# ASC Topic 805: Business Combinations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/805/) 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): 2026-09-10T01:22:15.852Z to 2026-09-10T01:28:11.147Z Record version: sha256:ee11ff19482ccd921d8d67588d7d6461177f0e58b266a026037481428f28fa95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 805 requires every transaction meeting the definition of a business combination to be accounted for by the acquisition method: identify the acquirer, determine the acquisition date (805-10), recognize and measure the identifiable assets acquired, liabilities assumed and any noncontrolling interest at acquisition-date fair value subject to a closed list of exceptions (805-20), and recognize goodwill — the excess of consideration transferred plus NCI plus any previously held equity interest over identifiable net assets — or, after reassessment, a bargain purchase gain (805-30). Specialized subtopics adapt or displace that model: reverse acquisitions where the legal acquirer is the accounting acquiree (805-40), joint venture formations that apply a new basis without identifying an acquirer (805-60), and 805-50's residual bucket of asset acquisitions (cost allocated on relative fair values, no goodwill), common-control transfers at carryover basis, and optional pushdown accounting. Industry and entity-type overlays cover mining (805-930), insurance and demutualizations (805-944), not-for-profit mergers under the carryover method and NFP acquisitions with inherent contributions (958-805), and health care performance-indicator presentation (805-954). The central idea is that control obtained over a *business* triggers fresh-start fair value measurement and goodwill, while everything short of that is measured at cost or carryover basis. Source downloaded (UTC): 2026-09-10T01:22:15.852Z to 2026-09-10T01:23:02.215Z Record version: sha256:e654801785c4a8062f81e48cf3ef91b68058017fb4f10bba119427194ec11368 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10: Business Combinations — Overall ### Machine-generated study aids ```json { "summary": "ASC 805-10 is the Overall subtopic of Business Combinations: it sets the scope of the Topic and governs two of the four steps of the acquisition method — identifying the acquirer and determining the acquisition date — plus the definition of a business, the measurement period, and deciding what is (and is not) part of the business combination exchange. Every transaction meeting the definition of a business combination must be accounted for by the acquisition method (805-10-25-1); if the acquired set is not a business, it is an asset acquisition. It also sets the disclosure objectives and requirements enabling users to evaluate the nature and financial effects of a combination.", "key_points": [ "A business combination must be accounted for using the acquisition method, whose four steps are identifying the acquirer, determining the acquisition date, recognizing/measuring identifiable assets acquired, liabilities assumed and any noncontrolling interest, and recognizing/measuring goodwill or a bargain purchase gain (805-10-05-4; 805-10-25-1); the Topic does not apply to asset acquisitions, common-control combinations, or joint venture formations (805-10-15-4).", "The acquirer is the entity that obtains control, identified using the controlling financial interest guidance in the General Subsections of Subtopic 810-10; if that is not clear, the factors in 805-10-55-11 through 55-15 apply, and for an acquired VIE the primary beneficiary is the acquirer (805-10-25-5).", "The acquisition date is the date the acquirer obtains control, generally the closing date, but may be earlier or later based on all pertinent facts and circumstances (805-10-25-6 through 25-7).", "A set is a business only if it includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output; if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business (805-10-55-5 through 55-5C).", "In a step acquisition the acquirer remeasures its previously held equity interest at acquisition-date fair value with the gain or loss in earnings, reclassifying related amounts (including cumulative translation adjustment) out of OCI (805-10-25-10).", "Provisional amounts may be adjusted during the measurement period — which ends when the information is obtained or is unobtainable, but never exceeds one year from the acquisition date — with a corresponding adjustment to goodwill recognized in the period the adjustment is determined; after that, changes are error corrections under Topic 250 (805-10-25-13 through 25-19).", "Transactions separate from the exchange for the acquiree (settlement of preexisting relationships, compensation for future services, reimbursement of acquisition costs) are accounted for under other GAAP, and acquisition-related costs are expensed as incurred except debt/equity issuance costs (805-10-25-20 through 25-23)." ], "categories": [ "Business combinations", "Recognition", "Initial measurement", "Disclosure" ], "audience_level": "intermediate", "student_note": "This is the gateway subtopic: exams test whether a transaction is a business combination versus an asset acquisition (the concentration screen and the input/substantive process framework) and who the accounting acquirer is in a reverse acquisition. A common misunderstanding is that measurement-period adjustments are retrospectively restated — under current guidance they are recorded in the period determined, with the cumulative earnings effect (e.g., catch-up depreciation) recognized in current earnings.", "related_topics": [ "805-20", "805-30", "805-40", "805-50", "805-60", "810-10" ], "key_concepts": [ "acquisition method", "definition of a business", "identifying the acquirer", "acquisition date", "measurement period", "step acquisition", "acquisition-related costs", "preexisting relationship settlement" ] } ``` Source downloaded (UTC): 2026-09-10T01:22:15.852Z to 2026-09-10T01:22:15.852Z Record version: sha256:ab7afe7c1e60351743e949e5484e2480e447f955fa85fa92a06d049221bbafc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/10/#00-status) SEC content: no ##### [805-10-00-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:15.852Z to 2026-09-10T01:22:15.852Z Record version: sha256:d1e4a640d0b03f63cf7e065074aea9983b43d92e887955cc93ab804983820016 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
AcquireeAmendedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Beneficial InterestsAddedAccounting Standards Update No. 2014-1308/05/2014
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
Collateralized Financing EntityAddedAccounting Standards Update No. 2014-1308/05/2014
Conduit Debt SecurityAddedMaintenance Update 2014-20 (PDF)09/29/2014
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Control of a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Equity InterestsAmendedAccounting Standards Update No. 2010-0701/28/2010
Financial Asset (2nd def.)AmendedAccounting Standards Update No. 2016-1912/14/2016
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAmendedAccounting Standards Update No. 2010-0701/28/2010
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Merger of Not-for-Profit EntitiesAddedAccounting Standards Update No. 2010-0701/28/2010
Nonfinancial AssetAddedAccounting Standards Update No. 2014-1308/05/2014
Nonprofit ActivityAddedAccounting Standards Update No. 2010-0701/28/2010
Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
OwnersAmendedAccounting Standards Update No. 2010-0701/28/2010
Primary BeneficiaryAddedAccounting Standards Update No. 2025-0305/12/2025
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Public Business EntityAddedAccounting Standards Update No. 2015-1609/25/2015
Public EntityAmendedMaintenance Update 2014-20 (PDF)09/29/2014
Public EntityAmendedAccounting Standards Update No. 2010-0701/28/2010
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
805-10-05-1AmendedAccounting Standards Update No. 2023-0508/23/2023
805-10-15-1AmendedAccounting Standards Update No. 2023-0508/23/2023
805-10-15-3AmendedAccounting Standards Update No. 2010-0701/28/2010
805-10-15-4AmendedAccounting Standards Update No. 2023-0508/23/2023
805-10-15-4AmendedAccounting Standards Update No. 2016-1912/14/2016
805-10-15-4AmendedAccounting Standards Update No. 2014-1308/05/2014
805-10-15-4AmendedAccounting Standards Update No. 2010-0701/28/2010
805-10-25-5AmendedAccounting Standards Update No. 2025-0305/12/2025
805-10-25-10AmendedAccounting Standards Update No. 2016-0101/05/2016
805-10-25-10AmendedAccounting Standards Update No. 2013-0503/04/2013
805-10-25-13AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-25-17AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-50-1 through 50-5
AmendedAccounting Standards Update No. 2025-1112/08/2025
805-10-50-2AmendedMaintenance Update 2016-05 (PDF)04/12/2016
805-10-50-2AmendedAccounting Standards Update No. 2010-0201/06/2010
805-10-50-2AmendedAccounting Standards Update No. 2010-2912/21/2010
805-10-50-6SupersededAccounting Standards Update No. 2015-1006/12/2015
805-10-50-7AmendedAccounting Standards Update No. 2025-1112/08/2025
805-10-55-3AAddedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-4AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-5AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-5A through 55-5F
AddedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-6AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-7SupersededAccounting Standards Update No. 2017-0101/05/2017
805-10-55-8AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-9AmendedAccounting Standards Update No. 2017-0101/05/2017
805-10-55-10AmendedAccounting Standards Update No. 2025-0305/12/2025
805-10-55-10AmendedMaintenance Update 2018-02 (PDF)02/02/2018
805-10-55-16AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-55-27 through 55-29
AmendedAccounting Standards Update No. 2015-1609/25/2015
805-10-55-37AmendedMaintenance Update 2016-11 (PDF)06/27/2016
805-10-55-44AmendedAccounting Standards Update No. 2016-0202/25/2016
805-10-55-45AmendedMaintenance Update No. 2025-05 (PDF)06/20/2025
805-10-55-47AmendedAccounting Standards Update No. 2011-0405/12/2011
805-10-55-49AmendedAccounting Standards Update No. 2010-2912/21/2010
805-10-55-50AddedAccounting Standards Update No. 2010-2912/21/2010
805-10-55-51 through 55-96
AddedAccounting Standards Update No. 2017-0101/05/2017
805-10-65-1AmendedAccounting Standards Update No. 2010-0701/28/2010
805-10-65-2AddedAccounting Standards Update No. 2010-2912/21/2010
805-10-65-3AddedAccounting Standards Update No. 2015-1609/25/2015
805-10-65-4AddedAccounting Standards Update No. 2017-0101/05/2017
805-10-65-5AddedAccounting Standards Update No. 2025-0305/12/2025
Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:e66fc8ead34cf1c4bf4043061c3d11d22b25cd4c45390e53bd4245d869df3985 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/10/#05-overview-and-background) SEC content: no ##### [805-10-05-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:e0898cd55938aff8e22e82157c926361b2544cdc9f4ce14efbd2e2ad63fe3405 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Business Combinations Topic provides guidance on the accounting and reporting for transactions that represent [business combinations](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.") to be accounted for under the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4)). In addition, the Topic includes Subtopic 805-50, which provides guidance on transactions sometimes associated with business combinations but that do not meet the requirements to be accounted for as business combinations under the acquisition method, and Subtopic 805-60, which provides guidance on the formation of a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities."). The Business Combinations Topic includes the following Subtopics: 1. a Overall 2. b Identifiable Assets and Liabilities, and Any Noncontrolling Interest 3. c Goodwill or Gain from Bargain Purchase, Including Consideration Transferred 4. d Reverse Acquisitions 5. e Related Issues 6. f Income Taxes 7. g Joint Venture Formations. ##### [805-10-05-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:059e83eb1499b835483be52705a0c48498989154dda21df3d0cda2d56b6619bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To accomplish the objective identified in paragraph [805-10-10-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-10-1), this Topic establishes principles and requirements for how 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.") does each of the following: 1. a Recognizes and measures in its financial statements 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.") 2. b Recognizes and measures 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.") acquired in the business combination or a gain from a bargain purchase 3. c Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. ##### [805-10-05-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:f5bdd2b5b9369282cf6f258ec13b6ef2976e68389bbeb2baf8962c7c8f12a78b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic and Subtopics 805-20 and 805-30 address specific aspects of the acquisition method. Subtopic 805-20 addresses the recognition and measurement of identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. Subtopic 805-30 addresses the recognition and measurement of goodwill or a gain from a bargain purchase. This Subtopic addresses requirements of the acquisition method, as outlined in the following paragraph, not addressed by those two Subtopics, including the following: 1. a Whether a particular transaction or event is a business combination 2. b The identification of the acquirer and the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c The period of time that an acquirer has to adjust provisional amounts, referred to as the measurement period 4. d The determination of what is part of a business combination transaction. ##### [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:ce19847917594fc7991d88eeef43294b0fb19a708fe31a3df750ac44d045e0fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-1) requires that a business combination be accounted for by applying what is referred to as the acquisition method. The acquisition method requires all of the following steps: 1. a Identifying the acquirer 2. b Determining the acquisition date 3. c Recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree 4. d Recognizing and measuring goodwill or a gain from a bargain purchase. ##### [805-10-05-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:17c0a3be0b1ba2223656e25b9de77c7e9bcd36ab68134730fccf7c7485d13ed2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses steps (a) and (b) of the acquisition method as listed in the preceding paragraph. Subtopic 805-20 addresses step (c) and Subtopic 805-30 addresses step (d). ##### [805-10-05-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:19.043Z to 2026-09-10T01:22:19.043Z Record version: sha256:e63c041151624c0aecfb9bad68ac280182e92199720bc84c13bc360edd7a4197 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs presented in bold type in this Topic state the main principles. All paragraphs have equal authority. Source downloaded (UTC): 2026-09-10T01:22:21.226Z to 2026-09-10T01:22:21.226Z Record version: sha256:cad106faac7d27b4e25bc4eb54ed422f5608dc20a0c9c7ccae31e8aa5b6fa91b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/805/10/#10-objectives) SEC content: no ##### [805-10-10-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:21.226Z to 2026-09-10T01:22:21.226Z Record version: sha256:dafac1dca1f4845605230212f98e3d49e64fa2de9a52c9f755cb295152edfed2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the Subtopics in this Topic that address [business combinations](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.") is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:0c12eb02ec13d463e47a73261f459a9bb5c3c066ea2e57a284fb944cbfd2096e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-10-15-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:efbc252d6de87241b4e72b96240132c550bf33d66ede0315b34c1b205a918e1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Scope Section of the Overall Subtopic establishes the pervasive scope for all Subtopics of the Business Combinations Topic. Unless explicitly addressed within specific Subtopics, the following scope guidance applies to all Subtopics of the Business Combinations Topic, with the exception of Subtopic 805-50and Subtopic 805-60, each of which has its own discrete scope guidance. #### Entities ##### [805-10-15-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:9d0b06e913a8f226b145407f4cd112ecb805dd44e3b822e7c255ba64feacded1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Business Combinations Topic applies to all entities, with specific qualifications and exceptions in paragraph [805-10-15-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-4). #### Transactions ##### [805-10-15-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:3f0ebd11b4bd972f55f3b882304388b3b4b137c541aec4b3c561eb38864d77a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Business Combinations Topic applies to all transactions or other events that meet the definition of 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.") 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."). ##### [805-10-15-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:22.921Z to 2026-09-10T01:22:22.921Z Record version: sha256:381778ef0d9f9a45bb6d741a6b9fc87f8302a39444335700715d19e29c80b9ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Business Combinations Topic does not apply to any of the following: 1. a The formation of a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") or a [corporate joint venture](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.") (except as described in Subtopic 805-60) 2. b The acquisition of an asset or a group of assets that does not constitute 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.") 