# ASC 805-958: Business Combinations — Not-for-Profit Entities Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/958/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:27:38.837Z to 2026-09-10T01:28:11.147Z Record version: sha256:433fa1910b9a0935706ff0b558c740d3ca202ed2948f3f6629154fd85699160b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958: Business Combinations — Not-for-Profit Entities ### Machine-generated study aids ```json { "summary": "ASC 958-805 (indexed here as 805-958) governs combinations in which a not-for-profit entity is the reporting entity and combines with other NFPs, businesses, or nonprofit activities. If the participating governing boards cede control to a new NFP, the transaction is a merger accounted for under the carryover method (combine GAAP carrying amounts, no fresh start, no new assets); if one entity obtains control of the other, it is an acquisition accounted for under the acquisition method with NFP-specific rules for identifying the acquirer, goodwill, and inherent contributions.", "key_points": [ "An NFP must classify the transaction by applying the definitions: ceding control to a new NFP is the sole definitive criterion for a merger, and one entity obtaining control of another is the sole definitive criterion for an acquisition (958-805-25-1; 958-805-55-1).", "Under the carryover method the new NFP combines the merging entities' GAAP carrying amounts as of the merger date, recognizes no additional assets such as internally developed intangibles, carries forward prior classifications and designations, conforms accounting policies, and eliminates intra-entity balances (958-805-25-4 through 25-9; 958-805-30-1 through 30-4).", "Because the carryover method is not a fresh-start measurement, a merger does not permit new elections (or reversals) of options restricted to initial acquisition or recognition, such as the fair value option (958-805-30-3).", "The new NFP is a new reporting entity whose initial period begins on the merger date; the merger is not reported as activity of that period, and combined amounts appear as opening balances (958-805-45-1 through 45-2).", "An NFP acquirer applies the acquisition method with modifications: the acquirer is identified using NFP/health care consolidation control guidance (958-805-25-15), acquired donor relationships are subsumed into goodwill (958-805-25-22), uncapitalized collection items are not recognized as assets (958-805-25-23), and conditional promises to give are recognized only if conditions are substantially met (958-805-25-26).", "If the acquiree's operations are expected to be predominantly supported by contributions and returns on investments, the acquirer recognizes an immediate separate charge in the statement of activities instead of goodwill; otherwise goodwill is recognized (958-805-25-28 through 25-30; 958-805-30-6; presented per 958-805-45-4).", "Instead of a bargain purchase gain, an excess of net identifiable assets acquired over consideration is recognized as an inherent contribution received, reported as a separate line item and classified according to donor restrictions without applying the 958-605-45-4A exception (958-805-25-31; 958-805-30-8; 958-805-45-5 through 45-6)." ], "categories": [ "Business combinations", "Not-for-profit", "Intangibles and goodwill", "Disclosure" ], "audience_level": "advanced", "student_note": "Exams love the merger/acquisition fork: NFPs are the only reporting entities that may use the carryover method, and only when both boards cede control to a genuinely new governing body. The classic mistake is treating an excess of net assets acquired as a bargain purchase gain (it is an inherent contribution) or automatically recognizing goodwill when the acquiree is contribution-supported (that excess is charged immediately to the statement of activities).", "related_topics": [ "805-10", "805-20", "805-30", "805-50", "958-810", "350-20" ], "key_concepts": [ "merger of not-for-profit entities", "acquisition by a not-for-profit entity", "carryover method", "ceding of control", "inherent contribution received", "goodwill versus immediate charge", "donor relationships and collections", "conditional promises to give" ] } ``` Source downloaded (UTC): 2026-09-10T01:27:38.837Z to 2026-09-10T01:27:38.837Z Record version: sha256:2f1977978f87056570b51ed2096c1282dc540018895cf2f1600b1fa0cc9aa71d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/958/#00-status) SEC content: no ##### [805-958-00-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:38.837Z to 2026-09-10T01:27:38.837Z Record version: sha256:1ac0ce22812ad874a3c2d7fe53f208032ed563ecda40a1368ced19732b671fe6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
AcquireeAddedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
AcquirerAddedAccounting Standards Update No. 2010-0701/28/2010
Acquisition DateAddedAccounting Standards Update No. 2010-0701/28/2010
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
BusinessAddedAccounting Standards Update No. 2010-0701/28/2010
Business CombinationAddedAccounting Standards Update No. 2010-0701/28/2010
CollectionsAmendedAccounting Standards Update No. 2019-0303/21/2019
CollectionsAddedAccounting Standards Update No. 2010-0701/28/2010
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
Conditional Promise to GiveAmendedAccounting Standards Update No. 2018-0806/21/2018
Conditional Promise to GiveAddedAccounting Standards Update No. 2010-0701/28/2010
Conduit Debt SecurityAddedMaintenance Update 2014-20 (PDF)09/29/2014
Contingent ConsiderationAddedAccounting Standards Update No. 2010-0701/28/2010
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAddedAccounting Standards Update No. 2010-0701/28/2010
ControlAddedAccounting Standards Update No. 2010-0701/28/2010
Control of a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Donor-Imposed RestrictionAmendedAccounting Standards Update No. 2016-1408/18/2016
Donor-Imposed RestrictionsAddedAccounting Standards Update No. 2010-0701/28/2010
Donor-Restricted SupportAddedAccounting Standards Update No. 2016-1408/18/2016
Equity InterestsAddedAccounting Standards Update No. 2010-0701/28/2010
ExchangeAddedAccounting Standards Update No. 2025-1012/04/2025
Fair Value (2nd def.)AddedAccounting Standards Update No. 2025-1012/04/2025
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAddedAccounting Standards Update No. 2010-0701/28/2010
Government GrantAddedAccounting Standards Update No. 2025-1012/04/2025
Grant Related to an AssetAddedAccounting Standards Update No. 2025-1012/04/2025
Grant Related to IncomeAddedAccounting Standards Update No. 2025-1012/04/2025
IdentifiableAddedAccounting Standards Update No. 2010-0701/28/2010
Inherent ContributionAddedAccounting Standards Update No. 2010-0701/28/2010
Intangible AssetsAddedAccounting Standards Update No. 2010-0701/28/2010
Investing ActivitiesAddedAccounting Standards Update No. 2010-0701/28/2010
Merger DateAddedAccounting Standards Update No. 2010-0701/28/2010
Merger of Not-for-Profit EntitiesAddedAccounting Standards Update No. 2010-0701/28/2010
Monetary AssetsAddedAccounting Standards Update No. 2025-1012/04/2025
Net Assets with Donor RestrictionsAddedAccounting Standards Update No. 2016-1408/18/2016
Net Assets without Donor RestrictionsAddedAccounting Standards Update No. 2016-1408/18/2016
Noncontrolling InterestAddedAccounting Standards Update No. 2010-0701/28/2010
Nonprofit ActivityAddedAccounting Standards Update No. 2010-0701/28/2010
Permanently Restricted Net AssetsSupersededAccounting Standards Update No. 2016-1408/18/2016
Permanently Restricted Net AssetsAddedAccounting Standards Update No. 2010-0701/28/2010
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
Public EntityAmendedMaintenance Update 2014-20 (PDF)09/29/2014
Public EntityAddedAccounting Standards Update No. 2010-0701/28/2010
ReclassificationsSupersededAccounting Standards Update No. 2016-1408/18/2016
ReclassificationsAddedAccounting Standards Update No. 2010-0701/28/2010
Reclassification of Net AssetsAddedAccounting Standards Update No. 2016-1408/18/2016
Temporarily Restricted Net AssetsSupersededAccounting Standards Update No. 2016-1408/18/2016
Temporarily Restricted Net AssetsAddedAccounting Standards Update No. 2010-0701/28/2010
Unrestricted Net AssetsSupersededAccounting Standards Update No. 2016-1408/18/2016
Unrestricted Net AssetsAddedAccounting Standards Update No. 2010-0701/28/2010
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
958-805-05-1 through 05-5
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-10-1AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-15-1 through 15-8
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-25-1 through 25-37
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-25-9AmendedAccounting Standards Update No. 2016-0202/25/2016
958-805-25-11AmendedAccounting Standards Update No. 2016-0202/25/2016
958-805-25-15AmendedAccounting Standards Update No. 2015-0202/18/2015
958-805-25-18AAddedAccounting Standards Update No. 2019-0605/30/2019
958-805-25-21AmendedAccounting Standards Update No. 2025-1212/17/2025
958-805-25-21AAddedAccounting Standards Update No. 2025-1012/04/2025
958-805-25-27AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-30-1 through 30-13
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-30-5AmendedAccounting Standards Update No. 2025-1212/17/2025
958-805-35-1 through 35-5
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-35-5AmendedAccounting Standards Update No. 2021-0303/30/2021
958-805-35-5AmendedAccounting Standards Update No. 2019-0605/30/2019
958-805-45-1 through 45-11
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-45-6AmendedMaintenance Update 2020-18 (PDF)11/25/2020
958-805-45-6AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-45-7AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-45-10AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-45-11AmendedAccounting Standards Update No. 2016-1508/26/2016
958-805-45-12AddedAccounting Standards Update No. 2016-1508/26/2016
958-805-50-1 through 50-17
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-50-2 through 50-6
AmendedAccounting Standards Update No. 2025-1112/08/2025
958-805-50-3AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-50-8 through 50-14
AmendedAccounting Standards Update No. 2025-1112/08/2025
958-805-50-8AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-50-8AmendedAccounting Standards Update No. 2010-2912/21/2010
958-805-50-9AmendedAccounting Standards Update No. 2010-2912/21/2010
958-805-50-16AmendedAccounting Standards Update No. 2025-1112/08/2025
958-805-50-16AmendedAccounting Standards Update No. 2015-1006/12/2015
958-805-50-16AmendedAccounting Standards Update No. 2011-0405/12/2011
958-805-50-17AmendedAccounting Standards Update No. 2025-1112/08/2025
958-805-50-17AmendedAccounting Standards Update No. 2021-0303/30/2021
958-805-50-17AmendedAccounting Standards Update No. 2019-0605/30/2019
958-805-55-1 through 55-70
AddedAccounting Standards Update No. 2010-0701/28/2010
958-805-55-36 through 55-38
AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-55-40AmendedMaintenance Update 2018-02 (PDF)02/02/2018
958-805-55-41AmendedAccounting Standards Update No. 2017-0101/05/2017
958-805-55-60AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-55-64 through 55-67
AmendedAccounting Standards Update No. 2016-1408/18/2016
958-805-65-1AddedAccounting Standards Update No. 2010-0701/28/2010
Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:4f97fb6963ab24128cfe07ddc800e9effe6994f0e7a9615be969913b0a15ff4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/958/#05-overview-and-background) SEC content: no ##### [805-958-05-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:e66c509490bb69f5f8e502a339866a595b6b4392b509443c250616972fb4139f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on a transaction or other event in which a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) that is the reporting entity combines with one or more other NFPs, [businesses](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business."), or [nonprofit activities](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.")in a transaction that meets the definition of a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.")or an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities."). The guidance is presented in the following three Subsections: 1. a General 2. b Merger of Not-for-Profit Entities 3. c Acquisition by a Not-for-Profit Entity. ##### [805-958-05-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:218fe964fd507ea90bee091908a5d52a148ce4fea17147d244dad531ad4d47e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsections provide overall guidance on the recognition of combinations involving NFPs, and they provide implementation guidance for determining whether a combination between an NFP and one or more businesses, nonprofit activities, or another NFP is a merger or an acquisition. ##### [805-958-05-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:6fb80083c56290e5997e4eb2ddd16ef5ec8562f61558c62328771616f40ad120 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs presented in **bold** type in this Subtopic state the main principles. All paragraphs have equal authority. ### Merger of Not-for-Profit Entities ##### [805-958-05-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:203e61d336db5f5588405ef1c18ef7be13c965f8c4c6768840dd911dda15810f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Merger of Not-for-Profit Entities Subsections establish standards of financial accounting and reporting for transactions or other events that meet the definition of a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity."). Specifically, these Subsections establish principles and requirements for how a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) does both of the following: 1. a Applies the carryover method in accounting for a merger 2. b Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of a merger. ### Acquisition by a Not-for-Profit Entity ##### [805-958-05-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:41.131Z to 2026-09-10T01:27:41.131Z Record version: sha256:45c5e580f695383bb3d8ac62d97d54eee4a0ae1e6b14caa9a2a8ee53be9c6785 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Acquisition by a Not-for-Profit Entity Subsections establish standards of financial accounting and reporting for transactions or other events that meet the definition of an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities."). Those standards are incremental to the guidance in Subtopics 805-10, 805-20, and 805-40. Specifically, these Subsections establish principles and requirements for how a not-for-profit entity does both of the following: 1. a Applies the acquisition method in accounting for an acquisition, including determining which of the combining entities is the [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.") 2. b Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of an acquisition. Source downloaded (UTC): 2026-09-10T01:27:44.834Z to 2026-09-10T01:27:44.834Z Record version: sha256:e3e01f6f2ea05383e84f681efee14bee05567f82d70da69f36c24208a15c825c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/805/958/#10-objectives) SEC content: no ##### [805-958-10-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:44.834Z to 2026-09-10T01:27:44.834Z Record version: sha256:c8be1a0824fe9e0c3849f168130d2876f0459e5782e8951ca52bf2556a3fd669 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of this Subtopic is to improve the relevance, representational faithfulness, and comparability of the information that a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) that is a reporting entity provides in its financial reports about a combination with one or more other NFPs, businesses, or nonprofit activities. Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:b9fe9ccf1263b49e1cb50ed8165b0b39fe85b981d5e7af7fe1cdadd4b621726d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/958/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-958-15-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:24f849b1d2d4b90eefb66c239be3c4205b80a8a772e108a5bb33c5319c5b42d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same scope and scope exceptions as the Overall Subtopic, see Section 958-10-15. ##### [805-958-15-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:59eeda54ae598ddde3fd3ae4cf077cf7dca46f81da796a672b99d6d967aa355c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsection of this Section establishes the pervasive scope for this Subtopic. #### Transactions ##### [805-958-15-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:bf307eb3551a700f60099bdf417896d16bd485a8c40ac63669f450b661295d90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to a transaction or other event that meets the definition of either of the following: 1. a A [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.") 2. b An [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities."). ##### [805-958-15-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:0aea51c48d55ca7f39b089358d467518c6cc90939f9768f71fcdbe02be9e45fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not apply to all of the following: 1. a The formation of a joint venture 2. b The acquisition of an asset or a group of assets that does not constitute either a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") or a [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity."). (Subtopic 805-50 addresses the typical accounting for an asset acquisition.) 