b5376a301ef978d1a996bbd21","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-41","para":"55-41","html":"
Furthermore, because an integrated set of activities that is in the development stage might not have outputs, an acquirer should consider, in addition to the factors in paragraph 805-10-55-5D, whether the set will be able to obtain access to beneficiaries or members that will purchase or otherwise receive the outputs that fulfill the purpose or mission for which an NFP exists.
","snippet":"Furthermore, because an integrated set of activities that is in the development stage might not have outputs, an acquirer should consider, in addition to the factors in paragraph 805-10-55-5D, whether the set will be abl…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d5cffa2111edf1849755137726f1f195c5fc10e6256da5edff0d4ff26d348298","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-42","para":"55-42","html":"
Paragraph 958-805-25-15 provides guidance used by the combining entities to determine the acquirer. If applying the guidance in that paragraph does not clearly indicate which of the combining entities is the acquirer, paragraph 958-805-25-16 requires that the combining entities consider the factors in paragraphs
805-10-55-10 through 55-15
and in paragraphs
958-805-55-43 through 55-46
.
","snippet":"Paragraph 958-805-25-15 provides guidance used by the combining entities to determine the acquirer. If applying the guidance in that paragraph does not clearly indicate which of the combining entities is the acquirer, pa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:14d9b7a14caa049a7cd5b3f7d54a0740d1a85a63c0da06ba8427bae67af8e53f","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-43","para":"55-43","html":"
If one of the combining entities can select or dominate the process of selecting the management team of the resulting organization, that entity is likely to be the acquirer.
","snippet":"If one of the combining entities can select or dominate the process of selecting the management team of the resulting organization, that entity is likely to be the acquirer.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d8c16fa5842a4bfde8d3c97f4164c2dc75e53111fef849201666051103300cbc","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-44","para":"55-44","html":"
The acquirer usually is the entity whose governing body has the ability to select or dominate the process of selecting the governing body of the combined entity, which may be a newly created entity, although whether a new entity is created is not a pertinent factor in identifying an acquisition (see paragraph 958-805-55-1). That ability may be demonstrated by an entity's powers to elect or appoint members to the combined entity's governing body or an entity's powers to dominate the process of selecting a voting majority. In determining whether one of the entities has the power to dominate the selection process, consideration shall be given to the existence of rights to elect or appoint members to the governing body that are provided by the entity's articles of incorporation, by its bylaws, or by provisions in the acquisition agreement. Consideration also shall be given to the ability of one entity to dominate the selection process through other means.
","snippet":"The acquirer usually is the entity whose governing body has the ability to select or dominate the process of selecting the governing body of the combined entity, which may be a newly created entity, although whether a ne…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe9d32c794229a8d344ff61ae1bd2e559922ef811d1f28b6dd2842c6cdd172af","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-45","para":"55-45","html":"
The combined entity often retains the mission and the legal name of the acquirer.
","snippet":"The combined entity often retains the mission and the legal name of the acquirer.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e0e04f2bb550ac15745de23ae52ebd0f6c5f8c071aa64bfd9d4ce8366a21ba83","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-46","para":"55-46","html":"
The following factors should be considered in assessing which entity is able to select or to dominate the process of selecting the governing body:
  1. a
    If the combined entity's articles of incorporation or bylaws state that the members of the governing body are appointed, whether one of the entities has the right to appoint a voting majority of the governing body.
  2. b
    Both of the following factors, if the combined entity's governing body is self-perpetuating:
    1. 1
      Whether one of the entities has the right to select a voting majority of the initial governing body of the entity as part of the acquisition agreement
    2. 2
      Whether one of the entities has the ability to dominate the selection of a voting majority of the initial governing body of the entity through means other than negotiated selection rights, such as through disproportionate representation on the committee that selects nominees for that body.
  3. c
    If the initial governing body of the combined entity is selected by the governing members of the combining entities, whether one entity's members have the majority of the voting rights.
  4. d
    Any other rights to appoint or designate members of the combined entity's governing body either as of the acquisition date or in the near future (such as upon the expiration of the terms of some or all of the initial members).
  5. e
    If positions on the combined entity's governing body are designated positions, the effect of those designated positions on the ability of an entity to appoint a voting majority of the resulting entity's governing body.