3. c A combination between entities, businesses, or nonprofit activities under common [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") (see paragraph [805-50-15-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-6) for examples) 4. d An acquisition by a not-for-profit entity for which the acquisition date is before December 15, 2009 or 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.") (NFPs) 5. e A transaction or other event in which an NFP obtains [control of a 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 described in paragraph [958-810-25-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-4). The Business Combinations Topic also 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. 6. f Financial assets and financial liabilities of a consolidated variable interest entity that is a [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") within the scope of the guidance on collateralized financing entities in Subtopic 810-10. Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:ebfba9431309cac53d524db2fab3aedd5d671673ec06f7bc3df742762be9e403 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/10/#25-recognition) SEC content: no ##### [805-10-25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:bf69d433eae860f86efc29189b6e9e7adb2f342c50a212b9f9081a253ed4890a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall determine whether a transaction or other event is 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.") by applying the definition in this Subtopic, which requires that the assets acquired and liabilities assumed constitute 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."). If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition.An entity shall account for each business combination by applying the acquisition method. ##### [805-10-25-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:a389a2482849a79e9f19dff3320106013a853a8dcbbab71c4b87917fa867c886 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4) summarizes the four steps in the acquisition method. This Section establishes the requirements for the following two of the four steps: 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."). ##### [805-10-25-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:21b7685f540351fc0cb0e59735bd4f51d2e09bfa56dc2a7989e46dca6059b01b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section also provides guidance on all of the following: 1. a Particular types of business combinations 2. b The measurement period 3. c Determining what is part of the business combination transaction. #### Identifying the Acquirer ##### [805-10-25-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:747d311e9d01946cfa0d61920a8202227d09cb32712b980d20d409f0c11c5293 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For each business combination, one of the combining entities shall be identified as the acquirer. ##### [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:d3fa111661cc749b4fdbe647eb2791dd1fa715783ed62644421557e9473d5d8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest shall be used to identify the acquirer—the entity that obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") 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."). If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in making that determination. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying either the guidance in the General Subsections of that Subtopic, relating to a controlling financial interest, or in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5)The guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest shall be used to identify the acquirer—the entity that obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") 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."). If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in making that determination. However, in a business combination in which a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) is acquired, the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of that entity is the acquirer unless the business combination is effected primarily by exchanging equity interests.The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying either the guidance in the General Subsections of that Subtopic, relating to a controlling financial interest, or the guidance in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . For a business combination that is effected primarily by exchanging equity interests in which a VIE is acquired, the factors in paragraphs [805-10-55-12 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) shall be considered in determining which entity is the accounting acquirer. #### Identifying the Acquisition Date ##### [805-10-25-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:fc2189d85b89c67439afd349692907dac8aa11c97ca2071a269a9abb6b669d80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall identify the acquisition date, which is the date on which it obtains control of the acquiree. ##### [805-10-25-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:553b774b44aaba49391369896ceaf15b46c0309ae8a111ae623d3027d6089042 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The date on which the acquirer obtains control of the acquiree generally is the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree—the closing date. However, the acquirer might obtain control on a date that is either earlier or later than the closing date. For example, the acquisition date precedes the closing date if a written agreement provides that the acquirer obtains control of the acquiree on a date before the closing date. An acquirer shall consider all pertinent facts and circumstances in identifying the acquisition date. #### Particular Types of Business Combinations ##### [805-10-25-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:1b9c8ce55a7cee26bc6b03d133408871871d55c50be9243af215c7f10a908054 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance describes the accounting for a business combination achieved in stages and a business combination achieved without the transfer of consideration. ##### [805-10-25-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:72cbb872a941b8676175fbca9d8636d328c6020dc20783d1c85e3f2bdc7be7bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer sometimes obtains control of an acquiree in which it held an equity interest immediately before the acquisition date. For example, on December 31, 20X1, Entity A holds a 35 percent noncontrolling equity interest in Entity B. On that date, Entity A purchases an additional 40 percent interest in Entity B, which gives it control of Entity B. This Topic refers to such a transaction as a business combination achieved in stages, sometimes also referred to as a step acquisition. ##### [805-10-25-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:1bba20b9c9971ea6a27338d639ebef0b7b4053e9927dff391677de82550da001 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") and recognize the resulting gain or loss, if any, in earnings. In prior reporting periods, with respect to its previously held equity method investment, the acquirer may have recognized amounts in other comprehensive income in accordance with paragraph [323-10-35-18](https://asc.understandingaccounting.org/asc/323/10/#323-10-35-18). If so, the amount that was recognized in other comprehensive income shall be reclassified and included in the calculation of gain or loss as of the acquisition date. If the business combination achieved in stages relates to a previously held equity method investment that is a [foreign entity](https://asc.understandingaccounting.org/glossary/f/#foreign-entity "An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both: Prepared in a currency other than the reporting currency of the reporting entity Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting entity."), the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that previously held investment. For guidance on derecognizing foreign currency translation adjustments recorded in accumulated other comprehensive income, see Section 830-30-40. ##### [805-10-25-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:c521ee061f232f082699b9ff6c2bceaf23e0f5b251bdfbc7158ad005b61b370c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer sometimes obtains control of an acquiree without transferring consideration. The acquisition method of accounting for a business combination applies to those combinations. Such circumstances include any of the following: 1. a The acquiree repurchases a sufficient number of its own shares for an existing investor (the acquirer) to obtain control. 2. b Minority veto rights lapse that previously kept the acquirer from controlling an acquiree in which the acquirer held the majority voting interest. 3. c The acquirer and acquiree agree to combine their businesses by contract alone. The acquirer transfers no consideration in exchange for control of an acquiree and holds no [equity interests](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, either on the acquisition date or previously. Examples of business combinations achieved by contract alone include bringing two businesses together in a stapling arrangement or forming a dual-listed corporation. ##### [805-10-25-12](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:d23b6bb1ab65e763aeb2c8de9528c186fa93004a6381a34ebceb86d335e174a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination achieved by contract alone, the acquirer shall attribute to the equity holders of the acquiree the amount of the acquiree's net assets recognized in accordance with the requirements of this Topic. In other words, the equity interests in the acquiree held by parties other than the acquirer are a [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 acquirer's postcombination financial statements even if the result is that all of the equity interests in the acquiree are attributed to the noncontrolling interest. #### The Measurement Period ##### [805-10-25-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:5fd64b45292ee3d4a0153405bc1ed01e9a18922bdcbc44a2e3c3c768c6592fc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, in accordance with paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17), the acquirer shall adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. ##### [805-10-25-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:ffed6ff74c3be4494e4655ff2a8bd16e1d1d315dd55227c4b313dffdd1adeddd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the measurement period, the acquirer also shall recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. However, the measurement period shall not exceed one year from the acquisition date. ##### [805-10-25-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:18258ad3ef602a8606fd40de01d9b652f72ee6439d76a2309bd26e7a5d0da34a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The measurement period is the period after the acquisition date during which the acquirer may adjust the provisional amounts recognized for a business combination. The measurement period provides the acquirer with a reasonable time to obtain the information necessary to identify and measure any of the following as of the acquisition date in accordance with the requirements of this Topic: 1. a 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, liabilities assumed, and any noncontrolling interest in the acquiree (see Subtopic 805-20) 2. b The consideration transferred for the acquiree (or the other amount used in measuring [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.") in accordance with paragraphs [805-30-30-1 through 30-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) ) 3. c In a business combination achieved in stages, the equity interest in the acquiree previously held by the acquirer (see paragraph [805-30-30-1(a)(3)](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1)) 4. d The resulting goodwill recognized in accordance with paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) or the gain on a bargain purchase recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2). ##### [805-10-25-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:a73a8760d18ced4e157fb05b9000d72d462b609d001e263462d86fbb7dee8dcd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer recognizes an increase (decrease) in the provisional amount recognized for an identifiable asset (liability) by means of a decrease (increase) in goodwill. However, new information obtained during the measurement period sometimes may result in an adjustment to the provisional amount of more than one asset or liability. For example, the acquirer might have assumed a liability to pay damages related to an accident in one of the acquiree's facilities, part or all of which are covered by the acquiree's liability insurance policy. If the acquirer obtains new information during the measurement period about the acquisition-date fair value of that liability, the adjustment to goodwill resulting from a change to the provisional amount recognized for the liability would be offset (in whole or in part) by a corresponding adjustment to goodwill resulting from a change to the provisional amount recognized for the claim receivable from the insurer. ##### [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:7ec0bf424d31937b02b51c451b53b2a076e3ce53da0d7a8a7386dcf958d9d878 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the measurement period, the acquirer shall recognize adjustments to the provisional amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined. Thus, the acquirer shall adjust its financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. Paragraph [805-10-55-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-16) and Example 1 (see paragraph [805-10-55-27](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-27)) provide additional guidance. ##### [805-10-25-18](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:dc38be7be5679ca3909c1e8ef05ef9a09272a7d02f005627747468ca8210000f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-30-2 through 30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-2) require consideration of all pertinent factors in determining whether information obtained after the acquisition date should result in an adjustment to the provisional amounts recognized or whether that information results from events that occurred after the acquisition date. ##### [805-10-25-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:3720de9578b1cc95692d85745c717552ade13f142a42ea0da58895f4ef8d9fb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the measurement period ends, the acquirer shall revise the accounting for a business combination only to correct an error in accordance with Topic 250. #### Determining What Is Part of the Business Combination Transaction ##### [805-10-25-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:960c7eb1c24e42821fdd88c8c99c86b1ff06a5b78ada6c80e747dbb9f7397481 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer and the acquiree may have a preexisting relationship or other arrangement before negotiations for the business combination began, or they may enter into an arrangement during the negotiations that is separate from the business combination. In either situation, the acquirer shall identify any amounts that are not part of what the acquirer and the acquiree (or its former [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.")) exchanged in the business combination, that is, amounts that are not part of the exchange for the acquiree. The acquirer shall recognize as part of applying the acquisition method only the consideration transferred for the acquiree and the assets acquired and liabilities assumed in the exchange for the acquiree. Separate transactions shall be accounted for in accordance with the relevant generally accepted accounting principles (GAAP). ##### [805-10-25-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:c9f0ed6c5f9bfaf456fa39d4b12438f02963878446b38ab3c40b09ec9926b52e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transaction entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer or the combined entity, rather than primarily for the benefit of the acquiree (or its former owners) before the combination, is likely to be a separate transaction. The following are examples of separate transactions that are not to be included in applying the acquisition method: 1. a A transaction that in effect settles preexisting relationships between the acquirer and acquiree (see paragraphs [805-10-55-20 through 55-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) ) 2. b A transaction that compensates employees or former owners of the acquiree for future services (see paragraphs [805-10-55-24 through 55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) ) 3. c A transaction that reimburses the acquiree or its former owners for paying the acquirer's acquisition-related costs (see paragraph [805-10-25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-23)). ##### [805-10-25-22](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:c5d2cac416124b01e56088307cf5ce4c5ecc8c731595752a520e7f1d4155736d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-55-18 through 55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-18) , [805-30-55-6 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) , [805-740-25-10 through 25-11](https://asc.understandingaccounting.org/asc/740/805/#740-805-25-10) , [805-740-45-5 through 45-6](https://asc.understandingaccounting.org/asc/740/805/#740-805-45-5) , and Example 2 (see paragraph [805-10-55-30](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30)) provide additional guidance for determining whether a transaction is separate from the business combination transaction. #### Acquisition-Related Costs ##### [805-10-25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:28.548Z to 2026-09-10T01:22:28.548Z Record version: sha256:36530d7a4755e914f64761b130ea09ab2c1e37998dd7573bc9897eb88a5925b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition-related costs are costs the acquirer incurs to effect a business combination. Those costs include finder's fees; advisory, legal, accounting, valuation, and other professional or consulting fees; general administrative costs, including the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. The acquirer shall account for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received, with one exception. The costs to issue debt or equity securities shall be recognized in accordance with other applicable GAAP. Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:19d55a8913c4da3fef6b11fea0ea0e6b1231768c6890d300f8f3ea7f0f961e25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/10/#30-initial-measurement) SEC content: no ##### [805-10-30-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:0aec4eacc052af558ab8647a1b6cb5003040254e85827a4b5c93d44e1dfd8d63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-15) establishes that the measurement period provides 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.") with a reasonable time to obtain the information necessary to identify and measure various items in 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."). ##### [805-10-30-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:a4bfa05cb9cfda4e44722539b7327579cea640436dc16b6acfdd12485dd5988e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall consider all pertinent factors in determining whether information obtained after the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") should result in an adjustment to the provisional amounts recognized or whether that information results from events that occurred after the acquisition date. Pertinent factors include the time at which additional information is obtained and whether the acquirer can identify a reason for a change to provisional amounts. ##### [805-10-30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:30.514Z to 2026-09-10T01:22:30.514Z Record version: sha256:f40564df98c3b918e44e7a5bf0a2a1700d16e1eb60ff28a67285af77687ff5d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Information that is obtained shortly after the acquisition date is more likely to reflect circumstances that existed at the acquisition date than is information obtained several months later. For example, unless an intervening event that changed its [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") can be identified, the sale of an asset to a third party shortly after the acquisition date for an amount that differs significantly from its provisional fair value determined at that date is likely to indicate an error in the provisional amount. Source downloaded (UTC): 2026-09-10T01:22:33.360Z to 2026-09-10T01:22:33.360Z Record version: sha256:df94910a5eb0bfbc8b2f78a2ddd3ed97a9153c7528a50fe3ff8b2879d6227ca7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/10/#35-subsequent-measurement) SEC content: no ##### [805-10-35-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:33.360Z to 2026-09-10T01:22:33.360Z Record version: sha256:3412eb1df1ee61970a46094d5202771de2061ee7f54d364ccdc2c6e3daddd883 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, 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.") shall subsequently measure and account for assets acquired, liabilities assumed or incurred, and equity instruments issued in 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.") in accordance with other applicable generally accepted accounting principles (GAAP) for those items, depending on their nature. However, this Topic provides guidance on subsequently measuring and accounting for any of the following assets acquired, liabilities assumed or incurred, and equity instruments issued in a business combination: 1. a Reacquired rights (see paragraph [805-20-35-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-2)) 2. b Assets and liabilities arising from contingencies recognized as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") (see paragraph [805-20-35-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-3)) 3. c Indemnification assets (see paragraph [805-20-35-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4)) 4. d [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.") (see paragraph [805-30-35-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1)) 5. e Contingent consideration arrangements of an acquiree assumed by the acquirer (see paragraph [805-30-35-1A](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1A)). ##### [805-10-35-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:33.360Z to 2026-09-10T01:22:33.360Z Record version: sha256:6616df47739f53aae786de1eaae310af6c267732e2bcd55f23452938b69e3722 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other Subtopics in this Topic provide examples of guidance elsewhere in GAAP on subsequently measuring and accounting for assets acquired, liabilities assumed or incurred, and any noncontrolling interests in a business combination. Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:9b5229871d3a18526814a1429ffd8055818f51fa3c7aa22c799f2fbae5de79e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/10/#50-disclosure) SEC content: no #### Business Combinations Occurring during a Current Reporting Period or after the Reporting Date but before the Financial Statements Are Issued ##### [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:039ef3b0532daf1740fdb7bf2ed4ae82233a74cee8065e3b8223aaeef2996fb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall disclose information that enables users of its financial statements to evaluate the nature and financial effect of 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.") that occurs either: 1. a During the current reporting period 2. b After the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25). 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, 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.") shall disclose information that enables users of its financial statements to evaluate the nature and financial effect of 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.") that occurs either: 1. a During the current reporting period 2. b After the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25). ##### [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:f023cc57183a911be7c7478207e1ce1ec5158043f5b557a03f2ff1ff79e76c82 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), the acquirer shall disclose the following information for each business combination that occurs during the reporting period: 1. a The name and a description 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.") 2. b The [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c The percentage of voting [equity interests](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.") acquired 4. d The primary reasons for the business combination and a description of how the acquirer obtained [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of the acquiree 5. e For transactions that are recognized separately from the acquisition of assets and assumptions of liabilities in the business combination (see paragraph [805-10-25-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20)), all of the following: 1. 1 A description of each transaction 2. 2 How the acquirer accounted for each transaction 3. 3 The amounts recognized for each transaction and the line item in the financial statements in which each amount is recognized 4. 4 If the transaction is the effective settlement of a preexisting relationship, the method used to determine the settlement amount. 6. f The disclosure of separately recognized transactions required in (e) shall include the amount of acquisition-related costs, the amount recognized as an expense, and the line item or items in the income statement in which those expenses are recognized. The amount of any issuance costs not recognized as an expense and how they were recognized also shall be disclosed. 7. g In a business combination achieved in stages, all of the following: 1. 1 The acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the equity interest in the acquiree held by the acquirer immediately before the acquisition date 2. 2 The amount of any gain or loss recognized as a result of remeasuring to fair value the equity interest in the acquiree held by the acquirer immediately before the business combination (see paragraph [805-10-25-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-10)) and the line item in the income statement in which that gain or loss is recognized 3. 3 The valuation technique(s) used to measure the acquisition-date fair value of the equity interest in the acquiree held by the acquirer immediately before the business combination 4. 4 Information that enables users of the acquirer's financial statements to assess the inputs used to develop the fair value measurement of the equity interest in the acquiree held by the acquirer immediately before the business combination. 8. h If the acquirer 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."), all of the following: 1. 1 The amounts of revenue and earnings of the acquiree since the acquisition date included in the consolidated income statement for the reporting period. 2. 2 If comparative financial statements are not presented, the revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period (supplemental pro forma information). 3. 3 If comparative financial statements are presented, the revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period (supplemental pro forma information). 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). 4. 4 The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the business combination(s) included in the reported pro forma revenue and earnings (supplemental pro forma information). If disclosure of any of the information required by (h) is impracticable, the acquirer shall disclose that fact and explain why the disclosure is impracticable. In this context, the term _impracticable_ has the same meaning as 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)To meet the objective in paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1), the acquirer shall disclose in interim and annual reporting periods the following information for each business combination that occurs during the reporting period: 1. a The name and a description 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.") 2. b The [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c The percentage of voting [equity interests](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.") acquired 4. d The primary reasons for the business combination and a description of how the acquirer obtained [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of the acquiree 5. e For transactions that are recognized separately from the acquisition of assets and assumptions of liabilities in the business combination (see paragraph [805-10-25-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20)), all of the following: 1. 1 A description of each transaction 2. 2 How the acquirer accounted for each transaction 3. 3 The amounts recognized for each transaction and the line item in the financial statements in which each amount is recognized 4. 4 If the transaction is the effective settlement of a preexisting relationship, the method used to determine the settlement amount. 6. f The disclosure of separately recognized transactions required in (e) shall include the amount of acquisition-related costs, the amount recognized as an expense, and the line item or items in the income statement in which those expenses are recognized. The amount of any issuance costs not recognized as an expense and how they were recognized also shall be disclosed. 7. g In a business combination achieved in stages, all of the following: 1. 1 The acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the equity interest in the acquiree held by the acquirer immediately before the acquisition date 2. 2 The amount of any gain or loss recognized as a result of remeasuring to fair value the equity interest in the acquiree held by the acquirer immediately before the business combination (see paragraph [805-10-25-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-10)) and the line item in the income statement in which that gain or loss is recognized 3. 3 The valuation technique(s) used to measure the acquisition-date fair value of the equity interest in the acquiree held by the acquirer immediately before the business combination 4. 4 Information that enables users of the acquirer's financial statements to assess the inputs used to develop the fair value measurement of the equity interest in the acquiree held by the acquirer immediately before the business combination. 8. h If the acquirer 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."), all of the following: 1. 1 The amounts of revenue and earnings of the acquiree since the acquisition date included in the consolidated income statement for the reporting period. 2. 2 If comparative financial statements are not presented, the revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period (supplemental pro forma information). 3. 3 If comparative financial statements are presented, the revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period (supplemental pro forma information). 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). 4. 4 The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the business combination(s) included in the reported pro forma revenue and earnings (supplemental pro forma information). If disclosure of any of the information required by (h) is impracticable, the acquirer shall disclose that fact and explain why the disclosure is impracticable. In this context, the term _impracticable_ has the same meaning as in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9). ##### [805-10-50-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:614fec119a7f80b9010ef450c85a51e5ee64f01b97683c04897c5b33f6fb81b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For individually immaterial business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by (e) through (h) in paragraph [805-10-50-2](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 business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by (e) through (h) in paragraph [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) in the aggregate in interim and annual reporting periods. ##### [805-10-50-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:060eee10780284577af781f0da5f5657672af91d247273f5678ea4a4e7711acd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. 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 acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2)in interim and annual reporting periods unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. In that situation, the acquirer shall describe which disclosures could not be made and the reason why they could not be made. #### The Financial Effects of Adjustments That Relate to Business Combinations That Occurred in the Current or Previous Reporting Periods ##### [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:c4ab09fcd12142aa628a21886456b1ae95ff0eb53530baffc92f220f7c5028d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall disclose information that enables users of its financial statements to evaluate the financial effects of adjustments recognized in the current reporting period that relate to business combinations that occurred in the current or previous reporting periods. 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)The acquirer shall disclose information in interim and annual reporting periods that enables users of its financial statements to evaluate the financial effects of adjustments recognized in the current reporting period that relate to business combinations that occurred in the current or previous reporting periods. ##### [805-10-50-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:1dfb0c3a38ef2025b83cde91e9f347e465a833985076f0fd134d798e5570e566 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-10](https://asc.understandingaccounting.org/updates/asu-2015-10/). #### Other Disclosures ##### [805-10-50-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-7) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:11ecfd3f5a86058014b763069dffcc1bab6e2b90440042af7ed92590eeaf2b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the specific disclosures required by this Subtopic and other generally accepted accounting principles (GAAP) do not meet the objectives set out in paragraphs [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) and [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5), the acquirer shall disclose whatever additional information is necessary to meet those objectives. 