3. c A combination between [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs), businesses, or nonprofit activities under common control. (Subtopic 805-50 addresses the typical accounting for a transfer of assets or an exchange of shares between entities under common control.) 4. d A transaction or other event in which an NFP obtains [control of another not-for-profit entity](https://asc.understandingaccounting.org/glossary/c/#control-of-a-not-for-profit-entity "See Control.") but does not consolidate that entity, as permitted or required by Section 958-810-25. Similarly, this Subtopic does not apply if an NFP that obtained control in a transaction or other event in which consolidation was permitted but not required decides in a subsequent annual reporting period to begin consolidating a controlled entity that it initially chose not to consolidate. ### Merger of Not-for-Profit Entities #### Overall Guidance ##### [805-958-15-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:2a5b78a7a764cb5a61a595e63832590db9a101c56e3489c17920537c7ff98ac6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Merger of Not-for-Profit Entities Subsections follow the same Scope and Scope Exceptions as the General Subsections of this Subtopic, see Section 958-805-15, with specific exceptions noted below. #### Transactions ##### [805-958-15-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:85a48cc751d7b2aa15ec9dc2d6a433ed4541b810d06d3a3d07cf28f64d67570b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Merger of Not-for-Profit Entities Subsections applies only to transactions or other events that meet the definition of a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity."). ### Acquisition by a Not-for-Profit Entity #### Overall Guidance ##### [805-958-15-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:b6233a75fb59997b8be3bd631c38ade28ee5c49e67e19532826b657f774458d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Acquisition by a Not-for-Profit Entity Subsections follow the same Scope and Scope Exceptions as the General Subsections of this Subtopic, see Section 958-805-15, with specific exceptions noted below. #### Transactions ##### [805-958-15-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:48.912Z to 2026-09-10T01:27:48.912Z Record version: sha256:6073ac331f6babfe9cf666e2ad0c45d57555744d964050d882af7116056d6556 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Acquisition by a Not-for-Profit Entity Subsections applies only to transactions or other events that meet the definition of an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities."). Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:30f7638be149f4249dde28012ae97ace325fc2364eea9a32f5284d4c85e4d10d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/958/#25-recognition) SEC content: no ##### [805-958-25-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:b8458e236390642719daffbb7fa468fbea5a4afb517e62f230f69028e2981845 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) shall determine whether a transaction or other event is a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.") or an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.") by applying the definitions. ##### [805-958-25-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:866946f07622a7db5a4c6a4278526bf9d751f8c4bc8a6c78c3ac5cc418177d34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [958-805-55-1 through 55-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-1) provide guidance on distinguishing between a merger and an acquisition. ### Merger of Not-for-Profit Entities ##### [805-958-25-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:1778cfa6b706fd9912040606074616c54e5f81d8c6f147bbe0fc247a8402bbee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) resulting from a merger (the new entity) shall account for the merger by applying the carryover method described in the Merger of Not-for-Profit Entities Subsections of this Subtopic. ##### [805-958-25-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:aaa57e3ef2c6b8f1c3bcbd42640fc4eef531ea5bdeb188e82a1de32f2b64dc22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Applying the carryover method requires combining the assets and liabilities recognized in the separate financial statements of the merging entities as of the [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective.") (or that would be recognized if the entities issued financial statements as of that date), adjusted as necessary in accordance with paragraph [958-805-25-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-7) and paragraphs [958-805-30-2 through 30-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-2) . ##### [805-958-25-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:30783262a3c08d0157dc43c923939311a45b63b076d5676d422ea989a82ffbca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of the discussion of the carryover method refers to _financial statements of the merging entities_, rather than a more precise, but longer, phrase such as _assets and liabilities that would be recognized in the financial statements of the merging entities if statements are prepared_. Use of the shorter phrase is not intended to exclude, for example, an NFP that has not prepared or issued financial statements. In that situation, the phrase refers to the items in the entity's financial records that would be the basis for preparing financial statements. ##### [805-958-25-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:179bb726ae21bf20517d0d21e2f47159727685652f223e1a40124132bae60d5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The new NFP shall recognize in its financial statements the assets and liabilities reported in the separate financial statements of the merging entities as of the merger date in accordance with generally accepted accounting principles (GAAP). ##### [805-958-25-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:6cf61a3e789120268fb5c9833fbb6faec6df23aad7b76759ca5fd1aa406a0e62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The new NFP does not recognize additional assets or liabilities, such as internally developed intangible assets, that GAAP did not require or permit the merging entities to recognize. However, if a merging entity's separate financial statements are not prepared in accordance with GAAP, those statements shall be adjusted to GAAP before the new entity recognizes the assets and liabilities. #### Classifying or Designating Assets and Liabilities in a Merger ##### [805-958-25-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:96980c71596f3e34ae0d0044fb2d4213cd96dc09820a6b410f96cf7c396f662d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The new NFP shall carry forward at the merger date the merging entities' classifications and designations of their assets and liabilities unless one of the exceptions in the following paragraph applies. ##### [805-958-25-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:2ac9ee4df528df97c4f02523c0525b32c973030dc86600b4b4824be47c03163e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some situations, GAAP provides for different accounting depending on how an entity classifies or designates a particular asset or liability. Paragraphs [805-20-25-7 through 25-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-7) provide examples of such classifications and designations. The new NFP shall carry forward into the opening balances in its financial statements (see paragraph [958-805-45-2(a)](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-2)) the merging entities' classifications and designations unless either of the following situations applies: 1. a The merger results in a modification of a contract in a manner that would change those previous classifications or designations; for example, if the provisions of a lease are modified and the modification is not accounted for as a separate contract in accordance with paragraph [842-10-25-8](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-8) 2. b Reclassifications are necessary to conform accounting policies in accordance with paragraph [958-805-30-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-2). ##### [805-958-25-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:fed1d76eefe69d9a6dfbff7bf3e7dcb32695467550e7bc3c120025aa25ae95a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In situation (a) in the preceding paragraph, the new NFP shall classify or designate the asset or liability on the basis of the contractual terms, economic conditions, its operating or accounting policies, and other pertinent conditions as they exist at the date of that modification. In situation (b) in the preceding paragraph, the new NFP shall classify or designate the asset or liability on the basis of the conformed accounting policies at the merger date. ##### [805-958-25-11](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:25b432ca33c477bb6eaf63f16ca7338187a41622965366f694c3a89c55040949 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the merger date, the new NFP may contemplate renegotiating and modifying leases of the business or nonprofit activity acquired. Modifications made after the merger date, including those that were planned at the time of the combination, are postcombination events that should be accounted for separately by the new NFP in accordance with Topic 842. ### Acquisition by a Not-for-Profit Entity ##### [805-958-25-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:27687aa6624780047335410b8e75475edbcd3b3452c4a0f7b80741fd376540f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) shall account for each acquisition of a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") or [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.") by applying the acquisition method described in the Acquisition by a Not-for-Profit Entity Subsections of this Subtopic. ##### [805-958-25-13](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:7093e08dc56c093d7aa50978dfc0d8e88c14442bf7f82f1644d660dd5a2ed2d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquisition method in the Acquisition by a Not-for-Profit Entity Subsections is the same as the acquisition method described in Topic 805. However, these Subsections include guidance on aspects of the following items that are unique or especially significant to an NFP: 1. a Identifying the [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.") 2. b Identifying the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c Recognizing the [identifiable](https://asc.understandingaccounting.org/glossary/i/#identifiable "An asset is identifiable if it meets either of the following criteria: It is separable, that is, capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability, regardless of whether the entity intends to do so. It arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.") assets acquired, the liabilities assumed, and any [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") in the [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.") 4. d Recognizing [goodwill](https://asc.understandingaccounting.org/glossary/g/#goodwill "An asset representing the future economic benefits arising from other assets acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation that are not individually identified and separately recognized. For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph 958-805-25-29.") acquired or a [contribution](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") received, including consideration transferred 5. e Determining what is part of the acquisition transaction. ##### [805-958-25-14](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:d849942b8f7669f93e52c9deae39fa8b3f2c6ebaa714a0f8940e0275003e3e01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Differences in the application of the acquisition method by a NFP acquirer from the application of the acquisition method by a business entity include all of the following: 1. a The identification of the acquirer in accordance with paragraphs [958-805-25-15 through 25-16](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-15) , instead of the guidance in paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) 2. b The recognition and measurement of goodwill (or the immediate charge to the statement of activities) in accordance with paragraphs [958-805-25-27 through 25-30](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-27) , instead of the guidance in paragraph [805-30-25-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-1) and paragraphs [805-30-30-1 through 30-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) 3. c The recognition and measurement of an [inherent contribution](https://asc.understandingaccounting.org/glossary/i/#inherent-contribution "A contribution that results if an entity voluntarily transfers assets (or net assets) or performs services for another entity in exchange for either no assets or for assets of substantially lower value and unstated rights or privileges of a commensurate value are not involved.") received in accordance with paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31) and paragraphs [958-805-30-8 through 30-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-8) , instead of the guidance for a gain from a bargain purchase in paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) and paragraphs [805-30-30-4 through 30-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-4) . #### Identifying the Acquirer ##### [805-958-25-15](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:fac4f00e0dfdea5fcf3fabea9829448ee43f4f5238d73ab333663982a9cf50d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-4) requires that one of the combining entities be identified as the acquirer. Instead of applying the guidance in paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5), the following guidance on control and consolidation of NFPs shall be used to identify the acquirer: 1. a For an NFP acquirer other than a health care entity within the scope of Topic 954, the guidance in Subtopic 958-810, including the guidance referenced in paragraph [958-810-15-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-15-4). 2. b For a not-for-profit health care acquirer within the scope of Topic 954 (see Section 954-10-15), the guidance referenced in paragraph [954-810-15-3](https://asc.understandingaccounting.org/asc/810/954/#810-954-15-3). 3. c Control of a for-profit business has the meaning of controlling financial interest in paragraphs [810-10-15-8 through 15-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8). 4. d Control of a not-for-profit entity has the meaning of [control](https://asc.understandingaccounting.org/glossary/c/#control "The direct or indirect ability to determine the direction of management and policies through ownership, contract, or otherwise.") used in Subtopic 954-810 and Subtopic 958-810. ##### [805-958-25-16](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:5ab9fde4ab8eb46e9b699e2f5bf57aa47337ffefdd7a9d9760b8a6faea8ef31f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.") has occurred but applying the guidance in the previous paragraph does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [958-805-55-42 through 55-46](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-42) shall be considered in making that determination. #### Identifying the Acquisition Date ##### [805-958-25-17](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:c8cb0ebffb17cf369ff971ab300bcb29c23d42088a71e6dcc3b904a8e107c841 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-25-6 through 25-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-6) require identifying the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") and provide guidance for doing so. In addition to that guidance, the date on which an NFP acquirer obtains [control of an NFP](https://asc.understandingaccounting.org/glossary/c/#control-of-a-not-for-profit-entity "See Control.") with sole corporate membership generally also is the date on which the acquirer becomes the sole corporate member of that entity. #### Recognizing the Identifiable Assets Acquired, the Liabilities Assumed, and Any Noncontrolling Interest in the Acquiree ##### [805-958-25-18](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:fe8ca9c5ce0d782d06b1cd40a1c6e4840cbbf3a1bc7f76e7fb6296f3d0f08c47 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection includes the following guidance that is incremental to Subtopic 805-20 for the recognition of identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree: 1. a Recognition conditions 2. b Classifying or designating identifiable assets acquired and liabilities assumed 3. c Additional exceptions to the recognition principle. ##### [805-958-25-18A](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-18A) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:49e9a7dc63e9fe57417f3a9ed194c38004b049c84f5f7595e3a8f8b4d1d265cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the accounting alternative to subsume certain identifiable intangible assets acquired into goodwill, see Subtopic 805-20 on business combinations—identifiable assets and liabilities, and any noncontrolling interest and see paragraph [805-20-65-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2) for