  6. f
    The powers of any sponsoring entities or members of an NFP and the composition of those sponsors and members. If sponsors and corporate members have limited powers, the effect of those limited powers on the ability of one of the entities to control the combined entity.
  7. g
    If the combined entity's governing body delegates powers to committees, the nature of those delegated powers and the composition of the committees.
  8. h
    The effect of voting requirements (such as supermajority voting requirements) on the ability of one entity to appoint or dominate the selection of a supermajority of the governing body of the combined entity.
","snippet":"The following factors should be considered in assessing which entity is able to select or to dominate the process of selecting the governing body:\n(a) If the combined entity's articles of incorporation or bylaws state th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b0aafeda6c9a1dc71341283615bb2e93aea486a5d0a94127ffb9108f2c1c45fa","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-47","para":"55-47","html":"
In addition to the examples of intangible assets provided in paragraphs
805-20-55-11 through 55-45
, a donor list is an example of an identifiable asset.
","snippet":"In addition to the examples of intangible assets provided in paragraphs 805-20-55-11 through 55-45, a donor list is an example of an identifiable asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:59e2ad88d44f280b4da9d180954c819a57f02fe967730940e949c924499e761e","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-48","para":"55-48","html":"
A donor list is different from a customer list (see paragraph 805-20-55-21), although a donor list consists of similar information about donors, such as their names and contact information. A donor list also may be in the form of a database that includes other information about the donors, such as their donation histories and demographic information. A donor list may but does not always arise from contractual or other legal rights. However, donor lists are frequently leased or exchanged. Therefore, a donor list acquired in an acquisition by a not-for-profit entity normally meets the separability criterion (see paragraph 805-20-55-4). However, a donor list would not meet the separability criterion if the terms of confidentiality or other agreements prohibit an entity from selling, leasing, or otherwise exchanging information about its donors.
","snippet":"A donor list is different from a customer list (see paragraph 805-20-55-21), although a donor list consists of similar information about donors, such as their names and contact information. A donor list also may be in th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f8187280ca95d78234dd84326bce2aaeef5fb7eaaa99b38b4755beb619eff56d","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bf3a0b6b36c8577434924063d480ee27b70536555a762bbfeca92a4d82f8d9ad","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"block":"Acquisition by a Not-for-Profit Entity","heading":"Illustrations","paragraphs":[{"citation":"805-958-55-49","para":"55-49","html":"
This Example illustrates application of the guidance in paragraphs
958-805-25-23 through 25-24
. Museum B, which has a policy of not capitalizing its collection, acquires Museum A without transferring consideration. As part of the transaction, Museum B acquires 500 paintings owned by Museum A. Museum B adds 450 of Museum A's paintings to its collection. The remaining 50 paintings acquired from Museum A are not suitable for Museum B's collection. They are not subject to donor restrictions, and Museum B expects to sell them. The fair values of Museum A's assets and liabilities other than collection items (the 450 paintings) at the acquisition date follows.
","snippet":"This Example illustrates application of the guidance in paragraphs 958-805-25-23 through 25-24. Museum B, which has a policy of not capitalizing its collection, acquires Museum A without transferring consideration. As pa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:24ffc9b3f2c55dae71d7c2470a819c510657bb2386793a27769c4db1d6fa9deb","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-50","para":"55-50","html":"
An NFP acquirer needs to determine whether acquired collection items were purchased or contributed and, if purchased, the cost to attribute to them. Because Museum B transferred no consideration, it would recognize a separate credit to its statement of activities (contribution received) of $1,500 in accordance with paragraph 958-805-25-31. No measurement of the collection items (the 450 paintings) would be required because it is evident that those items were contributed as part of the acquisition. It is evident that the items were contributed because the fair value of the identifiable assets (excluding the collection items) exceeds the fair value of the liabilities assumed and no consideration was transferred for the acquiree. Any value that might be ascribed to the newly acquired collection items would increase the amount of the contribution received by Museum B in the acquisition. Consistent with paragraph 958-605-25-19, contributed collection items shall not be recognized as a contribution received if collections are not capitalized.