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 Subtopic and other generally accepted accounting principles (GAAP) do not meet the objectives set out in paragraphs [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) and [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5), the acquirer shall disclose whatever additional information is necessary to meet those objectives in interim and annual reporting periods. ##### [805-10-50-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:35.815Z to 2026-09-10T01:22:35.815Z Record version: sha256:b7ba3367f3257f647b3f06cce03d74a23f378229abf2dec422dd8b1f9849bc6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 5 (see paragraph [805-10-55-37 through 55-50](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37) ) illustrates the disclosure requirements applicable to business combinations. Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:cac766ebbe02af91208da5087b2a2d3352176b97d9f1273e4eb29f1a851cca75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/10/#55-implementation-guidance-and-illustrations) SEC content: no ##### [805-10-55-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:304b54edfa67650d87c74ad7a99ed7719b8b8a84780c0cf8636537b900a3635d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides additional guidance and illustrations that address the general application of accounting requirements for [business combinations](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."). #### Implementation Guidance ##### [805-10-55-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:eab472fac06146e461a7b8d3bf0c82b01715ae47f0db299455127200b3bfb99c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-1) requires an entity to determine whether a transaction or event is a business combination. In a business combination, 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.") might obtain [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of an [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.") in a variety of ways, including any of the following: 1. a By transferring cash, cash equivalents, or other assets (including net assets that constitute 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.")) 2. b By incurring liabilities 3. c By issuing [equity interests](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.") 4. d By providing more than one type of consideration 5. e Without transferring consideration, including by contract alone (see paragraph [805-10-25-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-11)). ##### [805-10-55-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:29aa6b139e33db618d036333f465ef798288f3213ee96cbccecf78790ffac087 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business combination may be structured in a variety of ways for legal, taxation, or other reasons, which include but are not limited to, the following: 1. a One or more businesses become subsidiaries of an acquirer or the net assets of one or more businesses are legally merged into the acquirer. 2. b One combining entity transfers its net assets or its [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") transfer their equity interests to another combining entity or its owners. 3. c All of the combining entities transfer their net assets or the owners of those entities transfer their equity interests to a newly formed entity (sometimes referred to as a roll-up or put-together transaction). 4. d A group of former owners of one of the combining entities obtains control of the combined entity. ##### [805-10-55-3A](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-3A) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:cd331b1e5aa0d113064de1d377a205b911d8619e4815e6b11ab8466807a9dcf7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. To be considered a business, an integrated set must meet the requirements in paragraphs [805-10-55-4 through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-4) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) . ##### [805-10-55-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a02ac3d939010aa2737b2902aac8313b603f1911b6f27b494fa8ac18c8d30be4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business consists of inputs and processes applied to those inputs that have the ability to contribute to the creation of outputs. Although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business. The three elements of a business are defined as follows: 1. a Input. Any economic resource that creates, or has the ability to contribute to the creation of, outputs when one or more processes are applied to it. Examples include long-lived assets (including [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.)") or rights to use long-lived assets), intellectual property, the ability to obtain access to necessary materials or rights, and employees. 2. b Process. Any system, standard, protocol, convention, or rule that when applied to an input or inputs, creates or has the ability to contribute to the creation of outputs. Examples include strategic management processes, operational processes, and resource management processes. These processes typically are documented, but the intellectual capacity of an organized workforce having the necessary skills and experience following rules and conventions may provide the necessary processes that are capable of being applied to inputs to create outputs. Accounting, billing, payroll, and other administrative systems typically are not processes used to create outputs. 3. c Output. The result of inputs and processes applied to those inputs that provide goods or services to customers, investment income (such as dividends or interest), or other revenues. ##### [805-10-55-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e2d93083aabb03a0a42401eb3b692bb0557fc27dcdf5db6da437feb3d8889db7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be capable of being conducted and managed for the purposes described in paragraph [805-10-55-3A](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-3A), an integrated set of activities and assets requires two essential elements—inputs and processes applied to those inputs. A business need not include all the inputs or processes that the seller used in operating that business. However, to be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) provide a practical screen to determine when a set would not be considered a business. If the screen is not met, further assessment is necessary to determine whether the set is a business. Paragraphs [805-10-55-5D through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) provide a framework to assist an entity in evaluating whether the set includes both an input and a substantive process. ##### [805-10-55-5A](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5120d7164d0281983a8c615ba5e176a734ad08a0fada35203dcaf898643bf22b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not considered a business. Gross assets acquired should exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities. However, the gross assets acquired should include any consideration transferred (plus the fair value of any noncontrolling interest and previously held interest, if any) in excess of the fair value of net identifiable assets acquired. ##### [805-10-55-5B](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5B) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:0ba4375ddf4152487b256fa6b158357172493489187b04795dc840fbca112370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A single identifiable asset includes any individual asset or group of assets that could be recognized and measured as a single identifiable asset in a business combination. However, for purposes of this evaluation, the following should be considered a single asset: 1. a A tangible asset that is attached to and cannot be physically removed and used separately from another tangible asset (or an intangible asset representing the right to use a tangible asset) without incurring significant cost or significant diminution in utility or fair value to either asset (for example, land and building) 2. b In-place lease intangibles, including favorable and unfavorable intangible assets or liabilities, and the related leased assets. ##### [805-10-55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5C) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d7d10425bdc330b24344d3d748995460caaeb356af1ac12192373b73a7290cbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A group of similar assets includes multiple assets identified in accordance with paragraph [805-10-55-5B](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5B). When evaluating whether assets are similar, an entity should consider the nature of each single identifiable asset and the risks associated with managing and creating outputs from the assets (that is, the risk characteristics). However, the following should not be considered similar assets: 1. a A tangible asset and an intangible asset 2. b Identifiable intangible assets in different major [intangible asset classes](https://asc.understandingaccounting.org/glossary/i/#intangible-asset-class "A group of intangible assets that are similar, either by their nature or by their use in the operations of an entity.") (for example, customer-related intangibles, trademarks, and in-process research and development) 3. c A financial asset and a nonfinancial asset 4. d Different major classes of financial assets (for example, accounts receivable and marketable securities) 5. e Different major classes of tangible assets (for example, inventory, manufacturing equipment, and automobiles) 6. f Identifiable assets within the same major asset class that have significantly different risk characteristics. ##### [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ac2658a0f433d6382ac57cffa60df3fe7b990bc967d3f936e199767b676a95c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a set does not have outputs (for example, an early stage company that has not generated revenues), the set will have both an input and a substantive process that together significantly contribute to the ability to create outputs only if it includes employees that form an organized workforce and an input that the workforce could develop or convert into output. The organized workforce must have the necessary skills, knowledge, or experience to perform an acquired process (or group of processes) that when applied to another acquired input or inputs is critical to the ability to develop or convert that acquired input or inputs into outputs. An entity should consider the following in evaluating whether the acquired workforce is performing a substantive process: 1. a A process (or group of processes) is not critical if, for example, it is considered ancillary or minor in the context of all the processes required to create outputs. 2. b Inputs that employees who form an organized workforce could develop (or are developing) or convert into outputs could include the following: 1. 1 Intellectual property that could be used to develop a good or service 2. 2 Resources that could be developed to create outputs 3. 3 Access to necessary materials or rights that enable the creation of future outputs. Examples of inputs that could be developed include technology, mineral interests, real estate, and in-process research and development. ##### [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:20ce50eb3272fa30d86e409dfccd11cf5ef87e2ec2d4062decd1125470c78870 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When the set has outputs (that is, there is a continuation of revenue before and after the transaction), the set will have both an input and a substantive process that together significantly contribute to the ability to create outputs when any of the following are present: 1. a Employees that form an organized workforce that has the necessary skills, knowledge, or experience to perform an acquired process (or group of processes) that when applied to an acquired input or inputs is critical to the ability to continue producing outputs. A process (or group of processes) is not critical if, for example, it is considered ancillary or minor in the context of all of the processes required to continue producing outputs. 2. b An acquired contract that provides access to an organized workforce that has the necessary skills, knowledge, or experience to perform an acquired process (or group of processes) that when applied to an acquired input or inputs is critical to the ability to continue producing outputs. An entity should assess the substance of an acquired contract and whether it has effectively acquired an organized workforce that performs a substantive process (for example, considering the duration and the renewal terms of the contract). 3. c The acquired process (or group of processes) when applied to an acquired input or inputs significantly contributes to the ability to continue producing outputs and cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs. 4. d The acquired process (or group of processes) when applied to an acquired input or inputs significantly contributes to the ability to continue producing outputs and is considered unique or scarce. ##### [805-10-55-5F](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5F) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dba0f0ee0de483eca083652fdd585188a4e94a9cee2f1e8da8bca0c43fc9806c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a set has outputs, continuation of revenues does not on its own indicate that both an input and a substantive process have been acquired. Accordingly, assumed contractual arrangements that provide for the continuation of revenues (for example, customer contracts, customer lists, and leases \[when the set is the lessor\]) should be excluded from the analysis in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) of whether a process has been acquired. ##### [805-10-55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5218f6e327e827036e1dd90869acb6727edd052b6fc94284fb20acb77756f94c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nature of the elements of a business varies by industry and by the structure of an entity's operations (activities), including the entity's stage of development. Established businesses often have many different types of inputs, processes, and outputs, whereas new businesses often have few inputs and processes and sometimes only a single output (product). Nearly all businesses also have liabilities, but a business need not have liabilities. In addition, some transferred sets of assets and activities that are not a business may have liabilities. ##### [805-10-55-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7864691d17a2725b8bd78ea7f2e62d0ee2a867ed356004a2df91fb22a445397b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-01](https://asc.understandingaccounting.org/updates/asu-2017-01/). ##### [805-10-55-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8b7bc111245e82aea5ac28bb17aad9be89e20d7560ae986be72d114bc1c41b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Determining whether a particular set of assets and activities is a business should be based on whether the integrated set is capable of being conducted and managed as a business by a [market participant](https://asc.understandingaccounting.org/glossary/m/#market-participants "Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics: They are independent of each other, that is, they are not related parties, although the price in a related-party transaction may be used as an input to a fair value measurement if the reporting entity has evidence that the transaction was entered into at market terms They are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary They are able to enter into a transaction for the asset or liability They are willing to enter into a transaction for the asset or liability, that is, they are motivated but not forced or otherwise compelled to do so."). Thus, in evaluating whether a particular set is a business, it is not relevant whether a seller operated the set as a business or whether the acquirer intends to operate the set as a business. ##### [805-10-55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3f98e481ab53445059945d1e1a1b9c84e3b7d06d662febb16786bac5f9616434 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When evaluating whether a set meets the criteria in paragraphs [805-10-55-5D through 55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) , the presence of more than an insignificant amount of [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.") may be an indicator that the acquired process is substantive and, therefore, the acquired set is a business. However, a business need not have goodwill. ##### [805-10-55-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-10) Pending content: yes Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d60d8c73e7e4b3b4c4059921eb280a29a47d2f36846235dce3a7c6238c406c8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) provides that the guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest should be used to identify the acquirer in a business combination, except when a variable interest entity (VIE) is acquired. If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) requires the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) to be considered in making that determination. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5) Paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) provides that the guidance in the General Subsections of Subtopic 810-10 related to determining the existence of a controlling financial interest should be used to identify the acquirer in a business combination, except when a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) is acquired. If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, paragraph [805-10-25-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-5) requires the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) to be considered in making that determination.For a business combination that is effected primarily by exchanging equity interests in which a VIE is acquired, the factors in paragraphs [805-10-55-12 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) shall be considered in determining which entity is the accounting acquirer. For a business combination that is not effected primarily by exchanging equity interests in which a VIE is acquired, the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of that entity is the accounting acquirer. ##### [805-10-55-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:4577a14079a3e880fd5cd7c93b4d6dbe970a704d412b5e85f91ba70814e3bd4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination effected primarily by transferring cash or other assets or by incurring liabilities, the acquirer usually is the entity that transfers the cash or other assets or incurs the liabilities. ##### [805-10-55-12](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8e81fe03507f795a1d49a97d06f784d0352d8fb171a0c6d67be6f394d16e97b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination effected primarily by exchanging equity interests, the acquirer usually is the entity that issues its equity interests. However, in some business combinations, commonly called [reverse acquisitions](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition."), the issuing entity is the acquiree. Subtopic 805-40 provides guidance on accounting for reverse acquisitions. Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following: 1. a The relative voting rights in the combined entity after the business combination. The acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity. In determining which group of owners retains or receives the largest portion of the voting rights, an entity shall consider the existence of any unusual or special voting arrangements and options, warrants, or convertible securities. 2. b The existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest. The acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity. 3. c The composition of the governing body of the combined entity. The acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity. 4. d The composition of the senior management of the combined entity. The acquirer usually is the combining entity whose former management dominates the management of the combined entity. 5. e The terms of the exchange of equity interests. The acquirer usually is the combining entity that pays a premium over the precombination [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the equity interests of the other combining entity or entities. ##### [805-10-55-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e99db5c2e8649e62b0beb4356e2e18e556c12114de602b6120f962e7d53720d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities. ##### [805-10-55-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:fbc1958cfa617998a37bcf77759401cad6650325bec60e2cbf1edc62e7d5a215 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination involving more than two entities, determining the acquirer shall include a consideration of, among other things, which of the combining entities initiated the combination, as well as the relative size of the combining entities, as discussed in paragraph [805-10-55-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-13). ##### [805-10-55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ce108665179623d090706f1410b94d7d9dc69f432379f7f9c8604b91ae1e70ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A new entity formed to effect a business combination is not necessarily the acquirer. If a new entity is formed to issue equity interests to effect a business combination, one of the combining entities that existed before the business combination shall be identified as the acquirer by applying the guidance in paragraphs [805-10-55-10 through 55-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-10) . In contrast, a new entity that transfers cash or other assets or incurs liabilities as consideration may be the acquirer. ##### [805-10-55-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:0c03d79f9693f17468cd3768aa2dc0352028788ff40db5ad163f926b74adb3de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-25-14 through 25-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-14) and [805-10-30-2 through 30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-30-2) discuss requirements related to the measurement period in a business combination. If the initial accounting for a business combination is incomplete at the end of the financial reporting period in which the combination occurs, paragraph [805-10-25-13](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) requires that the acquirer recognize in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the acquirer recognizes adjustments to the provisional amounts needed to reflect new information obtained about facts and circumstances that existed as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") that, if known, would have affected the measurement of the amounts recognized as of that date. Paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17) requires the acquirer to recognize such adjustments with a corresponding adjustment to goodwill in the reporting period the adjustments are determined. The effects of adjustments to provisional amounts to periods after the acquisition date are included in the earnings of the adjustment period. ##### [805-10-55-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:cd7262089a146484d5ca3554a72cde0ef783eb101257d9d6fdaa24e4e610758c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [805-10-55-27](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-27)) illustrates measurement period guidance. ##### [805-10-55-18](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:0086dd4ed089d525a1cf0695bf1cdf08d99836ac4cd57db798478dc1921e7084 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-25-20 through 25-22](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20) establish the requirements to identify amounts that are not part of the business combination. The acquirer should consider the following factors, which are neither mutually exclusive nor individually conclusive, to determine whether a transaction is part of the exchange for the acquiree or whether the transaction is separate from the business combination: 1. a The reasons for the transaction. Understanding the reasons why the parties to the combination (the acquirer, the acquiree, and their owners, directors, managers, and their agents) entered into a particular transaction or arrangement may provide insight into whether it is part of the consideration transferred and the assets acquired or liabilities assumed. For example, if a transaction is arranged primarily for the benefit of the acquirer or the combined entity rather than primarily for the benefit of the acquiree or its former owners before the combination, that portion of the transaction price paid (and any related assets or liabilities) is less likely to be part of the exchange for the acquiree. Accordingly, the acquirer would account for that portion separately from the business combination. 2. b Who initiated the transaction. Understanding who initiated the transaction may also provide insight into whether it is part of the exchange for the acquiree. For example, a transaction or other event that is initiated by the acquirer may be entered into for the purpose of providing future economic benefits to the acquirer or combined entity with little or no benefit received by the acquiree or its former owners before the combination. On the other hand, a transaction or arrangement initiated by the acquiree or its former owners is less likely to be for the benefit of the acquirer or the combined entity and more likely to be part of the business combination transaction. 3. c The timing of the transaction. The timing of the transaction may also provide insight into whether it is part of the exchange for the acquiree. For example, a transaction between the acquirer and the acquiree that takes place during the negotiations of the terms of a business combination may have been entered into in contemplation of the business combination to provide future economic benefits to the acquirer or the combined entity. If so, the acquiree or its former owners before the business combination are likely to receive little or no benefit from the transaction except for benefits they receive as part of the combined entity. ##### [805-10-55-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5c62786aedb7d92f3053b164111fe96248000684e5dc36455df2020f91990f72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses specific transactions referred to in paragraph [805-10-25-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-21) that are not to be included in applying the acquisition method: 1. a Effective settlement of a preexisting relationship between the acquirer and acquiree in a business combination 2. b Arrangements for contingent payments to employees or selling shareholders. ##### [805-10-55-20](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:6f6c9155e1b09135ebfb1640e01db157bd0c589d5eb9445231ac141cd883af90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer and acquiree may have a relationship that existed before they contemplated the business combination, referred to here as a preexisting relationship. A preexisting relationship between the acquirer and acquiree may be contractual (for example, vendor and customer or licensor and licensee) or noncontractual (for example, plaintiff and defendant). ##### [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:80d9c712604716ddee3a9569dc3a31a1223d2cf59e6873fb6944b6a7a896e3bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the business combination in effect settles a preexisting relationship, the acquirer recognizes a gain or loss, measured as follows: 1. a For a preexisting noncontractual relationship, such as a lawsuit, fair value 2. b For a preexisting contractual relationship, the lesser of the following: 1. 1 The amount by which the contract is favorable or unfavorable from the perspective of the acquirer when compared with pricing for current market transactions for the same or similar items. An unfavorable contract is a contract that is unfavorable in terms of current market terms. It is not necessarily a loss contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. 2. 2 The amount of any stated settlement provisions in the contract available to the counterparty to whom the contract is unfavorable. If this amount is less than the amount in (b)(1), the difference is included as part of the business combination accounting. ##### [805-10-55-22](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:2cec1cb223fbea05935d8646f86968a1623c543d181e61b513b80d7fa351ed26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples 2 and 3 (see paragraphs [805-10-55-30 through 55-33](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30) ) illustrate the accounting for the effective settlement of a preexisting relationship as a result of a business combination. As indicated in Example 3 (see paragraph [805-10-55-33](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-33)), the amount of gain or loss recognized may depend in part on whether the acquirer had previously recognized a related asset or liability, and the reported gain or loss therefore may differ from the amount calculated by applying paragraph [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21). ##### [805-10-55-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:9c1f688afaedf79f3908c43332493b441cb9c6498031cb18e77f7961b74fdc26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A preexisting relationship may be a contract that the acquirer recognizes as a reacquired right in accordance with paragraph [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14). If the contract includes terms that are favorable or unfavorable when compared with pricing for current market transactions for the same or similar items, the acquirer recognizes, separately from the business combination, a gain or loss for the effective settlement of the contract, measured in accordance with paragraph [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21). ##### [805-10-55-24](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3b6c1e4c57de13762e30a68428b18dfc374cbaffb18b58c7dafc236d14b4836e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether arrangements for contingent payments to employees or selling shareholders are [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.") in the business combination or are separate transactions depends on the nature of the arrangements. Understanding the reasons why the acquisition agreement includes a provision for contingent payments, who initiated the arrangement, and when the parties entered into the arrangement may be helpful in assessing the nature of the arrangement. ##### [805-10-55-25](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:b08f915dea7f863f92648513abaa8af700411c6572dc3acf31c6daf7c885e1d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is not clear whether an arrangement for payments to employees or selling shareholders is part of the exchange for the acquiree or is a transaction separate from the business combination, the acquirer should consider the following indicators: 1. a Continuing employment. The terms of continuing employment by the selling shareholders who become key employees may be an indicator of the substance of a contingent consideration arrangement. The relevant terms of continuing employment may be included in an employment agreement, acquisition agreement, or some other document. A contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is compensation for postcombination services. Arrangements in which the contingent payments are not affected by employment termination may indicate that the contingent payments are additional consideration rather than compensation. 2. b Duration of continuing employment. If the period of required employment coincides with or is longer than the contingent payment period, that fact may indicate that the contingent payments are, in substance, compensation. 3. c Level of compensation. Situations in which employee compensation other than the contingent payments is at a reasonable level in comparison to that of other key employees in the combined entity may indicate that the contingent payments are additional consideration rather than compensation. 4. d Incremental payments to employees. If selling shareholders who do not become employees receive lower contingent payments on a per-share basis than the selling shareholders who become employees of the combined entity, that fact may indicate that the incremental amount of contingent payments to the selling shareholders who become employees is compensation. 5. e Number of shares owned. The relative number of shares owned by the selling shareholders who remain as key employees may be an indicator of the substance of the contingent consideration arrangement. For example, if the selling shareholders who owned substantially all of the shares in the acquiree continue as key employees, that fact may indicate that the arrangement is, in substance, a profit-sharing arrangement intended to provide compensation for postcombination services. Alternatively, if selling shareholders who continue as key employees owned only a small number of shares of the acquiree and all selling shareholders receive the same amount of contingent consideration on a per-share basis, that fact may indicate that the contingent payments are additional consideration. The preacquisition ownership interests held by parties related to selling shareholders who continue as key employees, such as family members, also should be considered. 6. f Linkage to the valuation. If the initial consideration transferred at the acquisition date is based on the low end of a range established in the valuation of the acquiree and the contingent formula relates to that valuation approach, that fact may suggest that the contingent payments are additional consideration. Alternatively, if the contingent payment formula is consistent with prior profit-sharing arrangements, that fact may suggest that the substance of the arrangement is to provide compensation. 7. g Formula for determining consideration. The formula used to determine the contingent payment may be helpful in assessing the substance of the arrangement. For example, if a contingent payment is determined on the basis of a multiple of earnings, that might suggest that the obligation is contingent consideration in the business combination and that the formula is intended to establish or verify the fair value of the acquiree. In contrast, a contingent payment that is a specified percentage of earnings might suggest that the obligation to employees is a profit-sharing arrangement to compensate employees for services rendered. 