transition guidance on applying the accounting alternative. ##### [805-958-25-19](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:f36a5ccc091e41175e84bed8fef81b653719bc267410ea9f6fe4956717529a7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When considering whether an identifiable asset or liability assumed qualifies for recognition as part of applying the acquisition method as described in paragraph [805-20-25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-3), an identifiable asset or liability also qualifies if it is part of what was contributed in an acquisition that includes an inherent contribution (see paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31)). ##### [805-958-25-20](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:15d885a2237e7e24f3ebfa3b149c49b0749ea480ba33c2ea356918b71ad87e4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer is not required to classify investments as described in paragraph [805-20-25-7(a)](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-7). However, an NFP acquirer that is a health care entity (see Section 954-10-15) shall classify particular investments as described in paragraph [954-805-25-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-25-1). ##### [805-958-25-21](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-21) Pending content: yes Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:31d4a81d27c67f13e232084716927d02a7826a275dd27484c1cca5a6d24c6d32 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection provides the following limited exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1), which are incremental to the exceptions provided by paragraphs [805-20-25-16 through 25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) : 1. a Donor relationships 2. b [Collections](https://asc.understandingaccounting.org/glossary/c/#collections "Works of art, historical treasures, or similar assets that meet all of the following criteria: They are held for public exhibition, education, or research in furtherance of public service rather than financial gain. They are protected, kept unencumbered, cared for, and preserved. They are subject to an organizational policy that requires the use of proceeds from items that are sold to be for the acquisitions of new collection items, the direct care of existing collections, or both. Collections generally are held by museums; botanical gardens; libraries; aquariums; arboretums; historic sites; planetariums; zoos; art galleries; nature, science, and technology centers; and similar educational, research, and public service organizations that have those divisions; however, the definition is not limited to those entities nor does it apply to all items held by those entities.") 3. c [Conditional promises to give](https://asc.understandingaccounting.org/glossary/c/#conditional-promise-to-give "A promise to give that is subject to a donor-imposed condition."). Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)This Subsection provides the following limited exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1), which are incremental to the exceptions discussed in paragraphs [805-20-25-16 through 25-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) and related guidance: 1. a Donor relationships 2. b [Collections](https://asc.understandingaccounting.org/glossary/c/#collections "Works of art, historical treasures, or similar assets that meet all of the following criteria: They are held for public exhibition, education, or research in furtherance of public service rather than financial gain. They are protected, kept unencumbered, cared for, and preserved. They are subject to an organizational policy that requires the use of proceeds from items that are sold to be for the acquisitions of new collection items, the direct care of existing collections, or both. Collections generally are held by museums; botanical gardens; libraries; aquariums; arboretums; historic sites; planetariums; zoos; art galleries; nature, science, and technology centers; and similar educational, research, and public service organizations that have those divisions; however, the definition is not limited to those entities nor does it apply to all items held by those entities.") 3. c [Conditional promises to give](https://asc.understandingaccounting.org/glossary/c/#conditional-promise-to-give "A promise to give that is subject to a donor-imposed condition."). ##### [805-958-25-21A](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-21A) Pending content: yes Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:768152520b4aa7dffe1292e108958e31aa0908821bb79772538ed587b9e3f04d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2028; (N) December 16, 2029Transition guidance: [832-10-65-2](https://asc.understandingaccounting.org/asc/832/10/#832-10-65-2)The exception to the recognition principle in paragraph [805-20-25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28D) for a [grant related to income](https://asc.understandingaccounting.org/glossary/g/#grant-related-to-income "(P) December 16, 2028; (N) December 16, 2029832-10-65-2A government grant, or part of a government grant, other than a grant related to an asset (for example, a grant that reimburses an entity for operating expenses).") is not applicable to entities that apply the guidance within this Subtopic. ##### [805-958-25-22](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:a62cf9944db09e0a668174f3b7515f0f7e95685e203aa5ff5a4b249d55fe2a3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall not recognize an acquired donor relationship as an identifiable intangible asset separate from goodwill. Unlike acquired customer relationships (see paragraphs [805-20-55-23 through 55-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-23) ), acquired donor relationships are not recognized separately; they are instead subsumed into goodwill. ##### [805-958-25-23](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:7a63e61a09dfe042c4f110ebddaa38d2bcaad136405c80807b77ca71ad48fa28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer that has an organizational policy of not capitalizing collections in accordance with paragraph [958-360-25-3](https://asc.understandingaccounting.org/asc/360/958/#360-958-25-3) shall not recognize as an asset those items (works of art, historical treasures, or similar assets) that it acquires as part of an acquisition and adds to its collection. Rather, the acquirer shall do both of the following: 1. a Recognize the cost of the collection items purchased (either by the transfer of consideration or the assumption of liabilities in excess of assets acquired) as a decrease in the appropriate class of net assets in the statement of activities and as a cash outflow for investing activities 2. b Not recognize the fair value of collection items contributed—either as an asset or as contribution revenue. ##### [805-958-25-24](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:0fe39f8049530b00b766f992a48d2f0bee958c8c64ed6f5f0cc741727dfda3bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquired item that is not added to the acquirer's collection shall be recognized as an asset in accordance with paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1). ##### [805-958-25-25](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:a0a05cb8d4220b80d3fad5210973f33747e81453ad7e01bcc5a6349c5bea6a40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraphs [958-805-55-49 through 55-50](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-49) ) and Example 2 (see paragraphs [958-805-55-51 through 55-54](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-51) ) provide guidance on determining whether an acquired collection item is purchased or contributed and, if purchased, the appropriate amount of cost to attribute to it. ##### [805-958-25-26](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:7fc0a6b0d87a4a75014c6823f0288e47afd3d65e7f62816cdb060cca2625c750 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall apply the guidance in paragraphs [958-605-25-11 through 25-15](https://asc.understandingaccounting.org/asc/605/958/#605-958-25-11) to account for conditional promises to give. That guidance requires the acquirer to do either of the following: 1. a Recognize a conditional promise only if the conditions on which it depends are substantially met as of the acquisition date 2. b Recognize a transfer of assets with a conditional promise to contribute them as a refundable advance unless the conditions have been substantially met as of the acquisition date. #### Recognizing Goodwill Acquired or a Contribution Received, Including Consideration Transferred ##### [805-958-25-27](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:6a0f29a8fa906df18b614a66d99563f398727473948bd912f1a374288b5ea67a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer applies the guidance in this Subsection instead of Subtopic 805-30 for the recognition of the following items: 1. a Goodwill acquired, whether recognized as an asset or as an immediate charge to the statement of activities 2. b A [contribution](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") received in an acquisition 3. c Consideration transferred, including [contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met."). ##### [805-958-25-28](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:75f8fd70f9eb2d3bac40c07346e3eadc5f74ba684ff5655908a301e066f35f94 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unless the operations of the acquiree are expected to be predominantly supported by contributions and returns on investments (see paragraphs [958-805-25-29 through 25-30](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29) ), an NFP acquirer shall recognize goodwill as of the acquisition date, measured in accordance with paragraph [958-805-30-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-6). ##### [805-958-25-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:317dec49bf4c81f706047ef254921f5b34e32898284c6dc12ac4d145f7fc3a07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the operations of the acquiree as part of the combined entity are expected to be predominantly supported by contributions and returns on investments, an NFP acquirer shall recognize a separate charge in its statement of activities as of the acquisition date, measured in accordance with paragraph [958-805-30-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-6), rather than goodwill. _Predominantly supported by_ means that contributions and returns on investments are expected to be significantly more than the total of all other sources of revenues. ##### [805-958-25-30](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:065befabecc2c6a7533d8de601da045181957af546b2e8f3f05293e2916ce29b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall consider all relevant qualitative and quantitative factors in determining the expected nature of the predominant source of support for an acquiree's operations as part of the combined entity. For example, an NFP acquirer shall consider qualitative and quantitative information about all forms of contributed support, including contributions that are precluded from being recognized or are not required to be recognized in the financial statements (such as certain contributed services and collection items and conditional promises to give). ##### [805-958-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:c490529177ee095c345d2f923a5531700301e43b968c25b8be1b532a74754335 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall recognize an inherent contribution received, measured in accordance with paragraph [958-805-30-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-8), as a separate credit in its statement of activities as of the acquisition date.Example 1 (see paragraphs [958-805-55-49 through 55-50](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-49) ) and Example 6 (see paragraphs [958-805-55-62 through 55-67](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-62) ) illustrate acquisitions with inherent contributions. ##### [805-958-25-32](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:a02e8c669a2cefb578747e22a15737e9a4fdb578c324a2fcbe74648c5afbdbb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer might transfer consideration to the former owner of the acquiree or to a designee of the former owner. The NFP acquirer also might receive assistance from an unrelated third party, which shall be taken into account in measuring the consideration transferred. Examples of potential forms of consideration include any of the following: 1. a Cash 2. b Other assets 3. c A business or a nonprofit activity of the acquirer 4. d Contingent consideration. ##### [805-958-25-33](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:0ac0a2ec064cf227c323d559f89df423e25bf7b38a11509ff1b7ad375f7ed8a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An asset transferred by an NFP acquirer to an unrelated third party as a required condition of an acquisition shall be accounted for as consideration transferred for the acquiree unless the NFP acquirer retains control over the transferred assets. Example 4 (see paragraphs [958-805-55-57 through 55-58](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-57) ) illustrates assistance received from a third party. ##### [805-958-25-34](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:5e4d8045b0cbe8ec62a5b5185f486a64d254d29cc51ce45b78cc15e01cdfa1a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consideration transferred may include assets or liabilities of the NFP acquirer that have carrying amounts that differ from their fair values at the acquisition date (for example, nonmonetary assets or a business of the acquirer). If so, the NFP acquirer shall recognize the resulting gains or losses, if any, in the statement of activities. However, sometimes the transferred assets or liabilities remain within the combined entity after the acquisition, and the acquirer therefore retains control of them. An NFP acquirer that retains control over the transferred assets shall not recognize a gain or loss in the statement of activities on assets or liabilities it controls both before and after the acquisition. ##### [805-958-25-35](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:9095e4ce79426acb5cf776c6de0dc9cb227e428ce0e1399e1aa2d0d230363da4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of asset transfers in which control over the future economic benefits of the transferred assets is retained by the acquirer include all of the following: 1. a The assets are transferred to the acquiree rather than to its former owners or are otherwise transferred to a recipient that is controlled by the acquirer. By virtue of its control over the recipient, the acquiring entity has the ability to revoke the transfer or to direct the use of the assets to itself or an affiliate. 2. b The asset transfer is otherwise revocable, repayable, or refundable. 3. c The assets are transferred with the stipulation that they be used on behalf of, or for the benefit of, the acquiree, the acquirer, the consolidated entity, or their affiliates. Example 3 (see paragraphs [958-805-55-55 through 55-56](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-55) ) illustrates an asset transfer in which the NFP acquirer retains control over the future economic benefits after the acquisition. ##### [805-958-25-36](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:63558988e71f43128bec2e0fa1f45ca05a23086ea2c7745a91f51bed2b79db56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consideration an NFP acquirer transfers in exchange for the acquiree includes any asset or liability resulting from a contingent consideration arrangement. The NFP acquirer shall recognize the contingent consideration as part of the consideration transferred in exchange for the acquiree. #### Determining What Is Part of the Acquisition Transaction ##### [805-958-25-37](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:55.035Z to 2026-09-10T01:27:55.035Z Record version: sha256:d5fadb29c9e8a6d01dc142ed52fc4a43f0afb8240ce20b2e74faf78988a0cb25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to the examples in paragraph [805-10-25-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-21), a payment by a former owner of an acquired business that is unrelated to the acquiree, such as a contribution to fund activities of the acquirer or its affiliates that are unrelated to those of the acquiree, is an example of a separate transaction that is not to be included in applying the acquisition method. Those contributions made shall be accounted for in accordance with the guidance in Subtopic 720-25. Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:ddb5a2d90622496a09d875675304ee2912b8e3b1a1137e65738aedd3f1614fae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/958/#30-initial-measurement) SEC content: no ### Merger of Not-for-Profit Entities ##### [805-958-30-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:b2f0295f50f9b924ea7e297dd9a7ec22707c7065f2d970f1aa384e4a60704803 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. **The new [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) shall measure the assets and liabilities in its financial statements as of the [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective.") at the amounts reported in the financial statements of the merging entities as of that date prepared in accordance with GAAP, adjusted as necessary in accordance with paragraphs [958-805-30-2 through 30-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-2) .