","snippet":"An NFP acquirer needs to determine whether acquired collection items were purchased or contributed and, if purchased, the cost to attribute to them. Because Museum B transferred no consideration, it would recognize a sep…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:15ee0f9558c3e3aa7a92bf03287278767818cd532758cbc4b481bc090875f71c","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-51","para":"55-51","html":"
This Example illustrates application of the guidance in paragraphs
958-805-25-23 through 25-24
. Museum D, which has a policy of not capitalizing its collection, acquires Museum C. To effect the acquisition, Museum D agrees to transfer cash consideration of $1,600 to a foundation designated by Museum C. As part of the acquisition, Museum D acquires 800 paintings owned by Museum C. Museum D adds all of Museum C's paintings to its collection. The fair values of Museum C's assets and liabilities other than collection items at the acquisition date follow.
","snippet":"This Example illustrates application of the guidance in paragraphs 958-805-25-23 through 25-24. Museum D, which has a policy of not capitalizing its collection, acquires Museum C. To effect the acquisition, Museum D agre…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1323813a89b2da6f761cd9c89694e470d8f79dd3cd382ea43a1582fe9b5846cd","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-52","para":"55-52","html":"
It is unclear whether the collection items were contributed or purchased because the fair value of the consideration transferred is $1,600, which exceeds the aggregate of the identifiable net assets acquired (excluding the collection items) of $700. The excess $900 paid could be attributable entirely to either the collection items or goodwill, or part could be attributed to the cost of the collection items and part to goodwill.
","snippet":"It is unclear whether the collection items were contributed or purchased because the fair value of the consideration transferred is $1,600, which exceeds the aggregate of the identifiable net assets acquired (excluding t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:286d00bbd0c6b098d7cdc343eb919095d38d9ba5e613e83bdcab142f88c5b1bd","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-53","para":"55-53","html":"
In this circumstance, if Museum D determines that the acquisition-date fair values of the collection items are far greater than $900, it would presume that $900 of the excess relates to the cost of the purchased collection items and that the remainder of the excess relates to contributed collection items. Consistent with how purchased collections are reported in paragraph 958-360-45-5, that $900 cost would be reported as a decrease in the appropriate class of net assets in the statement of activities in the period of the acquisition. No goodwill or contribution revenue would be recognized.
","snippet":"In this circumstance, if Museum D determines that the acquisition-date fair values of the collection items are far greater than $900, it would presume that $900 of the excess relates to the cost of the purchased collecti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d6dfc7f4adb37de111f2c4c64fc935de528b1ceceea4a86f25406df32fa4ae0b","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-54","para":"55-54","html":"
If Museum D instead determines that the acquisition-date fair values of the collection items are less than $900, for example, $300, it could not presume that the entire $900 excess relates to the collection. Rather, Museum D would attribute that lesser amount to the cost of the purchased collection items and attribute the remaining portion of the excess ($600) to goodwill in accordance with paragraph 958-805-25-28. (The acquiree, Museum C, as part of the combined entity, is expected to obtain so much of its support from sources other than contributions and returns on investments that it does not qualify to immediately charge to the statement of activities the amount that otherwise is recognized as goodwill.)
","snippet":"If Museum D instead determines that the acquisition-date fair values of the collection items are less than $900, for example, $300, it could not presume that the entire $900 excess relates to the collection. Rather, Muse…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:30f0993ffb48037a9f678ea3880c5fe7dee8bf8bbbc98890f8565ada51edd545","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-55","para":"55-55","html":"
This Example illustrates application of the guidance in paragraphs
958-805-25-32 through 25-35
. Hospital, an independent, not-for-profit community hospital, agreed to be acquired by System, a nearby not-for-profit health care system. Hospital was in the midst of a major capital project at the acquisition date. To ensure completion of that capital project, Hospital's board of directors required that System transfer $20 million to Foundation, a newly formed, unrelated foundation that is governed by a self-perpetuating board of directors. Foundation's initial board of directors is composed of the former board of directors of Hospital. The acquisition agreement requires that the $20 million be used to complete the project, if necessary, and that any assets remaining in Foundation on completion of the capital project be used solely for future capital projects at Hospital.