8. h Other agreements and issues. The terms of other arrangements with selling shareholders (such as noncompete agreements, executory contracts, consulting contracts, and property lease agreements) and the income tax treatment of contingent payments may indicate that contingent payments are attributable to something other than consideration for the acquiree. For example, in connection with the acquisition, the acquirer might enter into a property lease arrangement with a significant selling shareholder. If the lease payments specified in the lease contract are significantly below market, some or all of the contingent payments to the lessor (the selling shareholder) required by a separate arrangement for contingent payments might be, in substance, payments for the use of the leased property that the acquirer should recognize separately in its postcombination financial statements. In contrast, if the lease contract specifies lease payments that are consistent with market terms for the leased property, the arrangement for contingent payments to the selling shareholder may be contingent consideration in the business combination. ##### [805-10-55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:51e43078d145471d53a0f4c2ad07dbcb9b2d1f3511359c9f434f45ea1aa9b89b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 4 (see paragraph [805-10-55-34](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-34)) illustrates guidance relating to contingent payments made to an employee in a business combination. #### Illustrations ##### [805-10-55-27](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ff497d703572e1b117bb3c135f44c292f286aedf32fe336868e4f5a225183ba7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the measurement period guidance in paragraph [805-10-55-16](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-16). Acquirer acquires Target on September 30, 20X7. Acquirer seeks an independent appraisal for an item of property, plant, and equipment acquired in the combination, and the appraisal was not complete by the time Acquirer issued its financial statements for the year ended December 31, 20X7. In its 20X7 annual financial statements, Acquirer recognized a provisional fair value for the asset of $30,000. At the acquisition date, the item of property, plant, and equipment had a remaining useful life of five years. Six months after the acquisition date, Acquirer received the independent appraisal, which estimated the asset's acquisition-date fair value as $40,000. ##### [805-10-55-28](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:79357b39c56a7800a6bdc55de4035541cf061b26032c0917b9fbf3dd71fac8bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In its interim financial statements for the quarter ended March 31, 20X8, Acquirer adjusts the provisional amounts recorded and the related effects on that period's earnings as follows: 1. a The carrying amount of property, plant, and equipment as of March 31, 20X8, is increased by $9,000. That adjustment is measured as the fair value adjustment at the acquisition date of $10,000 less the additional depreciation that would have been recognized had the asset's fair value at the acquisition date been recognized from that date ($1,000 for 6 months' depreciation). 2. b The carrying amount of goodwill as of March 31, 20X8, is decreased by $10,000. 3. c Depreciation expense for the period ended March 31, 20X8, is increased by $1,000 to reflect the effect on earnings as a result of the change to the provisional amount recognized. ##### [805-10-55-29](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:69c64eaeca545b0a0e20389a205fd5f49875925701c83664a32c6171f494cdf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A), Acquirer discloses both of the following: 1. a In its 20X7 financial statements, that the initial accounting for the business combination has not been completed because the appraisal of property, plant, and equipment has not yet been received 2. b In its March 31, 20X8 financial statements, the amounts and explanations of the adjustments to the provisional values recognized during the current reporting period. Therefore, Acquirer discloses that the increase to the fair value of the item of property, plant, and equipment was $10,000, with a corresponding decrease to goodwill. Additionally, the change to the provisional amount resulted in an increase in depreciation expense and accumulated depreciation of $1,000, of which $500 relates to the previous quarter. ##### [805-10-55-30](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ef5c6858bdd597e23bb3b7490297bfde2cca70c7051e0cfa20e8f353360cabab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [805-10-55-20 through 55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) . Acquirer purchases electronic components from Target under a five-year supply contract at fixed rates. Currently, the fixed rates are higher than rates at which Acquirer could purchase similar electronic components from another supplier. The supply contract allows Acquirer to terminate the contract before the end of the initial 5-year term only by paying a $6 million penalty. With 3 years remaining under the supply contract, Acquirer pays $50 million to acquire Target, which is the fair value of Target based on what other market participants would be willing to pay. ##### [805-10-55-31](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1c833e8fe61de14d963cd602576f552bfe7ace07da821eda4d9cd09667840b0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Included in the total fair value of Target is $8 million related to the fair value of the supply contract with Acquirer. The $8 million represents a $3 million component that is at-market because the pricing is comparable to pricing for current market transactions for the same or similar items (selling effort, customer relationships, and so forth) and a $5 million component for pricing that is unfavorable to Acquirer because it exceeds the price of current market transactions for similar items. Target has no other [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 or liabilities related to the supply contract, and Acquirer has not recognized any assets or liabilities related to the supply contract before the business combination. ##### [805-10-55-32](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:bcddfa8910e63efecc778e3e7e9b608309f0699311f2b8f729d9b061ae6cd82a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, Acquirer recognizes a loss of $5 million (the lesser of the $6 million stated settlement amount and the amount by which the contract is unfavorable to the acquirer) separately from the business combination. The $3 million at-market component of the contract is part of goodwill. ##### [805-10-55-33](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dc16ecf6726c4ec72bbd05e0e173e10fa8172d6334c53372372d8820aa7cfb42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [805-10-55-20 through 55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) . Whether Acquirer had previously recognized an amount in its financial statements related to a preexisting relationship will affect the amount recognized as a gain or loss for the effective settlement of the relationship. In Example 2 (see paragraph [805-10-55-30](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-30)), generally accepted accounting principles (GAAP) might have required Acquirer to recognize a $6 million liability for the supply contract before the business combination. In that situation, Acquirer recognizes a $1 million settlement gain on the contract in earnings at the acquisition date (the $5 million measured loss on the contract less the $6 million loss previously recognized). In other words, Acquirer has in effect settled a recognized liability of $6 million for $5 million, resulting in a gain of $1 million. ##### [805-10-55-34](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ba0f26c1b094629d92b61ebea67e8d7191e800559c20ebacc7dc98cca4cff5ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [805-10-55-24 through 55-25](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) relating to contingent payments to employees in a business combination. Target hired a candidate as its new chief executive officer under a 10-year contract. The contract required Target to pay the candidate $5 million if Target is acquired before the contract expires. Acquirer acquires Target eight years later. The chief executive officer was still employed at the acquisition date and will receive the additional payment under the existing contract. ##### [805-10-55-35](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:91c18127886d6037fdc19cc49d4c6a9f9258ab9796731eedf2ae417312c4a9fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, Target entered into the employment agreement before the negotiations of the combination began, and the purpose of the agreement was to obtain the services of the chief executive officer. Thus, there is no evidence that the agreement was arranged primarily to provide benefits to Acquirer or the combined entity. Therefore, the liability to pay $5 million is included in the application of the acquisition method. ##### [805-10-55-36](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a9527bd654ee5afe07cd5276baccb69ae7cea98b59df51c68b77a7e2b3aeda7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In other circumstances, Target might enter into a similar agreement with the chief executive officer at the suggestion of Acquirer during the negotiations for the business combination. If so, the primary purpose of the agreement might be to provide severance pay to the chief executive officer, and the agreement may primarily benefit Acquirer or the combined entity rather than Target or its former owners. In that situation, Acquirer accounts for the liability to pay the chief executive officer in its postcombination financial statements separately from application of the acquisition method. ##### [805-10-55-37](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:b633ad35cecd0de6699e7b3ba7462fd200eac61e6e17629431893de98950ee12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates some of the disclosure requirements established in the several Subtopics of this Topic; it is not based on an actual transaction. The Example assumes that Acquirer is a public entity and that Target is a private entity. The illustration presents the disclosures in a tabular format that refers to the specific disclosure requirements illustrated. An actual note to financial statements might present many of the disclosures illustrated in a simple narrative format. ##### [805-10-55-38](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dd1c6ed5356153b4e3d9bf39c1f2800478b2138d9140bf724f8bc684359b1b06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(a) through (d)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - On June 30, 20X0, Acquirer acquired 15 percent of the outstanding common shares of Target. On June 30, 20X2, Acquirer acquired 60 percent of the outstanding common shares of Target. Target is a provider of data networking products and services in Canada and Mexico. As a result of the acquisition, Acquirer is expected to be the leading provider of data networking products and services in those markets. It also expects to reduce costs through economies of scale. ##### [805-10-55-39](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:45c5c7299c4862ccb9df25137a9a0ddc65a952464391c03b814fa60415535839 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(a)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) and [805-30-50-1(e)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - The goodwill of $2,500 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of Acquirer and Target. All of the goodwill was assigned to Acquirer's network segment. ##### [805-10-55-40](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a8d7b09374dbd67206cba278a33a7800a267769cf48e010a1d785193bd022286 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(d)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - None of the goodwill recognized is expected to be deductible for income tax purposes. ##### [805-10-55-41](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5720d2d8ca6680865444204ef127c907bee95b1297e975aaa24d0271dd73ac8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-10-50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2), [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1), and [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - The following table summarizes the consideration paid for Target and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date of the [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 Target. - At June 30, 20X2 - ![](https://asc.understandingaccounting.org/asc-img/GUID-184F6F82-5E3F-49F5-872D-97588ABA431F-low.gif) Refer to Paragraph(s) $ 805-30-50-1(b) Consideration 805-30-50-1(b)(1) Cash " 5,000 " 805-30-50-1(b)(4) "Equity instruments (100,000 common shares of Acquirer)" " 4,000 " " 805-30-50-1(b)(3), 805-30-50-1(c)(1)" Contingent consideration arrangement " 1,000 " Fair value of total consideration transferred " 10,000 " 805-10-50-2(g)(1) Fair value of Acquirer's equity interest in Target held before the business combination " 2,000 " " 12,000 " "805-10-50-2(e), 805-10-50-2(f)" "Acquisition-related costs (including in selling, general, and administrative expenses in Acquirer's income statement for the year ending December 31, 20X2)" " 1,250 " 805-20-50-1(c) Recognized amounts of identifiable assets acquired and liabilities assumed Financial assets " 3,500 " Inventory " 1,000 " "Property, plant, and equipment" " 10,000 " Identifiable intangible assets " 3,300 " Financial liabilities " (4,000)" Liability arising from a contingency " (1,000)" Total identifiable net assets " 12,800 " 805-20-50-1(e)(1) Noncontrolling interest in Target " (3,300)" Goodwill " 2,500 " " 12,000 " ##### [805-10-55-42](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:02888dc462ec033d8c4caaa143ec843288b536c9913cd49022058e3ddc423c46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(b)(4)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) - The fair value of the 100,000 common shares issued as part of the consideration paid for Target ($4,000) was determined on the basis of the closing market price of Acquirer's common shares on the acquisition date. ##### [805-10-55-43](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:88914d7a0f2a4ad20ecf878b723486015c71aa0275bba17aa8e3cc0d6b426797 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-50-1(b)(3)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) and [805-30-50-1(c)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1), and paragraph [805-30-50-4(a)](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-4) - The contingent consideration arrangement requires Acquirer to pay the former owners of Target 5 percent of the revenues of an unconsolidated equity investment, referred to as Investee, owned by Target, in excess of $7,500 for 20X3, up to a maximum amount of $2,500 (undiscounted). The potential undiscounted amount of all future payments that Acquirer could be required to make under the contingent consideration arrangement is between $0 and $2,500. The fair value of the contingent consideration arrangement of $1,000 was estimated by applying the income approach. That measure is based on significant inputs that are not observable in the market, which Section 820-10-35 refers to as Level 3 inputs. Key assumptions include a discount rate range of 20 percent to 25 percent and a probability-adjusted level of revenues in Investee between $10,000 and $20,000. As of December 31, 20X2, the amount recognized for the contingent consideration arrangement, the range of outcomes, and the assumptions used to develop the estimates had not changed. ##### [805-10-55-44](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:93fd8dd43376b9ba5d642cc25a98f05b28716efb722bf746cee4ca1df0270b4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-1(b)](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) - The fair value of the financial assets acquired includes receivables under [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") of data networking equipment with a fair value of $2,000. The gross amount due under the contracts is $3,100, of which $450 is expected to be uncollectible. ##### [805-10-55-45](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ec3e79c9e6615b33b650844d9e239744386e987f58f7cd1bd6b2c6b3ee81c496 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) - The fair value of the acquired identifiable intangible assets of $3,300 is provisional pending receipt of the final valuations for those assets. ##### [805-10-55-46](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5154f7e96bfd5276914a2565471e618d44b61d61b49a15d19bc859b53fceb2d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-1(d)](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) - A liability of $1,000 has been recognized at fair value for expected warranty claims on products sold by Target during the last 3 years. Acquirer expects that the majority of this expenditure will be incurred in 20X3 and that all will be incurred by the end of 20X4. ##### [805-10-55-47](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3d6e46ada200da5df7a942a8d90efb00f82d031f1659d0d3c40b33d500e6cb17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-50-1(e)](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) - The fair value of the noncontrolling interest in Target, a private entity, was estimated by applying the income approach and a market approach. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a fair value measurement categorized within Level 3 of the fair value hierarchy as described in Section 820-10-35. Key assumptions include a discount rate range of 20 percent to 25 percent, a terminal value based on a range of terminal earnings before interest, taxes, depreciation, and amortization multiples between 3 and 5 (or, if appropriate, based on long-term sustainable growth rates ranging between 3 percent and 6 percent), financial multiples of entities deemed to be similar to Target, and adjustments because of the lack of control or lack of marketability that market participants would consider when measuring the fair value of the noncontrolling interest in Target. ##### [805-10-55-48](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:4a8f05af1c014c1713d5f822240690095930e50000facc972c28d35c71c95f9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(g)(2)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - Acquirer recognized a gain of $500 as a result of remeasuring to fair value its 15 percent equity interest in Target held before the business combination. The gain is included in other income in Acquirer's income statement for the year ending December 31, 20X2. ##### [805-10-55-49](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7e395d3ad4e82f3d36cf82128bffa3df42f159bc55738c0809bc8005ddbb16ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(h)(1) through (h)(3)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - The amounts of Target's revenue and earnings included in Acquirer's consolidated income statement for the year ended December 31, 20X2, and the revenue and earnings of the combined entity had the acquisition date been January 1, 20X2 (if comparative financial statements are not presented), and January 1, 20X1 (if comparative financial statements are presented), are as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-34AE1002-F88D-49F7-97DC-709D62A8093C-low.gif) Refer to Paragraph Revenue Earnings 805-10-50-2(h)(1) Actual from 6/30/20X2-12/31/20X2 " $4,090 " " $1,710 " 805-10-50-2(h)(2) "20X2 supplemental pro forma from 1/1/20X2-12/31/20X2" " $27,670 " " $12,870 " 805-10-50-2(h)(3) "20X2 supplemental pro forma from 1/1/20X2-12/31/20X2" " $27,670 " " $14,770 " "20X1 supplemental pro forma from 1/1/20X1-12/31/20X1" " $26,985 " " $12,325 " ##### [805-10-55-50](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:78f9a1b743d6ae7eeb5b814c39e0d3a28602e62c1dd63f7ff7b09716b0f76b5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-2(h)(4)](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-2) - 20X2 supplemental pro forma earnings were adjusted to exclude $1,250 of acquisition-related costs incurred in 20X2 and $650 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. 20X1 supplemental pro forma earnings were adjusted to include these charges. ##### [805-10-55-51](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3f379d3d3863d69fa0d231f1213800d3a9c5a57848c28b5aecaa73054c51237b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Examples in paragraphs [805-10-55-52 through 55-96](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-52) illustrate the guidance in paragraphs [805-10-55-4 through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-4) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) on the definition of a business. In each of the Examples, the first step of the analysis is the evaluation of the threshold in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. If that threshold is not met, an entity should evaluate whether the set includes an input and a substantive process that together significantly contribute to the ability to create outputs. To determine whether both an input and a substantive process are included in the set, an entity should complete its evaluation using the framework (guidance in paragraphs [805-10-55-5D through 55-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) and [805-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-8) ). ##### [805-10-55-52](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:3a37e0d839e9b60e27c27d22dbb4be4796e8839db6c97ae0eabe0541dfc54fb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC acquires, renovates, leases, sells, and manages real estate properties. ABC acquires a portfolio of 10 single-family homes that each have in-place leases. The only elements included in the acquired set are the 10 single-family homes and the 10 in-place leases. Each single-family home includes the land, building, and property improvements. Each home has a different floor plan, square footage, lot, and interior design. No employees or other assets are acquired. ##### [805-10-55-53](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e5b802c6e226d4c78ca38486bb34a86ec6d2fb50552e4750a32dcd20f506d804 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC first considers the threshold guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . ABC concludes that the land, building, property improvements, and in-place leases at each property can be considered a single asset in accordance with paragraph [805-10-55-5B](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5B). That is, the building and property improvements are attached to the land and cannot be removed without incurring significant cost. Additionally, the in-place lease is an intangible asset that should be combined with the related real estate and considered a single asset. ##### [805-10-55-54](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5a5ed41eb8b52dac618e8df8ea5ee2c94c0a880741497029e9d0fdfb57735e9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC also concludes that the 10 single assets (the combined land, building, in-place lease intangible, and property improvements) are similar. Each home has a different floor plan; however, the nature of the assets (all single-family homes) are similar. ABC also concludes that the risks associated with managing and creating outputs are not significantly different. That is, the risks associated with operating the properties and tenant acquisition and management are not significantly different because the types of homes and class of customers are not significantly different. Similarly, the risks associated with operating in the real estate market of the homes acquired are not significantly different. Consequently, ABC concludes that substantially all of the fair value of the gross assets acquired is concentrated in the group of similar identifiable assets; thus, the set is not a business. ##### [805-10-55-55](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5023de752e60b8ce35ebc78c6b29e1a754cfecaa57b7611280e647bb1de69e74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 1 except that ABC also acquires an office park with six 10-story office buildings leased to maximum occupancy of which all have significant fair value. ABC also acquires the vendor contracts for outsourced cleaning, security, and maintenance. Seller's employees that perform leasing (sales, underwriting, and so forth), tenant management, financing, and other strategic management processes are not included in the set. ABC plans to replace the property management and employees with its own internal resources. ##### [805-10-55-56](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1fc559a562946ce22787f0cfb6b3ab410e1151562a5189f7f8886262f5404344 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC concludes that the single-family homes and office park are not similar assets. ABC considers the risks associated with operating the assets, obtaining tenants, and tenant management between the single-family homes and office park to be significantly different because the scale of operations and risks associated with the class of customers are significantly different. Therefore, substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets. Thus, ABC must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-57](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8695d6faf7f2027af32b074784333435385798031dc3b8949f65d462c56c0fa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has continuing revenues through the in-place leases and, therefore, has outputs. ABC must consider the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. ##### [805-10-55-58](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d2373b5b4bbee77dbe25ef54499e4cf7abc488e706e392cc33e0013d0c40bc8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC concludes that the criteria in paragraph [805-10-55-5E(a) through (b)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) are not met because the set does not include employees and the processes performed through the cleaning and security contracts (the only processes acquired) will be considered ancillary or minor in the context of all the processes required to create outputs in the real estate industry. That is, while those outsourcing agreements may be considered to provide an organized workforce that performs cleaning and security processes when applied to the building, the processes performed by the cleaning, security, and maintenance personnel are not considered critical in the context of all the processes required to create outputs. ##### [805-10-55-59](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:544e1feb6da0cb5dba82dc300cc5334d304dc5bb1abb74ce7539b872ccb4c500 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC also concludes that the criterion in paragraph [805-10-55-5E(c)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is not met because the cleaning and security processes could be easily replaced with little cost, effort, or delay in the ability to continue producing outputs. While the cleaning and security processes are necessary for continued operations of the buildings, these contracts can be replaced quickly with little effect on the ability to continue producing outputs. ##### [805-10-55-60](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:5fd91b81a9ab0332ec2a774f1d3a8539a02597bfacbd8d2a777d235096178f34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC concludes that the criterion in paragraph [805-10-55-5E(d)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is not met because the cleaning and security contracts are not considered unique or scarce. That is, these types of arrangements are readily accessible in the marketplace. ##### [805-10-55-61](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f00eb24349316bfc76bc3394206d686c98f7c18d3e16b1bc132a0e5b652aae4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because none of the criteria were met, ABC concludes that the set does not include both an input and substantive processes that together significantly contribute to the ability to create outputs and, therefore, is not considered a business. ##### [805-10-55-62](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f79131b0d7f3ce4071d484fdb6a90ab69c605dcc1837b88a6fa393113850daa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 2, except that the set includes the employees responsible for leasing, tenant management, and managing and supervising all operational processes. ##### [805-10-55-63](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d25667902e5d5e58eb1f1b6de2f83e99e1476598393344e24dec828e2991e1b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has continuing revenues through the in-place leases and, therefore, has outputs. ABC must consider the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. ##### [805-10-55-64](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:77d6dc13ce6d7e61f49c2cfecff44e6665908dec9334827137b09d9204fff0fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC determines that the criterion in paragraph [805-10-55-5E(a)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is met because the set includes an organized workforce that performs processes that when applied to the acquired inputs in the set (the land, building, and in-place leases) are critical to the ability to continue producing outputs. That is, ABC concludes that the leasing, tenant management, and supervision of the operational processes are critical to the creation of outputs. Because it includes both an input and a substantive process, the set is considered a business. ##### [805-10-55-65](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d522daabcfb98d1ff9f4827682d5a3201f65ab8e2e2f4829055767827eae59db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. purchases from Biotech a legal entity that contains the rights to a Phase 3 (in the clinical research phase) compound being developed to treat diabetes (the in-process research and development project). Included in the in-process research and development project is the historical know-how, formula protocols, designs, and procedures expected to be needed to complete the related phase of testing. The legal entity also holds an at-market clinical research organization contract and an at-market clinical manufacturing organization contract. No employees, other assets, or other activities are transferred. ##### [805-10-55-66](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a3103ae8d58c8b577b73f3dca1ed7a4620347fe11066bdce346971b8c4a47bf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Pharma Co. concludes that the in-process research and development project is an identifiable intangible asset that would be accounted for as a single asset in a business combination. Pharma Co. also qualitatively concludes that there is no fair value associated with the clinical research organization contract and the clinical manufacturing organization contract because the services are being provided at market rates and could be provided by multiple vendors in the marketplace. Therefore, all of the consideration in the transaction will be allocated to the in-process research and development project. As such, Pharma Co. concludes that substantially all of the fair value of the gross assets acquired is concentrated in the single in-process research and development asset and the set is not a business. ##### [805-10-55-67](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:acfa377c2fc9c37f18b3f95e719d55721f72b4ceee5940a86506461c26dc6b11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. purchases from Biotech a legal entity that contains the rights to a Phase 3 compound being developed to treat diabetes (Project 1) and a Phase 3 compound being developed to treat Alzheimer's disease (Project 2). Included with each project are the historical know-how, formula protocols, designs, and procedures expected to be needed to complete the related phase of testing. The legal entity also holds at-market clinical research organization contracts and at-market clinical manufacturing organization contracts associated with each project. Assume that Project 1 and Project 2 have equal fair value. No employees, other assets, or other activities are transferred. ##### [805-10-55-68](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:e759bc7894b1cb03dfe7853e469b6e21ac35aa7cd946a3261339cb7039288e15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. concludes that Project 1 and Project 2 are each separately identifiable intangible assets, both of which would be accounted for as a single asset in a business combination. Pharma Co. then considers whether Project 1 and Project 2 are similar assets. Pharma Co. notes that the nature of the assets is similar in that both Project 1 and Project 2 are in-process research and development assets in the same major asset class. However, Pharma Co. concludes that Project 1 and Project 2 have significantly different risks associated with creating outputs from each asset because each project has different risks associated with developing and marketing the compound to customers. The projects are intended to treat significantly different medical conditions, and each project has a significantly different potential customer base and expected market and regulatory risks associated with the assets. Thus, Pharma Co. concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-69](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7ed079f8e403fd3f1791538663d0250b945c00c81b00efd06e8ac7f41bed0250 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the set does not have outputs, Pharma Co. evaluates the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) to determine whether the set has both an input and a substantive process that together significantly contribute to the ability to create outputs. Pharma Co. concludes that the criteria are not met because the set does not have employees. As such, Pharma Co. concludes that the set is not a business. ##### [805-10-55-70](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:8092c2b20982843ad7760ba6c1175b04200a9e8f1fe98cbe7904b1c99cad99e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. buys all of the outstanding shares of Biotech. Biotech's operations include research and development activities on several drug compounds that it is developing (in-process research and development projects). The in-process research and development projects are in different phases of the U.S. Food and Drug Administration approval process and would treat significantly different diseases. The set includes senior management and scientists that have the necessary skills, knowledge, or experience to perform research and development activities. In addition, Biotech has long-lived tangible assets such as a corporate headquarters, a research lab, and lab equipment. Biotech does not yet have a marketable product and, therefore, has not generated revenues. Assume that each research and development project has a significant amount of fair value. ##### [805-10-55-71](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ef2f9ddf3f950933fcc87551e8f48b50c94e9edfd74f8ad48a51ec9c7a67178e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pharma Co. first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The identifiable assets in the set include multiple in-process research and development projects and tangible assets (the corporate headquarters, the research lab, and the lab equipment). Pharma Co. concludes that the in-process research and development projects are not similar assets because the projects have significantly different risks associated with managing the assets and creating the outputs (that is, because there are significantly different development risks in the different phases of development, market risks related to the different customer base, and potential markets for the