** ##### [805-958-30-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:37672415b865f535866f85da51672c0a070ddc167e592ed923df810b26c817a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The merging entities may have measured assets and liabilities using different methods of accounting in their separate financial statements. The new NFP shall adjust the amounts of those assets and liabilities as necessary to reflect a consistent method of accounting. ##### [805-958-30-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:657618d3fdd4d91a099684a864861de65c53b5e6b8e3257d1b26fa42f4365357 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, because the carryover method does not reflect a fresh-start measurement, a merger is not an event that permits the election of accounting options that are restricted to the entity's initial acquisition or recognition of an item (or the reversal of a previous election). Thus, for example, one merging entity's election to apply the Fair Value Option Subsections of Subtopic 825-10 for a particular financial asset or liability permits neither the new NFP's election of the fair value option for other financial assets or liabilities at the merger date nor the reversal of the previous selection of the fair value option. ##### [805-958-30-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:5087eadfa367bb93fb9b107ddf5924c1bca0df268a7d0b388dd9db6c553804a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The new NFP shall eliminate the effects of any intra-entity transactions on its assets, liabilities, and net assets as of the merger date. ### Acquisition by a Not-for-Profit Entity ##### [805-958-30-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:c2315654a39fbe13f1efcf1bfd916c46e4a6b26554dc9e013f54fb684b0751cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) that is an [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.") applies the guidance in this Subsection instead of Subtopic 805-30 for the measurement of the following items: 1. a [Goodwill](https://asc.understandingaccounting.org/glossary/g/#goodwill "An asset representing the future economic benefits arising from other assets acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation that are not individually identified and separately recognized. For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph 958-805-25-29.") acquired, whether recognized as an asset or an immediate charge to the statement of activities 2. b A [contribution](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") received in an acquisition 3. c Consideration transferred, including [contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met."). Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)A [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) that is an [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.") applies the guidance in this Subsection instead of Subtopics 805-20 and 805-30 for the measurement of the following items: 1. a [Goodwill](https://asc.understandingaccounting.org/glossary/g/#goodwill "An asset representing the future economic benefits arising from other assets acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation that are not individually identified and separately recognized. For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph 958-805-25-29.") acquired, whether recognized as an asset or an immediate charge to the statement of activities 2. b A [contribution](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") received in an acquisition 3. c Consideration transferred, including [contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met."). #### Goodwill Acquired, Whether Recognized as an Asset or an Immediate Charge to the Statement of Activities ##### [805-958-30-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:58ccf4de33a1b00d50c353f54e884466ed86e3613a17765af6ee5a668e1f2bd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall measure goodwill acquired, including goodwill recognized as an immediate charge to the statement of activities, as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") as the excess of (a) over (b): 1. a The aggregate of the following: 1. 1 The consideration transferred measured at its acquisition-date fair value (see paragraphs [958-805-30-10 through 30-13](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-10) ) 2. 2 The fair value of any [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") in the [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.") 3. 3 In an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.") achieved in stages, the acquisition-date fair value of the acquirer's previously held [equity interest](https://asc.understandingaccounting.org/glossary/e/#equity-interests "Used broadly to mean ownership interests of investor-owned entities; owner, member, or participant interests of mutual entities; and owner or member interests in the net assets of not-for-profit entities.") in the acquiree. 2. b The net of the acquisition-date amounts of the [identifiable](https://asc.understandingaccounting.org/glossary/i/#identifiable "An asset is identifiable if it meets either of the following criteria: It is separable, that is, capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability, regardless of whether the entity intends to do so. It arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.") assets acquired and the liabilities assumed measured in accordance with Subtopic 805-20 and this Subtopic. ##### [805-958-30-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:be7bcb29ec60f93d45da98450be450bb131cae0af83a655def2ddf1ca4945e8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The result of the equation in the preceding paragraph will be to measure goodwill or the separate charge to the statement of activities as the excess of liabilities assumed over assets acquired if the acquisition by the NFP meets all of the following criteria: 1. a No consideration is transferred. 2. b There is no noncontrolling interest in an acquiree. 3. c The acquisition was not achieved in stages. #### A Contribution Received in an Acquisition ##### [805-958-30-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:c962c408acb89cfd3e5533032db04e03ca329dd7bfb385481c5e913392bf6d81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. **An [inherent contribution](https://asc.understandingaccounting.org/glossary/i/#inherent-contribution "A contribution that results if an entity voluntarily transfers assets (or net assets) or performs services for another entity in exchange for either no assets or for assets of substantially lower value and unstated rights or privileges of a commensurate value are not involved.") recognized in accordance with paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31) shall be measured as the excess of the amount in paragraph [958-805-30-6(b)](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-6) over the amount in paragraph [958-805-30-6(a)](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-6).** ##### [805-958-30-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:f3a0f16ed103d7b6e4a126752a9261c275708775ab142a16cb75daf302939621 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The inherent contribution received will be measured as the excess of assets acquired over liabilities assumed if the acquisition meets all of the following criteria: 1. a That acquisition is effected without the transfer of consideration. 2. b There is no noncontrolling interest in an acquiree. 3. c The acquisition was not achieved in stages. Example 6 (see paragraphs [958-805-55-62 through 55-67](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-62) ) illustrates an inherent contribution. #### Consideration Transferred, Including Contingent Consideration ##### [805-958-30-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:71e2b8e8640e6eed8cb6ea8780ac10c35ef981b70113dc736b8385feb6a42f15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consideration transferred in an acquisition by an NFP shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer and the liabilities incurred by the acquirer. ##### [805-958-30-11](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:c262fc985f07a07c954eb15aef3be04b0053d31408a98b5f48fabbb598889c7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the consideration transferred includes assets or liabilities of the NFP acquirer that have carrying amounts that differ from their fair values at the acquisition date, as discussed in paragraph [958-805-25-34](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-34), the NFP acquirer shall remeasure the transferred assets or liabilities to their fair values as of the acquisition date. ##### [805-958-30-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:a4c8aacbb015bf9223e7a7c4bfbba3358d8525bf4ec2de27998e887ee21d407a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer that retains control over the transferred assets as described in paragraphs [958-805-25-33 through 25-34](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-33) shall measure those assets and liabilities at their carrying amounts immediately before the acquisition date. ##### [805-958-30-13](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:56.788Z to 2026-09-10T01:27:56.788Z Record version: sha256:00517dc4d5e2e102b0709887e85e797c03c4429cce1a3e653bd54f4217c45223 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration shall be measured initially at acquisition-date fair value. Source downloaded (UTC): 2026-09-10T01:27:59.311Z to 2026-09-10T01:27:59.311Z Record version: sha256:d4f0e0e32f7906686a65a4e9328f2ca4873c3526416f7725c3b072c6e9ed69d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/958/#35-subsequent-measurement) SEC content: no ### Acquisition by a Not-for-Profit Entity ##### [805-958-35-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:59.311Z to 2026-09-10T01:27:59.311Z Record version: sha256:4bfdb206d4dfcbcc60a7029e62ef478f2edb9a029ac9d0a2ed7fbcb7a7b95507 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Section together with the guidance in paragraph [805-10-35-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-1) and Section 805-20-35 applies to a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) that is an [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer."). This Section provides the following incremental guidance for assets acquired and liabilities assumed or incurred in an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities."): 1. a [Contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met."), including contingent consideration arrangements assumed by an acquirer 2. b [Goodwill](https://asc.understandingaccounting.org/glossary/g/#goodwill "An asset representing the future economic benefits arising from other assets acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation that are not individually identified and separately recognized. For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph 958-805-25-29.") acquired. #### Contingent Consideration, Including Contingent Consideration Arrangements Assumed by an Acquirer ##### [805-958-35-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:59.311Z to 2026-09-10T01:27:59.311Z Record version: sha256:82901d0f33ebdc08cc1e1b95cdf5aa688371f38b978b74bda8370256d7c7494b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some changes in the fair value of contingent consideration and contingent consideration arrangements assumed from an acquiree that the acquirer recognizes after the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") may be the result of additional information about facts and circumstances that existed at the acquisition date that the acquirer obtained after that date. Such changes are measurement period adjustments in accordance with paragraphs [805-10-25-13 through 25-18](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) and Section 805-10-30. ##### [805-958-35-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:59.311Z to 2026-09-10T01:27:59.311Z Record version: sha256:bf6c54dfdccd0e0afbdd203018db7ccae61a2daf81759a01da0206c29bd8d15b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes resulting from events after the acquisition date, such as meeting an earnings or other performance target, reaching a specified share price, or reaching a milestone on a research and development project, are not measurement period adjustments. An NFP acquirer shall account for such changes by remeasuring the related asset or liability to fair value at each reporting date until the contingency is resolved and recognizing the changes in fair value in the statement of activities. ##### [805-958-35-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:59.311Z to 2026-09-10T01:27:59.311Z Record version: sha256:09624b618f8a73e51ee46265f557c1a090daf3ef2da5cabae730766e9bf0a1ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration arrangements of an acquiree assumed by the acquirer shall be measured subsequently in accordance with the guidance for contingent consideration arrangements in paragraphs [958-805-35-2 through 35-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-35-2) . #### Goodwill Acquired ##### [805-958-35-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:59.311Z to 2026-09-10T01:27:59.311Z Record version: sha256:1c694fea91adc9b8acd86057272af82c440e115bc314641084a541d9410564e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance, including the related accounting alternative on subsequently measuring goodwill recognized in an acquisition of a business or a nonprofit activity, see Subtopic 350-20. See paragraph [350-20-65-2](https://asc.understandingaccounting.org/asc/350/20/#350-20-65-2) for transition guidance on applying the accounting alternative for amortizing goodwill in Subtopic 350-20 and paragraph [350-20-65-4](https://asc.understandingaccounting.org/asc/350/20/#350-20-65-4) for transition guidance on applying the accounting alternative for a goodwill impairment triggering event evaluation. Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:f2de7daea3340169907bf0ded3528ee14e23181a72f81b39edc96f260e179aec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/805/958/#45-other-presentation-matters) SEC content: no ### Merger of Not-for-Profit Entities ##### [805-958-45-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:5d5e7efb170b44d7e0d1c5be3117b2d8906b5704639c24697a57c558c02d21ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) resulting from a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.") is a new reporting entity, with no activities before the [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective."). Thus, the new NFP's initial reporting period begins with the merger date, and the merger itself shall not be reported as activity of the new NFP's initial reporting period. Rather, the combined assets, liabilities, and net assets of the merging entities are included in the statement of financial position as of the beginning of that initial reporting period, if presented. ##### [805-958-45-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:fd5d17f0e2c2a1f38f7f12d53b48d3575794d54bf8d4b8104ae82c081c3eb699 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The new NFP's statement of activities and statement of cash flows for its initial reporting period shall do both of the following: 1. a Include in the reported amounts as of the beginning of the period (the opening amounts), such as cash and cash equivalents at the beginning of the period, the combined amounts of the merging entities' assets, liabilities, and net assets (in total and by classes of net assets) as of the merger date. The following changes shall be reflected in the opening amounts: 1. 1 Accounting changes necessary to adjust a merging entity's financial statements to generally accepted accounting principles (GAAP) in accordance with paragraph [958-805-25-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-7) 2. 2 Accounting changes to conform the individual accounting policies of the merging entities in accordance with paragraph [958-805-30-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-2) 3. 3 Changes to eliminate intra-entity balances in accordance with paragraph [958-805-30-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-4). 