","snippet":"This Example illustrates application of the guidance in paragraphs 958-805-25-32 through 25-35. Hospital, an independent, not-for-profit community hospital, agreed to be acquired by System, a nearby not-for-profit health…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d766768f231d05db18517afc6a2de39528d83879be128a690329af54b198c533","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-56","para":"55-56","html":"
In this Example, the acquirer has transferred assets to an unrelated third party as a required condition of the acquisition. However, because those assets may be used only for future capital additions at Hospital, System has retained control over the future economic benefits of those assets. A transferor that retains control over the economic benefits in the transferred assets has not transferred assets in exchange for the acquiree. Rather, that transferor has exchanged one asset for another. An asset transfer of that type shall be accounted for as an asset-for-asset exchange rather than as consideration transferred.
","snippet":"In this Example, the acquirer has transferred assets to an unrelated third party as a required condition of the acquisition. However, because those assets may be used only for future capital additions at Hospital, System…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4a1e4888b0f3ad16f510d289fb143431c5109b3378824322e82059c02fc550c8","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-57","para":"55-57","html":"
This Example illustrates application of the guidance in paragraph 958-805-25-35. To induce the acquisition of NFP E, a financially weak not-for-profit entity (NFP), by NFP F, a financially strong NFP, as a condition of NFP F's acquisition of NFP E, a third-party donor agrees to provide a cash contribution to support NFP E's mission. That assistance is transferred to NFP F (the consolidated entity) upon the closing of the acquisition agreement. The donor, as part of its mission and purpose, has an interest in supporting certain NFPs. From the perspective of the donor, the assistance provided to induce NFP F to acquire NFP E is in the furtherance of its mission.
","snippet":"This Example illustrates application of the guidance in paragraph 958-805-25-35. To induce the acquisition of NFP E, a financially weak not-for-profit entity (NFP), by NFP F, a financially strong NFP, as a condition of N…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ef69e2e670b65963d0b68059c5ccfee2f403609dc072ed2f9fe3c1d09b69a54","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-58","para":"55-58","html":"
In this Example, the transaction was arranged primarily to achieve economic benefits favorable to the acquiree. Thus, that assistance would be an asset acquired at the acquisition date that is recognized as part of accounting for the acquisition. The cash assistance also is included in the acquisition accounting even though it is transferred to the resulting combined entity. The situation is accounted for the same as if the third-party donor had contributed the cash to NFP E before NFP F's acquisition of NFP E.
","snippet":"In this Example, the transaction was arranged primarily to achieve economic benefits favorable to the acquiree. Thus, that assistance would be an asset acquired at the acquisition date that is recognized as part of accou…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d5041350e93e55d12d9f64afdf46b944b5902e49c0e251b06fcaf1ef1b294b13","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-59","para":"55-59","html":"
This Example illustrates one way in which a not-for-profit entity (NFP) might implement the requirements of paragraphs 958-805-25-29 and 958-805-45-4. On February 10, 20X0, NFP G, a religious not-for-profit entity, purchases 100 percent of the ownership interests in Restaurant H for consideration of $525,000. On the acquisition date, the amount of the net identifiable assets of Restaurant H recognized and measured in accordance with this Subtopic was $410,000. NFP G acquired Restaurant H for the purpose of converting it to a soup kitchen.
","snippet":"This Example illustrates one way in which a not-for-profit entity (NFP) might implement the requirements of paragraphs 958-805-25-29 and 958-805-45-4. On February 10, 20X0, NFP G, a religious not-for-profit entity, purch…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:717637e5ffa9b9e5c38e4ca25a2a0a903400c2ae70b7bc096511188ee45742b9","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-60","para":"55-60","html":"
Management of NFP G expects the soup kitchen resulting from the conversion of Restaurant H to be predominantly supported by contributions and returns on investments. Specifically, the operating costs of the soup kitchen are expected to be funded by NFP G's existing contribution base. The following table illustrates how NFP G might satisfy the requirements of paragraph 958-805-45-4 for presenting the separate charge to the statement of activities at the acquisition date.
","snippet":"Management of NFP G expects the soup kitchen resulting from the conversion of Restaurant H to be predominantly supported by contributions and returns on investments. Specifically, the operating costs of the soup kitchen …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ef2e9bcaa9df68fe74d570cdcfb1e4a02934389e87c532010665f0235919bbd","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-61","para":"55-61","html":"
NFP G might satisfy the requirements of paragraphs 805-10-50-2(a) through (d) and paragraph 958-805-50-11(a) as shown in the illustrative note below.