2. b Report activity from the merger date through the end of the reporting period. ### Acquisition by a Not-for-Profit Entity ##### [805-958-45-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:8a3b0bd9c20f0396d393ce33702b98bd1c146c76572ee6b4339dbecb42660d9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial statements of an [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.") (the combined entity) shall report an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.") as activity of the period in which it occurs. #### Statement of Activities ##### [805-958-45-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:b30bfb08612c7866d6019dfb69ca49ba9266f3378595777d5bcb030bb68d31a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) acquirer shall report the excess amount recognized in accordance with the guidance in paragraph [958-805-25-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29) as a separate line item on the face of its statement of activities. The separate line item shall be appropriately described, for example, as _excess of consideration paid over net assets acquired in acquisition of Entity AB_ (or as _excess of liabilities assumed over assets acquired in acquisition of Entity AB_). Example 5 (see paragraphs [958-805-55-59 through 55-61](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-59) ) illustrates one way an acquirer might present that amount in its statement of activities. ##### [805-958-45-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:8867d0ddfe777e99d69ee17586f682d870ab807a428c0d4980bb832372619b21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall report the [inherent contribution](https://asc.understandingaccounting.org/glossary/i/#inherent-contribution "A contribution that results if an entity voluntarily transfers assets (or net assets) or performs services for another entity in exchange for either no assets or for assets of substantially lower value and unstated rights or privileges of a commensurate value are not involved.") recognized in accordance with paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31) as a separate line item on the face of the statement of activities. The separate line item shall be appropriately described, for example, as _excess of assets acquired over liabilities assumed in donation of Entity XY_ or as _contribution received in donation of Entity XY_. In another situation, that excess might be described as _excess of fair value of net assets acquired over consideration paid in acquisition of Entity XY_. ##### [805-958-45-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:08f359e3c20aa07c7da002dd4d50c95ab21dd65582ec7d03f7f8b7a2dd9f35cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall classify the inherent contribution received presented in accordance with the preceding paragraph on the basis of the donor restrictions imposed on the related net assets. In classifying those net assets, an acquirer shall do both of the following: 1. a Include restrictions imposed on the net assets of the [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.") by a donor before the acquisition and those imposed by the donor of the [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") or [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.") acquired, if any, in accordance with Section 958-605-45. 2. b Report donor-restricted [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") as [donor-restricted support](https://asc.understandingaccounting.org/glossary/d/#donor-restricted-support "Donor-restricted revenues or gains from contributions that increase net assets with donor restrictions (donors include other types of contributors, including makers of certain grants).") even if the restrictions are met in the same reporting period in which the acquisition occurs. That is, the acquirer shall not apply the reporting exception in paragraph [958-605-45-4A](https://asc.understandingaccounting.org/asc/605/958/#605-958-45-4A) to [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") acquired in an acquisition. ##### [805-958-45-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:299797b3dbf7b25928918a78ea0cc686351829178e040782fcf2eea0bbdbb3fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Thus, the inherent contribution received may increase net assets with donor restrictions, [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants)."), or some combination of those items. Example 6 (see paragraphs [958-805-55-62 through 55-67](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-62) ) illustrates the application of the preceding paragraph's guidance on reporting [donor-imposed restrictions](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.") on an inherent contribution received. ##### [805-958-45-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:e4aa3bcc6767892656914ffeb50b2163e074a3984f001151e46cd64b699f9353 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer that transfers assets as consideration for an acquired nonprofit activity or business shall assess whether that transaction satisfies a donor-imposed restriction (see the following paragraph) or otherwise results in a change in its net asset classifications (see paragraph [958-805-45-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-10)). ##### [805-958-45-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:148780cf104f39f54f542c354a4f4f212e134e14b98d0260784a80745b327cfa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, transferring consideration in an acquisition might satisfy a donor-imposed restriction on the acquirer's net assets that were restricted for acquisition of land, buildings, works of art, or other long-lived assets if the acquiree has the qualifying assets. If so, the acquirer may either report the expiration of those restrictions separately or aggregate and report them together with other similar expirations of donor-imposed restrictions during the period in which the acquisition occurs. ##### [805-958-45-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:f1f5473b137ee2c15994281dddc605237431dc98a8c5f329def69cfd3c17dfad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If transferring consideration results in changes in net asset classifications other than those described in the preceding paragraph, an NFP acquirer shall report those changes separately from both any other [reclassification of net assets](https://asc.understandingaccounting.org/glossary/r/#reclassification-of-net-assets "Simultaneous increase of one class of net assets and decrease of another. A reclassification of net assets usually results from a donor-imposed restriction (donors include other types of contributors, including makers of certain grants) being satisfied or otherwise lapsing.") and any expiration of those restrictions during the period in which the acquisition occurs. For example, an acquirer that transfers as consideration its assets with no associated donor restrictions and acquires assets from the acquiree that have associated donor restrictions shall recognize a reclassification of net assets in its statement of activities. #### Statement of Cash Flows ##### [805-958-45-11](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:839c0e7c17e2a412eea74ad68d58fd6f163856118dba5b22f9a55e3bb60e08be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall report the entire amount of any net cash flows related to an acquisition (cash paid as consideration, if any, less acquired cash of the acquiree) in the statement of cash flows as an [investing activity](https://asc.understandingaccounting.org/glossary/i/#investing-activities "Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services by the entity (other than materials that are part of the entity's inventory). Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale, as discussed in paragraphs 230-10-45-12 and 230-10-45-21."), except for cash payments made to settle a contingent consideration liability arising from the acquisition that are not paid soon after the business combination. Example 7 (see paragraphs [958-805-55-68 through 55-70](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-68) ) illustrates this requirement. In addition, cash payments made soon after the acquisition date of the business combination by an acquirer to settle a contingent consideration liability shall be classified as investing activities. ##### [805-958-45-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:03.101Z to 2026-09-10T01:28:03.101Z Record version: sha256:25286dbb8aa46e4857492e543a96c213d0e9a5cc16604d396d454a526fcebffe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash payments, or the portion of the payments, not made soon after the acquisition date of a business combination by the NFP acquirer to settle a contingent consideration liability up to the amount of the contingent consideration liability recognized at the acquisition date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle the contingent consideration liability shall be classified as cash outflows for financing activities. Cash payments, or the portion of the payments, not made soon after the acquisition date of a business combination by the NFP acquirer to settle a contingent consideration liability that exceed the amount of the contingent consideration liability recognized at the acquisition date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle the contingent consideration liability shall be classified as cash outflows for operating activities. Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:c5af3e8cfeb384323b2847d44370827503ef2f29b1e829daa68634e153ef7f5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/958/#50-disclosure) SEC content: no ### Merger of Not-for-Profit Entities ##### [805-958-50-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:da47638600c2c503ec5f651f556df2004be8613dc972182278bafa097960752f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. **The new [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) shall disclose information that enables users of its financial statements to evaluate the nature and financial effect of the [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.") that resulted in its formation.** ##### [805-958-50-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:1b5f3713578b710df994e298b23855549ae48ebb51f2a32ca24cad7fa85c0d9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To meet the objective in paragraph [958-805-50-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-1), the new NFP shall disclose the following information for the merger that resulted in its formation: 1. a The name and a description of each merging entity 2. b The [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective.") 3. c The primary reasons for the merger 4. d Both of the following for each merging entity: 1. 1 The amounts recognized as of the merger date for each major class of assets and liabilities and each class of net assets 2. 2 The nature and amounts, if applicable, of any significant assets (for example, conditional promises receivable or collections) or liabilities (for example, conditional promises payable) not otherwise required to be recognized under generally accepted accounting principles (GAAP). 5. e The nature and amount of any significant adjustments made to conform the individual accounting policies of the merging entities or to eliminate intra-entity balances. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)To meet the objective in paragraph [958-805-50-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-1), the new NFP shall disclose in interim and annual reporting periods the following information for the merger that resulted in its formation: 1. a The name and a description of each merging entity 2. b The [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective.") 3. c The primary reasons for the merger 4. d Both of the following for each merging entity: 1. 1 The amounts recognized as of the merger date for each major class of assets and liabilities and each class of net assets 2. 2 The nature and amounts, if applicable, of any significant assets (for example, conditional promises receivable or collections) or liabilities (for example, conditional promises payable) not otherwise required to be recognized under generally accepted accounting principles (GAAP). 5. e The nature and amount of any significant adjustments made to conform the individual accounting policies of the merging entities or to eliminate intra-entity balances. ##### [805-958-50-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:402f362b4892269daa634474ebd43def0eb6f35ae37e66b2197191c5210e8664 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the new NFP is a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market.") and the merger occurs at other than the beginning of an annual reporting period (that is, if its initial financial statements thus cover less than an annual reporting period), the new NFP shall disclose the following supplemental pro forma information: 1. a Revenue for the current reporting period as though the merger date had been the beginning of the annual reporting period 2. b Changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") and changes in [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") for the current reporting period as though the merger date had been the beginning of the annual reporting period. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If the new NFP is a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market.") and the merger occurs at other than the beginning of an annual reporting period (that is, if its initial financial statements thus cover less than an annual reporting period), the new NFP shall disclose the following supplemental pro forma information in interim and annual reporting periods: 1. a Revenue for the current reporting period as though the merger date had been the beginning of the annual reporting period 2. b Changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") and changes in [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") for the current reporting period as though the merger date had been the beginning of the annual reporting period. ##### [805-958-50-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:32dbbac91750622074c03a1e4231c294cc1f92f993a8ece2dc15f48add4e9116 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the new NFP is a public entity and it presents comparative financial information in the annual reporting period following the year in which the merger occurs, it shall disclose the supplemental pro forma information in paragraph [958-805-50-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-3) for the comparable prior reporting period as though the merger date had been the beginning of that prior annual reporting period. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If the new NFP is a public entity and it presents comparative financial information in interim and annual reporting periods following the year in which the merger occurs, it shall disclose the supplemental pro forma information in paragraph [958-805-50-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-3) for the comparable prior interim and annual reporting periods as though the merger date had been the beginning of that prior reporting period. ##### [805-958-50-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:135b7d98a7d319a9d0db394eabca08f4e6f69309993b3895c0c832d3179dd0c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If disclosure of any of the information required by paragraphs [958-805-50-3 through 50-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-3) is impracticable, the new NFP shall disclose that fact and explain why the disclosure is impracticable. The term _impracticable_ has the same meaning as _impracticability_ in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If disclosure of any of the information required by paragraphs [958-805-50-3 through 50-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-3) is impracticable, the new NFP shall disclose that fact and explain why the disclosure is impracticable in interim and annual reporting periods. The term _impracticable_ has the same meaning as _impracticability_ in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9). ##### [805-958-50-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-6) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:b5081e2290694e3ae77db6883dd355736194edf88b818fce2c29f856c59f8fa2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the specific disclosures required by this Subsection do not meet the objective in paragraph [958-805-50-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-1), the new NFP shall disclose whatever additional information is necessary to meet that objective. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If the specific disclosures required by this Subsection do not meet the objective in paragraph [958-805-50-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-1), the new NFP shall disclose in interim and annual reporting periods whatever additional information is necessary to meet that objective. ### Acquisition by a Not-for-Profit Entity ##### [805-958-50-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:a37f2dd7b9258d342f7bbfb1217ae1306832830c30fc4147e346f2fee4e77b6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To meet the objective in paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1), an NFP acquirer shall disclose the information required by paragraph [805-10-50-2(a) through (g)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2). ##### [805-958-50-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-8) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:6f8b12e6060dd60d1ee9918c32d0b032779a4614bc4b4dfdf409c9ef3896806a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Instead of disclosing the information in paragraph [805-10-50-2(h)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2), an NFP acquirer that is a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market.") shall disclose the following information for each acquisition that occurs during the reporting period: 1. a Revenues attributable to the acquiree since the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") that are included in the statement of activities for the reporting period 2. b Changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") and changes in [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") attributable to the [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.") since the acquisition date that are included in the statement of activities for the reporting period 3. c The revenues of the combined entity as though the acquisition date for all acquisitions that occurred during the current year had been at the beginning of the annual reporting period (supplemental pro forma information) 4. d Changes in net assets without donor restrictions and changes in net assets with donor restrictions as though the acquisition date for all acquisitions that occurred during the current year had been at the beginning of the annual reporting period (supplemental pro forma information) 5. e The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the acquisition(s) included in the reported pro forma revenues and changes in net assets without donor restrictions and changes in net assets with donor restrictions (supplemental pro forma information). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)Instead of disclosing the information in paragraph [805-10-50-2(h)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2), an NFP acquirer that is a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market.") shall disclose in interim and annual reporting periods the following information for each acquisition that occurs during the reporting period: 1. a Revenues attributable to the acquiree since the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") that are included in the statement of activities for the reporting period 2. b Changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") and changes in [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") attributable to the [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.") since the acquisition date that are included in the statement of activities for the reporting period 3. c The revenues of the combined entity as though the acquisition date for all acquisitions that occurred during the current year had been at the beginning of the annual reporting period (supplemental pro forma information) 4. d Changes in net assets without donor restrictions and changes in net assets with donor restrictions as though the acquisition date for all acquisitions that occurred during the current year had been at the beginning of the annual reporting period (supplemental pro forma information) 5. e The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the acquisition(s) included in the reported pro forma revenues and changes in net assets without donor restrictions and changes in net assets with donor restrictions (supplemental pro forma information). ##### [805-958-50-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-9) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:bdf7ee09cf0586b21bdf2061b6755f13686652945a784669c2de78c213a0371b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it presents comparative financial information, an NFP acquirer that is a public entity shall disclose the supplemental pro forma information required by paragraph [958-805-50-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-8) as though the acquisition(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. For example, for a calendar year-end entity, disclosures would be provided for a business combination that occurs in 20X2, as if it occurred on January 1, 20X1. Such disclosures would not be revised if 20X2 is presented for comparative purposes with the 20X3 financial statements (even if 20X2 is the earliest period presented). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If it presents comparative financial information in interim and annual reporting periods, an NFP acquirer that is a public entity shall disclose the supplemental pro forma information required by paragraph [958-805-50-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-8) as though the acquisition(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. For example, for a calendar year-end entity, disclosures would be provided for a business combination that occurs in 20X2, as if it occurred on January 1, 20X1. Such disclosures would not be revised if 20X2 is presented for comparative purposes with the 20X3 financial statements (even if 20X2 is the earliest period presented). ##### [805-958-50-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-10) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:ce931e110995545d002c049638c9a5e43c901e8b4a8c90def0eaf82a1814aeac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the disclosure of any of the information required by paragraphs [958-805-50-8 through 50-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-8) is impracticable, the NFP acquirer shall disclose that fact and explain why the disclosure is impracticable. The term _impracticable_ has the same meaning as _impracticability_ in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If the disclosure of any of the information required by paragraphs [958-805-50-8 through 50-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-8) is impracticable, the NFP acquirer shall disclose in interim and annual reporting periods that fact and explain why the disclosure is impracticable. The term _impracticable_ has the same meaning as _impracticability_ in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9). ##### [805-958-50-11](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-11) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:7ec0ce81fb07855c49539983e73f8f95e11de6f5a45eea039568179c8af9cfc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Instead of the information required by Section 805-30-50, an NFP acquirer shall disclose the following information for each acquisition that occurs during the reporting period: 1. a A qualitative description of the factors, such as expected synergies from combining operations of the acquiree and the acquirer, [intangible assets](https://asc.understandingaccounting.org/glossary/i/#intangible-assets "Assets (not including financial assets) that lack physical substance. (The term intangible assets is used to refer to intangible assets other than goodwill.)") that do not qualify for separate recognition, or other factors, such as the nonrecognition of collections, that make up either of the following: 1. 1 The [goodwill](https://asc.understandingaccounting.org/glossary/g/#goodwill "An asset representing the future economic benefits arising from other assets acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation that are not individually identified and separately recognized. For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph 958-805-25-29.") recognized 2. 2 The separate charge recognized in the statement of activities in accordance with paragraph [958-805-25-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29). 2. b The acquisition-date fair value of the total consideration transferred (or if no consideration was transferred, that fact) and the acquisition-date fair value of each major class of consideration, such as: 1. 1 Cash 2. 2 Other tangible or intangible assets, including a business or subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability for contingent consideration. 3. c For [contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.") arrangements, all of the following: 1. 1 The amount recognized as of the acquisition date 2. 2 A description of the arrangement and the basis for determining the amount of the payment 3. 3 An estimate of the range of outcomes (undiscounted) or, if a range cannot be estimated, that fact and the reasons why a range cannot be estimated. If the maximum amount of the payment is unlimited, the acquirer shall disclose that fact. 4. d The total amount of goodwill that is expected to be deductible for tax purposes. 5. e If the acquisition results in an [inherent contribution](https://asc.understandingaccounting.org/glossary/i/#inherent-contribution "A contribution that results if an entity voluntarily transfers assets (or net assets) or performs services for another entity in exchange for either no assets or for assets of substantially lower value and unstated rights or privileges of a commensurate value are not involved.") received, a description of the reasons why the transaction resulted in a contribution received (see paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31)). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)Instead of the information required by Section 805-30-50, an NFP acquirer shall disclose in interim and annual reporting periods the following information for each acquisition that occurs during the reporting period: 1. a A qualitative description of the factors, such as expected synergies from combining operations of the acquiree and the acquirer, [intangible assets](https://asc.understandingaccounting.org/glossary/i/#intangible-assets "Assets (not including financial assets) that lack physical substance. (The term intangible assets is used to refer to intangible assets other than goodwill.)") that do not qualify for separate recognition, or other factors, such as the nonrecognition of collections, that make up either of the following: 1. 1 The [goodwill](https://asc.understandingaccounting.org/glossary/g/#goodwill "An asset representing the future economic benefits arising from other assets acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation that are not individually identified and separately recognized. For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph 958-805-25-29.") recognized 2. 2 The separate charge recognized in the statement of activities in accordance with paragraph [958-805-25-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29). 2. b The acquisition-date fair value of the total consideration transferred (or if no consideration was transferred, that fact) and the acquisition-date fair value of each major class of consideration, such as: 1. 1 Cash 2. 2 Other tangible or intangible assets, including a business or subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability for contingent consideration. 3. c For [contingent consideration](https://asc.understandingaccounting.org/glossary/c/#contingent-consideration "Usually an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.") arrangements, all of the following: 1. 1 The amount recognized as of the acquisition date 2. 2 A description of the arrangement and the basis for determining the amount of the payment 3. 3 An estimate of the range of outcomes (undiscounted) or, if a range cannot be estimated, that fact and the reasons why a range cannot be estimated. If the maximum amount of the payment is unlimited, the acquirer shall disclose that fact. 4. d The total amount of goodwill that is expected to be deductible for tax purposes. 5. e If the acquisition results in an [inherent contribution](https://asc.understandingaccounting.org/glossary/i/#inherent-contribution "A contribution that results if an entity voluntarily transfers assets (or net assets) or performs services for another entity in exchange for either no assets or for assets of substantially lower value and unstated rights or privileges of a commensurate value are not involved.") received, a description of the reasons why the transaction resulted in a contribution received (see paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31)). ##### [805-958-50-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-12) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:9cf647792f59a60cb568796f7ccd879ab3d74eb7ee6c650855bb434dff9671d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Additionally, an NFP acquirer shall disclose the following information for each acquisition that occurs during the reporting period: 1. a The amount of collection items acquired that are recognized in the statement of activities as a decrease in the acquirer's net assets in accordance with paragraph [958-805-25-23](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-23). 2. b The undiscounted amount of [conditional promises to give](https://asc.understandingaccounting.org/glossary/c/#conditional-promise-to-give "A promise to give that is subject to a donor-imposed condition.") acquired or assumed and a description and the amount of each group of promises with similar characteristics, such as amounts of promises conditioned on establishing new programs, completing a new building, or raising matching gifts by a specified date. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)Additionally, an NFP acquirer shall disclose in interim and annual reporting periods the following information for each acquisition that occurs during the reporting period: 1. a The amount of collection items acquired that are recognized in the statement of activities as a decrease in the acquirer's net assets in accordance with paragraph [958-805-25-23](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-23). 2. b The undiscounted amount of [conditional promises to give](https://asc.understandingaccounting.org/glossary/c/#conditional-promise-to-give "A promise to give that is subject to a donor-imposed condition.") acquired or assumed and a description and the amount of each group of promises with similar characteristics, such as amounts of promises conditioned on establishing new programs, completing a new building, or raising matching gifts by a specified date. ##### [805-958-50-13](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-13) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:9dca9faa9262daea755974ce6312f73f384e3c44b2d33f2520b68d2cc4fe1c63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For individually immaterial acquisitions occurring during the reporting period that are material collectively, the NFP acquirer shall disclose the information required by paragraphs [958-805-50-8 through 50-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-8) and [805-10-50-2(e) through (g)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) in the aggregate. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For individually immaterial acquisitions occurring during the reporting period that are material collectively, the NFP acquirer shall disclose the information required by paragraphs [958-805-50-8 through 50-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-8) and [805-10-50-2(e) through (g)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) in the aggregate in interim and annual reporting periods. ##### [805-958-50-14](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-14) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:58018d903425371b8930e557b09687ac5e6d3abc61c5a82e421b2b5a4ada35ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the date of an acquisition is after the reporting date but before the financial statements are issued or available for issue, the NFP acquirer shall disclose the information required by paragraphs [958-805-50-7 through 50-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-7) unless the initial accounting for the acquisition is incomplete at the time the financial statements are issued or available for issue. In that situation, the acquirer shall describe which disclosures could not be made and the reason why they could not be made. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If the date of an acquisition is after the reporting date but before the financial statements are issued or available for issue, the NFP acquirer shall disclose in interim and annual reporting periods the information required by paragraphs [958-805-50-7 through 50-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-7) unless the initial accounting for the acquisition is incomplete at the time the financial statements are issued or available for issue. In that situation, the acquirer shall describe which disclosures could not be made and the reason why they could not be made. ##### [805-958-50-15](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:903f8e4e791f5197416e10cba1a9fa2dd532b75cee1d8736ca15070be3bd63eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer shall disclose any noncash [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") received and any other noncash amounts received or transferred in relation to an acquisition as noncash activities in accordance with paragraph [230-10-50-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-3). Example 7 (see paragraphs [958-805-55-68 through 55-70](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-68) ) illustrates the disclosure of noncash activities. ##### [805-958-50-16](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-16) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:61fe22673b555c1f1837954480514793de61fcb2ed8b11d0a07655ca633b10c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To meet the objective in paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5), an NFP acquirer shall disclose the information in this paragraph and paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) for each material acquisition or in the aggregate for individually immaterial business combinations that are material collectively. For each reporting period after the acquisition date until the NFP acquirer collects, sells, or otherwise loses the right to a contingent consideration asset, or until the NFP acquirer settles a contingent consideration liability or the liability is cancelled or expires, the NFP acquirer shall disclose all of the following: 1. a Any changes in the recognized amounts, including any differences arising upon settlement 2. b Any changes in the range of outcomes (undiscounted) and the reasons for those changes 3. c The disclosures required by Section 820-10-50. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)To meet the objective in paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5), an NFP acquirer shall disclose in interim and annual reporting periods the information in this paragraph and paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) for each material acquisition or in the aggregate for individually immaterial business combinations that are material collectively. For each interim and annual reporting period after the acquisition date until the NFP acquirer collects, sells, or otherwise loses the right to a contingent consideration asset, or until the NFP acquirer settles a contingent consideration liability or the liability is cancelled or expires, the NFP acquirer shall disclose all of the following: 1. a Any changes in the recognized amounts, including any differences arising upon settlement 2. b Any changes in the range of outcomes (undiscounted) and the reasons for those changes 3. c The disclosures required by Section 820-10-50. ##### [805-958-50-17](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-17) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:06.898Z to 2026-09-10T01:28:06.898Z Record version: sha256:0ce32f67b9dc71fe03664c7b38fb3355393231209948c8cb000140fbe7d4d2ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP acquirer that does not adopt the accounting alternative for amortizing goodwill in Subtopic 350-20shall provide a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period as required by paragraph [350-20-50-1](https://asc.understandingaccounting.org/asc/350/20/#350-20-50-1) for each material acquisition or in the aggregate for individually immaterial acquisitions that are material collectively. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For interim and annual reporting periods, an NFP acquirer that does not adopt the accounting alternative for amortizing goodwill in Subtopic 350-20shall provide a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period as required by paragraph [350-20-50-1](https://asc.understandingaccounting.org/asc/350/20/#350-20-50-1) for each material acquisition or in the aggregate for individually immaterial acquisitions that are material collectively. Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:88d4afa5cabd0a8b5b9a3518d406a2e2989dc682f1e3f9d5577bb7a34f3b07b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/958/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [805-958-55-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:c8dada3a1e8e184b2da33740e506ad630f4cb42049b0268dee9f4b433bfcb936 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the application of the definitions [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.") and [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.") in making the determination required by paragraph [958-805-25-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-1) 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](https://asc.understandingaccounting.org/glossary/c/#control "The direct or indirect ability to determine the direction of management and policies through ownership, contract, or otherwise.") of the new [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP), 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. ##### [805-958-55-2](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:6ec7ccaccb5ce53f5b539c289e21e592dbb5c79c0ce6320e1a51eff14056e6a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-3) , 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. ##### [805-958-55-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:65974708bceca9f4a7a7734a248eecf9168fee6176f4ee47077f4792e75f93b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:8c427f1fad4e446b800bc733c76e081ff6481e828068de1c30cd4d5a0965d6a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-5](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:401661573850abac6a163139c531cfb968e9b5f51237805ae63439229aceac1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:ade4569625273d56008d0779a312030cccb0e3754c7c2f5175d12a7010ee9bfc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-1), ceding of control is the sole definitive criterion for a merger. ##### [805-958-55-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:199aef4290818babb9a96df9224e23041c03fc44732f8125abb5b5dd717e283e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-8](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:94a647818b161235a5bb4d7f84ef26152bbfba8db4ba4a8a2a2a2987a91378dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/b/#business-combination "A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity."), 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. #### Illustrations ##### [805-958-55-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:adf62e5458b6a8b0ac86f8b1aabdadcf65618a2032500150d711523bb8959697 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example has two Cases, which share the assumptions in paragraphs [958-805-55-10 through 55-14](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-10) . The Cases illustrate the application of paragraph [958-805-25-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-1), 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-1) . 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). ##### [805-958-55-10](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:683a219327dd5d58a0773433c3ab53b4787d02349580682c88b1bbbaab01de96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-11](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:418f74ea6bea8f60c03204c6ead2d6ab49ba20c3343c6a12c96928d99805b81d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-12](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:f2707c3a1de337d8ca82901ecdfc1ead3e394077a613053f960ce22aedb34c3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-13](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:395e277a03b8df797aee39c8cd153a87a16af4380fb290587a24cb47849db591 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-14](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:34d56efc50c3adfcff5ff942a7da6cddd3337266c0cc6f186d4ae3cf80bd8a0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-15](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:a4d9a69892c52b964d62a1fd738c50c143ff504cf197a6029550268057bef834 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-16](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:e10fd68a8e2e44ae258e769d74de4520c02bc44b5de3c71032ceb87a55a125b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [958-805-55-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-4) 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. ##### [805-958-55-17](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:28515f5a84e456cc3326442ae7c2dd581d487082cc6187fe9eaa4fb18f017790 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-18](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:6c814d283e74d1d6409591cdcc4560dad0f23aef267e3e997c88d87da30ae6cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-19](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:4bd1737ba5d91c023cd9f143b5264af69cddd01babc2a584bc55c263051d7a0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-20](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:d809e877010a528288f01e40def12742e12cd67b8eb1cb902e986d18dae65f3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-21](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:f12aa8776c794c95dfd3fe5bd8d84571718084c622d5ec92eae5e1655ed6724a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-22](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:01be03c52dc9d54687244e30f7668f5a40aadfd14b39120ecefd31ca1c9c55b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-23](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:8aa6e352842c2a436f286755380901569ad1fb957db80f5319db04224f3ea838 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-24](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:b343c7a8bd49a04e30451e01c7ebf309f41b876df9c8a18b0071b4ea2c10180b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-25](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:0499a981564173819457c6921c99baa5cdc269a8c9d319e52d4b418cca27d387 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table summarizes certain facts for each of the combining charities and the initial staffing of the combined Charity E. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5FEF5D91-7E8E-4AE0-8AD1-7A832E8FACFB-low.gif) Charity C Charity D Financial—years ended 20X5 and 20X4: $ millions $ millions Revenues $45 $46 $30 $37 Expenses 42 42 37 38 Net excess (deficit) 3 4 (7) (1) Net assets—carrying amount 70 67 13 20 Employee head count 119 120 90 90 Joint operating agreements: Fund raising—net revenue sharing ratio 65% 35% "Information technology and marketing provided by Charity C" " receives nominal fee, pays all costs " " pays nominal fee " Governance: Members of board of directors 80 50 Members of executive committee 20 16 Staffing of Entity E: Senior officers of Entity E: President former chief executive officer Vice president strategic relations former chief executive officer Chief financial officer former chief financial officer "VP public policy (vacant, being recruited)" ##### [805-958-55-26](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:820a50076ad5c3e75e1d2bcae470f537dc53ea4d2bf40a9b80d61ba9fff929b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-27](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:3396fd90958638e663d1711740ef2dc775ce620b27a1970c0973ebfa4df85530 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-25) 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. ##### [805-958-55-28](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:6d9f9c5175df1081dc786c31e8156a04ea926685f279c4c48e391f2f67fa7e1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:d97bd996d40920b880b4cf6bf8c0de5b5179fcd7323857640379dc5630f1f138 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-30](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:18a6d51181e70b7a4a92856865dbc6b6410b117e7d36dce60722afe4000d2aa6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:c803312cd19e8f47e2b21214fdb11e29dc74d94a234b18e7b96ca64906fd3d8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ### Merger of Not-for-Profit Entities ##### [805-958-55-32](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:c21b53caba38f72e55ebb04ad8311b5ffa016a4534ab09b35edeedbf4a61adbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates some of the disclosures required for a [merger of not-for-profit entities](https://asc.understandingaccounting.org/glossary/m/#merger-of-not-for-profit-entities "A transaction or other event in which the governing bodies of two or more not-for-profit entities cede control of those entities to create a new not-for-profit entity.") in paragraphs [958-805-50-1 through 50-6](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-1) . The Example assumes that three [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs) merge to create a new NFP. NFP F, NFP G, and NFP H merge to create NFP I, which is a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market."). ##### [805-958-55-33](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:0a7e028b949cdadfe8cca273b1c2360bdc6ae386264856375bcf71e76bbd9bc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-34](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:be1b7e94b5c0f3e9f8018e64888ce9f083427b063d298c8c89a33d193623ebc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following note illustrates the disclosures required by paragraphs [958-805-50-2(a) through (c)](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-2). - NFP 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 H. All three entities shared the common mission of supporting youth education. Through their merger, the entities seek to further their common mission by substantially improving their after-school youth programs in the region and their capability to assist youth in need. They also seek to achieve economies of scale and other synergies through integrating their services. ##### [805-958-55-35](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:dd4b03ff9b33702d3b667376029eeef1a08d99d778199204856028c8b343cd07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following note illustrates the disclosures required by paragraph [958-805-50-2(d)(2)](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-2). - At 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-school youth facility. The promise is conditioned upon NFP F raising an equivalent amount from others by the end of 20X4 to be used for construction of the facility. At the merger date, NFP F had raised $420,000. NFP I expects to successfully raise the remaining amount by the end of 20X4. ##### [805-958-55-36](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:1fff47e77fc71a63eee7fcddaef8186f13a00705b385b96dd2cb9fd75acb0e55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following note illustrates the disclosure required by paragraph [958-805-50-2(e)](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-2). - NFP G and NFP H have a policy to report donor-restricted contributions whose restrictions are met in the same reporting period as support within net assets without donor restrictions. NFP F reports donor-restricted contributions whose restrictions are met in the same reporting period as donor-restricted support and subsequently releases the donor-restricted net assets when the restrictions are met. NFP I has conformed its policy to that of NFP G and NFP H. The accounting policy difference affects only the statement of activities; thus, no adjustment to the opening balance of NFP I's net asset classes is necessary. ##### [805-958-55-37](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:b25b3f79bafed56ca994e3d3715ce7751877962610ebfaac187ed09b26da670f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following note illustrates the disclosures required by paragraph [958-805-50-2(d)](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-2). - ![](https://asc.understandingaccounting.org/asc-img/GUID-64D226F2-F0C8-44C5-8B62-5DC8AAD5CB64-low.gif) "Major Classes of Assets June 15, 20X1" (amounts in thousands) Adjustments NFP F NFP G NFP H Debit Credit Total (NFP I) Assets Cash and short-term investments " $4,127 " " $7,213 " " $3,179 " - - " $14,519 " Contributions receivable " 3,053 " " 5,102 " " 2,696 " - - " 10,851 " Allowance for uncollectibles (295) (524) (157) - - (976) "Contributions receivable, net" " 2,758 " " 4,578 " " 2,539 " - - " 9,875 " "Land, buildings, and equipment" " 43,337 " " 59,021 " " 15,875 " - - " 118,233 " "Accumulated depreciation" " (8,458)" " (9,935)" " (1,990)" - - " (20,383)" "Land, buildings, and equipment, net" " 34,879 " " 49,086 " " 13,885 " - - " 97,850 " "Long-term investments" " 54,987 " " 108,234 " " 42,004 " - - " 205,225 " Liabilities - - Accounts payable and accrued expenses " 3,128 " " 6,412 " " 3,333 " - - " 12,873 " Grants payable " 2,893 " " 3,765 " " 2,232 " - - " 8,890 " Long-term debt " 32,980 " " 45,190 " " 18,556 " - - " 96,726 " Net assets With donor restrictions "48,834" "86,409" "28,895" - - "164,138" Without donor restrictions " 8,916 " " 27,335 " " 8,591 " - - "44,842" Total net assets " $57,750 " " $113,744 " " $37,486 " - - " $208,980 " ##### [805-958-55-38](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:b6afa5dab2c6798e128cf881d0cc2bb6fadf08f11380da6c8d8b15928d5588c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following supplemental information is required by paragraph [958-805-50-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-3). 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. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-88C99FEA-921E-4E02-987E-7404E920068B-low.gif) Supplementary Pro Forma Information (Unaudited) The following information is not audited. "NFP I's revenue and changes in net assets without donor restrictions and net assets with donor restrictions for the year ending December 31, 20X1, as if the merger had occurred at January 1, 20X1, are:" Revenue Change in Net Assets without Donor Restrictions Change in Net Assets with Donor Restrictions Supplemental pro forma information for 1/1/20X1-12/31/20X1 " $17,139 " " $5,715 " "($2,575)" ### Acquisition by a Not-for-Profit Entity #### Implementation Guidance ##### [805-958-55-39](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:bf66cd663b136a59b85ea3853091db0e58eb0890760fe7ec42c702149dc6f1b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") and a [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.") 2. b Identifying the [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.") 3. c [Intangible assets](https://asc.understandingaccounting.org/glossary/i/#intangible-assets "Assets (not including financial assets) that lack physical substance. (The term intangible assets is used to refer to intangible assets other than goodwill.)") that are [identifiable](https://asc.understandingaccounting.org/glossary/i/#identifiable "An asset is identifiable if it meets either of the following criteria: It is separable, that is, capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability, regardless of whether the entity intends to do so. It arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.") 4. d Transactions between entities under common control. ##### [805-958-55-40](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:b6a147b2fe6e10ec63a3d4a7d8244574a023577b5376a301ef978d1a996bbd21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-15-4](https://asc.understandingaccounting.org/asc/805/10/#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](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-3A) , 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](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) exists. ##### [805-958-55-41](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:d5cffa2111edf1849755137726f1f195c5fc10e6256da5edff0d4ff26d348298 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/10/#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. ##### [805-958-55-42](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:14d9b7a14caa049a7cd5b3f7d54a0740d1a85a63c0da06ba8427bae67af8e53f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [958-805-25-15](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-15) 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-16) requires that the combining entities consider the factors in paragraphs [805-10-55-10 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-10) and in paragraphs [958-805-55-43 through 55-46](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-43) . ##### [805-958-55-43](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:d8c16fa5842a4bfde8d3c97f4164c2dc75e53111fef849201666051103300cbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-44](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:fe9d32c794229a8d344ff61ae1bd2e559922ef811d1f28b6dd2842c6cdd172af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-1)). 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. ##### [805-958-55-45](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:e0e04f2bb550ac15745de23ae52ebd0f6c5f8c071aa64bfd9d4ce8366a21ba83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The combined entity often retains the mission and the legal name of the acquirer. ##### [805-958-55-46](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:b0aafeda6c9a1dc71341283615bb2e93aea486a5d0a94127ffb9108f2c1c45fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-47](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:59e2ad88d44f280b4da9d180954c819a57f02fe967730940e949c924499e761e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to the examples of intangible assets provided in paragraphs [805-20-55-11 through 55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-11) , a donor list is an example of an identifiable asset. ##### [805-958-55-48](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:f8187280ca95d78234dd84326bce2aaeef5fb7eaaa99b38b4755beb619eff56d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A donor list is different from a customer list (see paragraph [805-20-55-21](https://asc.understandingaccounting.org/asc/805/20/#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](https://asc.understandingaccounting.org/asc/805/20/#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. #### Illustrations ##### [805-958-55-49](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:24ffc9b3f2c55dae71d7c2470a819c510657bb2386793a27769c4db1d6fa9deb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the guidance in paragraphs [958-805-25-23 through 25-24](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-23) . Museum B, which has a policy of not capitalizing its [collection](https://asc.understandingaccounting.org/glossary/c/#collections "Works of art, historical treasures, or similar assets that meet all of the following criteria: They are held for public exhibition, education, or research in furtherance of public service rather than financial gain. They are protected, kept unencumbered, cared for, and preserved. They are subject to an organizational policy that requires the use of proceeds from items that are sold to be for the acquisitions of new collection items, the direct care of existing collections, or both. Collections generally are held by museums; botanical gardens; libraries; aquariums; arboretums; historic sites; planetariums; zoos; art galleries; nature, science, and technology centers; and similar educational, research, and public service organizations that have those divisions; however, the definition is not limited to those entities nor does it apply to all items held by those entities."), 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. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AFBA0D96-CFD6-4ECC-908D-1783EC2C9025-low.gif) Cash $200 Accounts receivable 400 Contributions receivable 200 "Property, plant, and equipment" 800 Paintings (50 paintings) 100 Liabilities (200) Identifiable net assets other than collections " $1,500 " ##### [805-958-55-50](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:15ee0f9558c3e3aa7a92bf03287278767818cd532758cbc4b481bc090875f71c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31). 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](https://asc.understandingaccounting.org/asc/605/958/#605-958-25-19), contributed collection items shall not be recognized as a contribution received if collections are not capitalized. ##### [805-958-55-51](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:1323813a89b2da6f761cd9c89694e470d8f79dd3cd382ea43a1582fe9b5846cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the guidance in paragraphs [958-805-25-23 through 25-24](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-23) . 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. - ![](https://asc.understandingaccounting.org/asc-img/GUID-456678D6-FBD6-4F05-817B-F9AA4C4501E8-low.gif) Cash $100 Accounts receivable 50 Contributions receivable 75 "Property, plant, and equipment" 675 Liabilities assumed (200) Identifiable net assets other than collections $700 ##### [805-958-55-52](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:286d00bbd0c6b098d7cdc343eb919095d38d9ba5e613e83bdcab142f88c5b1bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-53](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:d6dfc7f4adb37de111f2c4c64fc935de528b1ceceea4a86f25406df32fa4ae0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/360/958/#360-958-45-5), 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. ##### [805-958-55-54](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:30f0993ffb48037a9f678ea3880c5fe7dee8bf8bbbc98890f8565ada51edd545 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-28). (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.) ##### [805-958-55-55](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:d766768f231d05db18517afc6a2de39528d83879be128a690329af54b198c533 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the guidance in paragraphs [958-805-25-32 through 25-35](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-32) . 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. ##### [805-958-55-56](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:4a1e4888b0f3ad16f510d289fb143431c5109b3378824322e82059c02fc550c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-57](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:4ef69e2e670b65963d0b68059c5ccfee2f403609dc072ed2f9fe3c1d09b69a54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the guidance in paragraph [958-805-25-35](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-35). 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. ##### [805-958-55-58](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:d5041350e93e55d12d9f64afdf46b944b5902e49c0e251b06fcaf1ef1b294b13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [805-958-55-59](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:717637e5ffa9b9e5c38e4ca25a2a0a903400c2ae70b7bc096511188ee45742b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates one way in which a not-for-profit entity (NFP) might implement the requirements of paragraphs [958-805-25-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29) and [958-805-45-4](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-4). 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. ##### [805-958-55-60](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:9ef2e9bcaa9df68fe74d570cdcfb1e4a02934389e87c532010665f0235919bbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Management of NFP G expects the soup kitchen resulting from the conversion of Restaurant H to be predominantly supported by [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") 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](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-4) for presenting the separate charge to the statement of activities at the acquisition date. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5CD42ED7-FD4B-42A7-B43E-869AEE2D9139-low.gif) "NFP G Statement of Activities For the Year Ended December 31, 20X0 (presented in thousands)" Without Donor Restrictions With Donor Restrictions Total "Revenue, gains, and other support" " $8,640 " "$6,790 " " $15,430 " Net assets released from restrictions " 5,820 " " (5,820)" - "Total revenues, gains, and other support" " 14,460 " 970 " 15,430 " Expenses " (13,115)" - " (13,115)" "Change in net assets before changes related to acquisition of Restaurant H" " 1,345 " 970 "2,315" "Excess of consideration transferred over net assets acquired in acquisition of Restaurant H (Note X)" (115) - (115) Change in net assets " $1,230 " $970 " $2,200 " ##### [805-958-55-61](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:293a3f97b0a2f13df45712916878684ae9041dcca7e52cea74ae29b050b734e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. NFP G might satisfy the requirements of paragraphs [805-10-50-2(a) through (d)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) and paragraph [958-805-50-11(a)](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-11) as shown in the illustrative note below. - **Note X: Acquisition of Restaurant H** - On February 10, 20X0, NFP G acquired Restaurant H, a local restaurant, which it converted into a soup kitchen. NFP G acquired Restaurant H as part of furthering its mission to care for the needy. The acquisition was effected by purchasing 100 percent of the ownership interests in Restaurant H. - Because the operations of the soup kitchen are expected to be predominantly supported by contributions and returns on investments, NFP G has recognized the excess of the consideration transferred over the net assets acquired as a separate charge in its statement of activities rather than as goodwill. NFP G paid consideration of $525,000 for Restaurant H. On the acquisition date, the net identifiable assets of Restaurant H were $410,000. The excess of the amount paid over the net identifiable assets acquired represents the value of Restaurant H's assembled workforce, which is not recognized as a separate intangible asset, and the value of Restaurant H's earnings potential as a restaurant to other potential buyers. ##### [805-958-55-62](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:96b914d3de6e5a77bec53a9a180c0fd45e8d92a6e89f6c737f4f4f37b59ec280 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the guidance in paragraphs [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31), [958-805-30-8 through 30-9](https://asc.understandingaccounting.org/asc/805/958/#805-958-30-8) , and [958-805-45-5 through 45-7](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-5) . The Example has the following Cases: 1. a The [inherent contribution](https://asc.understandingaccounting.org/glossary/i/#inherent-contribution "A contribution that results if an entity voluntarily transfers assets (or net assets) or performs services for another entity in exchange for either no assets or for assets of substantially lower value and unstated rights or privileges of a commensurate value are not involved.") is not subject to additional restrictions (Case A) 2. b The inherent contribution is subject to additional restrictions (Case B). ##### [805-958-55-63](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:3cad41220d7488cc9dd1387e43ed9e5efc8df5f30561c9cda86e952d4d5c7f7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A and B share the following assumptions. ##### [805-958-55-64](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:f61e9031ed0fad6dc1f0a35038d1ae8eed4a8650dd10e332f64d8ef08b03dfb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions."), at the acquisition date follow. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-84D17AA5-0FCE-4717-B721-AFBDCB342931-low.gif) Cash $75 Net assets without donor restrictions $550 Contributions receivable 225 Net assets with donor restrictions 450 Long-term investments 500 "Plant, property, and equipment" 430 Total net assets " $1,000 " Total assets " 1,230 " Accounts payable (65) Mortgage (165) Total liabilities (230) Total net assets " $1,000 " ##### [805-958-55-65](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:4c78592fff41b9d05cd045610dfee8e7cc8e41cd06c1728e381d339faba38daf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Charity I recognizes a $1,000 [contribution](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") 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. ##### [805-958-55-66](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:02f9509bfe43e293a847dd9851412914d06c713368c22bfa723b60a4bc499dcd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-0EE396DC-02D3-4E13-860E-EEAB4816B8B1-low.gif) Increase in net assets without donor restrictions: Contribution received in the acquisition of Charity J $550 Increase in net assets with donor restrictions: Contribution received in the acquisition of Charity J $450 ##### [805-958-55-67](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:cb1a2d8cd422127ed2b0d383ecd612f8acbb10d8dfd8947fa6906c97f0b70bb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") 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. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E8C51D9E-5883-488F-9B34-582AF94B628C-low.gif) Increase in net assets without donor restrictions: Contribution received in the acquisition of Charity J $375 Increase in net assets with donor restrictions: Contribution received in the acquisition of Charity J $625 ##### [805-958-55-68](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:6b520f0d7e3045bc983d6b6762e1c569239753660c1ec2b3326fe66882b4b91c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the guidance in paragraphs [958-805-45-11](https://asc.understandingaccounting.org/asc/805/958/#805-958-45-11) and [958-805-50-15](https://asc.understandingaccounting.org/asc/805/958/#805-958-50-15). 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. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2A628F40-541B-42D4-8C44-511644C79117-low.gif) Cash $25 Contributions receivable 155 "Property, plant, and equipment" 900 Long-term note payable (375) Net assets acquired $705 ##### [805-958-55-69](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:fef51583532a11ddd7b9a18db3c1127736fc98c10daf8e44944ffafd5dfa0bd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity X reports the acquisition as a single line in the investing activities section of the statement of cash flows, as follows: - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-BDDC74BF-5A07-4705-AF47-48A32007E71A-low.gif) "Payment for acquisition of Entity S, net of cash acquired" $(275) ##### [805-958-55-70](https://asc.understandingaccounting.org/asc/805/958/#805-958-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:08.862Z to 2026-09-10T01:28:08.862Z Record version: sha256:2a71ad0a0261a5fe2c7fffcfebf20db8fc58a313d47ecb268405cced632597ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity X discloses the following additional information in a supplemental schedule of investing and financing activities: - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-87D49061-80F0-4773-8924-B18C6E7133AE-low.gif) "The Entity acquired Entity S by transferring cash of $300. In conjunction with the acquisition, liabilities were assumed and a contribution was received from Entity S's parent as follows:" Fair value of assets acquired " $1,080 " Cash transferred to community foundation (300) Liabilities assumed (375) Contribution received in acquisition of Entity S $405 Source downloaded (UTC): 2026-09-10T01:28:11.147Z to 2026-09-10T01:28:11.147Z Record version: sha256:c7bb4d71c97f083b3de2145f6eec89e64f8e1efcbcf66d8f1b461515bbdfe285 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-958-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/805/958/#65-transition-and-open-effective-date-information) SEC content: no ##### [805-958-65-1](https://asc.understandingaccounting.org/asc/805/958/#805-958-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:11.147Z to 2026-09-10T01:28:11.147Z Record version: sha256:e9ccbd24cd1d5b4480e282df4ffbee9c37bbbaa56c93a05663127daa758d7339 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2011 after the end of the transition period stated in FASB Statement No. 164, _Not-for-Profit Entities: Mergers and Acquisitions_.