","snippet":"NFP G might satisfy the requirements of paragraphs 805-10-50-2(a) through (d) and paragraph 958-805-50-11(a) as shown in the illustrative note below.\nNote X: Acquisition of Restaurant H\nOn February 10, 20X0, NFP G acquir…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:293a3f97b0a2f13df45712916878684ae9041dcca7e52cea74ae29b050b734e1","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-62","para":"55-62","html":"
This Example illustrates application of the guidance in paragraphs 958-805-25-31,
958-805-30-8 through 30-9
, and
958-805-45-5 through 45-7
. The Example has the following Cases:
  1. a
    The inherent contribution is not subject to additional restrictions (Case A)
  2. b
    The inherent contribution is subject to additional restrictions (Case B).
","snippet":"This Example illustrates application of the guidance in paragraphs 958-805-25-31, 958-805-30-8 through 30-9, and 958-805-45-5 through 45-7. The Example has the following Cases:\n(a) The inherent contribution is not subjec…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:96b914d3de6e5a77bec53a9a180c0fd45e8d92a6e89f6c737f4f4f37b59ec280","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-63","para":"55-63","html":"
Cases A and B share the following assumptions.
","snippet":"Cases A and B share the following assumptions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3cad41220d7488cc9dd1387e43ed9e5efc8df5f30561c9cda86e952d4d5c7f7c","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-64","para":"55-64","html":"
Charity I acquires Charity J. Charity I transfers no consideration in exchange for Charity J. The acquisition was achieved by, in effect, a gift of Charity J to Charity I. The fair values of Charity J's assets and liabilities, including donor-imposed restrictions, at the acquisition date follow.
","snippet":"Charity I acquires Charity J. Charity I transfers no consideration in exchange for Charity J. The acquisition was achieved by, in effect, a gift of Charity J to Charity I. The fair values of Charity J's assets and liabil…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f61e9031ed0fad6dc1f0a35038d1ae8eed4a8650dd10e332f64d8ef08b03dfb2","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-65","para":"55-65","html":"
Charity I recognizes a $1,000 contribution received in the acquisition (the excess of the acquisition date values of the identifiable assets acquired over the acquisition date values of the liabilities assumed). Charity I classifies the inherent contribution received according to the type of donor-imposed restrictions, including any imposed by the donor of the business or nonprofit activity acquired.
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Based on donor restrictions on Charity J's net assets at the acquisition date, net assets with a fair value of $450 were classified as with donor restrictions. In this Example, Charity J is, in effect, the donor of the acquired nonprofit activity, and it imposes no additional donor restrictions. To recognize the fiduciary responsibilities to the donors of Charity J that are assumed when Charity J's assets and liabilities are acquired, Charity I would classify changes to its net assets as follows.
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Charity J is a subsidiary of Parent before the acquisition by Charity I. As a condition of the acquisition, Parent's governing board requires that Charity I use $175 of net assets without donor restrictions for future capital improvements to the facility acquired. The requirement is irrevocable and is not self-imposed. To recognize the fiduciary responsibilities to the donors of Charity J that are assumed when Charity J's assets and liabilities are acquired, Charity I would classify changes to its net assets as follows.
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This Example illustrates application of the guidance in paragraphs 958-805-45-11 and 958-805-50-15. Entity X, an NFP, acquires Entity S from Entity S's parent. As part of the acquisition, Entity S's parent requires that Entity X transfer consideration of $300 to a third-party community foundation. The fair values of Entity S's assets and liabilities at the acquisition date are as follows.
","snippet":"This Example illustrates application of the guidance in paragraphs 958-805-45-11 and 958-805-50-15. Entity X, an NFP, acquires Entity S from Entity S's parent. As part of the acquisition, Entity S's parent requires that …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6b520f0d7e3045bc983d6b6762e1c569239753660c1ec2b3326fe66882b4b91c","downloaded_from":"2026-09-10T01:28:08.862Z","last_downloaded_at":"2026-09-10T01:28:08.862Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477391","source_sha256":"de706c4a076ed0d8dd0a68671c188cb74754951a4f981c9b255f8b0e3e9d255f"}},{"citation":"805-958-55-69","para":"55-69","html":"
Entity X reports the acquisition as a single line in the investing activities section of the statement of cash flows, as follows:
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Entity X discloses the following additional information in a supplemental schedule of investing and financing activities:
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