compounds). In addition, Pharma Co. concludes that there is fair value associated with the acquired workforce because of the proprietary knowledge of and experience with Biotech's ongoing development projects and the potential for creation of new development projects that the workforce embodies. As such, Pharma Co. concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-72](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c6709ee8f3c54a0631d2148b8d0f06938164baa55a97206e64268afe0de10542 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the set does not have outputs, Pharma Co. evaluates the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) to determine whether the set has both an input and a substantive process that together significantly contribute to the ability to create outputs. Pharma Co. concludes that the criteria are met because the scientists make up an organized workforce that has the necessary skills, knowledge, or experience to perform processes that when applied to the in-process research and development inputs is critical to the ability to develop those inputs into a product that can be provided to a customer. Pharma Co. also determines that there is a more-than-insignificant amount of goodwill (including the fair value associated with the workforce), which is another indicator that the workforce is performing a critical process. Thus, the set includes both inputs and substantive processes and is a business. ##### [805-10-55-73](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:d98fdf7e44d87a5d4cb99bf1545c47cca0725dee265915fa65697d832e243f1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A is a television broadcaster whose principal business is the ownership and operation of a television station group in the United States through which it broadcasts its proprietary health-care-related programming. Company B owns and operates several television stations in the western United States. Because of a recent merger, Company B must divest itself of a station in Portland, Oregon (KPOR), and agrees to sell the station to Company A. ##### [805-10-55-74](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:51ebf9224a9f0a7147b98f0ffa32fd10259d5ea89622dbec85bc5ef9a834a4ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A plans to change KPOR's programming format to its proprietary health-care-related programming. Therefore, Company A will receive only the U.S. Federal Communications Commission license, the broadcasting equipment, and the office building. KPOR will be integrated into Company A's operations, with most of the station processes centralized at Company A's corporate headquarters. Company A will not extend offers of employment to any of KPOR's employees or assume any of KPOR's contractual relationships. ##### [805-10-55-75](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:2a90c1afd9349e8153d63c829ed27941c0a837a06dfb91375d5a04e98336dca1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The U.S. Federal Communications Commission license is an intangible asset that is recognized and measured separately in a business combination, while the broadcast equipment and building are tangible nonfinancial assets in different major classes. Company A concludes that the broadcast equipment and building are not considered a single asset because the equipment is not attached to the building and can be removed without significant cost or diminution in fair value. Furthermore, none of the assets will be considered similar in accordance with paragraph [805-10-55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5C) because the U.S. Federal Communications Commission license cannot be considered similar to tangible assets and the tangible assets are in different major asset classes. Each of the separate identifiable assets has significant fair value. Thus, Company A concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-76](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:512202501fc14b571da9852aa568acc47d50a386758e31980c5cc14505dede44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set does not have outputs; therefore, Company A considers the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. The set does not include an organized workforce, so it does not meet the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D). Therefore, the set does not include both an input and a substantive process and is not considered a business. ##### [805-10-55-77](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-77) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:4493ada4d6f40ce293ce5f11c08c2c9cd93b3f644746761e61c18772e8df7d9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Widget Co. manufactures complex equipment and has manufacturing facilities throughout the world. Widget Co. decided to idle a facility in a foreign jurisdiction in a reorganization of its manufacturing footprint and furloughed the assembly line employees. ##### [805-10-55-78](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-78) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c9f0bee7f442fe4008517e6e0134e3c28aa0a978167fbe3e8ea51fd6ecb25836 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer enters into an agreement to purchase a manufacturing facility and related equipment from Widget Co. To comply with the local labor laws, Acquirer also must assume the furloughed employees. ##### [805-10-55-79](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-79) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f1ebb419ff32587d975df656a771dd318a18d9c5907919958b55e932f494c894 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets acquired include the equipment and facility (land and building) but no intellectual property, inventory, customer relationships, or any other inputs. ##### [805-10-55-80](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-80) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a09c7e3838ffc213298f9281221e2555b2171629025a8f19d74a8049beb3da56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Acquirer concludes that the equipment in the facility can be removed without significant cost or diminution in utility or fair value because the equipment is not attached to the building and can be used in many types of manufacturing facilities. Therefore, the equipment and building are not a single asset. Furthermore, the equipment and facility are not considered similar assets because they are different major classes of tangible assets. Acquirer determines that there is significant fair value in both the equipment and the facility and, thus, concludes that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-81](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-81) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:ae9e4a5195b001ea230fdc0e8d3c66648101541ef165fcf13c77d0efde7094fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set is not currently producing outputs because there is no continuation of revenue before and after the transaction; therefore, Acquirer considers the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D) and whether the set includes both employees that form an organized workforce and an input that the workforce could develop or convert into output. The set includes employees that have the necessary skills, knowledge, or experience to use the equipment; however, without intellectual property or other inputs that could be converted into outputs using the equipment, the set does not include both an organized workforce and an input that will meet the criteria in paragraph [805-10-55-5D](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5D). That is, the equipment itself cannot be developed or converted into an output by those employees. Therefore, the set is not a business. ##### [805-10-55-82](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-82) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:f8cd35d0b518fa6945a1b23e9cc731a238ae44619e63043720433ef3b12743c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A is a distributor of food and beverages. Company A enters into an agreement to sublicense the Latin American distribution rights of Yogurt Brand F to Company B, whereby Company B will distribute Yogurt Brand F in Latin America. As part of the agreement, Company A transfers the existing customer contracts in Latin America to Company B and an at-market supply contract with the producer of Yogurt Brand F. Company A retains all of its employees and distribution capabilities. ##### [805-10-55-83](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-83) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:a2da1c57f28c188d2fb95294e5d289a34d41436a3d72662b59126e67d6279325 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company B first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The identifiable assets that could be recognized in a business combination include the license to distribute Yogurt Brand F, customer contracts, and the supply agreement. Company B concludes that the license and customer contracts will have fair value assigned to them. Company B concludes that neither asset represents substantially all of the fair value of the gross assets. Company B then considers whether the license and customer contracts are a group of similar intangible assets. Because the license and customer contracts are in different major classes of identifiable intangible assets, they are not considered similar assets. Therefore, substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets, and Company B must evaluate whether the set has both an input and a substantive process. ##### [805-10-55-84](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-84) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1ec4e74f8f639609bf7186e463c62171bb5525a2188f9d6a08dac66aae66dff1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues with customers in Latin America. As such, Company B must evaluate the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes an input and a substantive process that together significantly contribute to the ability to create outputs. Company B considers whether the acquired contracts are providing access to an organized workforce that performs a substantive process. However, because the contracts are not providing a service that applies a process to another acquired input, Company B concludes that the substance of the contracts are only that of acquiring inputs. The set is not a business because: 1. a It does not include an organized workforce that could meet the criteria in paragraph [805-10-55-5E(a) through (b)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E). 2. b There are no acquired processes that could meet the criteria in paragraph [805-10-55-5E(c) through (d)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E). 3. c It does not include both an input and a substantive process. ##### [805-10-55-85](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-85) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:79863175e3679aab4074cbcdd04b11bbbb053b34be0043f147af0e7c879097e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A is a global producer of food and beverages. Company A sells the worldwide rights of Yogurt Brand F, including all related intellectual property, to Company B. Company B also acquires all customer contracts and relationships, finished goods inventory, marketing materials, customer incentive programs, raw material supply contracts, specialized equipment specific to manufacturing Yogurt Brand F, and documented processes and protocols to produce Yogurt Brand F. Company B does not receive employees, manufacturing facilities, all of the manufacturing equipment and processes required to produce the product, and distribution facilities and processes. ##### [805-10-55-86](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-86) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:1107fb066b2bb0da024146a5ae45cd341306792de24f9f371de3842c9c8eaf45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company B first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . The gross assets include intellectual property (the trademark, the related trade name, and recipes) associated with Yogurt Brand F (the intellectual property associated with the brand is determined to be a single intangible asset in accordance with the guidance in paragraph [805-20-55-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-18)), customer contracts and related relationships, equipment, finished goods inventory, and the excess of the consideration transferred over the fair value of the net assets acquired. Company B concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets even though, for purposes of the analysis, the intellectual property is considered to be a single identifiable asset. In addition, because there is significant fair value in both tangible assets and intangible assets, Company B concludes that there is not a group of similar assets that meets this threshold. ##### [805-10-55-87](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-87) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:83a28c00b1001e7950c04cccc6f245cb4cf767e6954a501ade66925ea77f9626 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues, and Company B must consider the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both inputs and a substantive process that together significantly contribute to the ability to create outputs. The set does not include an organized workforce and, therefore, does not meet the criteria in paragraph [805-10-55-5E(a) through (b)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E). However, the acquired manufacturing processes are unique to Yogurt Brand F, and when those processes are applied to acquired inputs such as the intellectual property, raw material supply contracts, and the equipment, they significantly contribute to the ability to continue producing outputs. As such, the criterion in paragraph [805-10-55-5E(c)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is met, and the set includes both inputs and substantive processes. Because the set includes inputs and substantive processes that together significantly contribute to the ability to create outputs, it is considered a business. ##### [805-10-55-88](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-88) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c8993b193534bf1f55e7571fbcc077980a375c2f5dff38a01f3353b97f1203d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A purchases a loan portfolio from Bank Z. The portfolio of loans consists of residential mortgages with terms, size, and risk ratings that are not significantly different. Bank A does not take over the employees of Bank Z that managed the credit risk of the portfolio and the relationship with the borrowers (such as brokers, vendors, and risk managers). ##### [805-10-55-89](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-89) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:529acb981e119bdaf9c41f4f937c53dbdc2efcd0d2245745b85cec480b8cc5cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Bank A concludes that the nature of the assets (residential mortgage loans) is similar. Bank A also concludes that the risks associated with managing and creating outputs are not significantly different because the terms, size, and risk ratings of the loans are not significantly different. Because all of the fair value of the gross assets acquired is in a group of similar identifiable assets, the set is not a business. ##### [805-10-55-90](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-90) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:70a39cc4af3a804565b1b587189f7ba328f30a98f8c5a1eb766c90be95c77378 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 1 except that the portfolio of loans consists of commercial loans with term, size, and risk ratings that are significantly different. ##### [805-10-55-91](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-91) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:45bbfd1c401d8118a73d226665e1dd7cfc384c776133c3ae0a9560e49382478f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Bank A must consider whether the loans are similar. Bank A concludes that the nature of the assets (commercial loans) is similar; however, because the term, size, and risk ratings of the loans are significantly different, Bank A concludes that the risks associated with managing and creating outputs are significantly different. Thus, Bank A concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has the minimum requirements to be considered a business. ##### [805-10-55-92](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-92) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:7938662ed18dfc84c76a442cef0d86ad0960d2645c54699b7787de68b9147327 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues (interest income). Consequently, Bank A considers the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both inputs and a substantive process that together significantly contribute to the ability to create outputs. Because the set does not include an organized workforce or acquired processes, the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) are not met and the set is not a business. ##### [805-10-55-93](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-93) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:9f7c81c7ce2f7d4d2f81673adc6993d39b4bae835601f146929295071e56be3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Scenario 2 except that Bank A takes over the employees of Bank Z that managed the credit risk of the portfolio and the relationship with the borrowers (such as brokers and risk managers). Additionally, consideration transferred is significantly higher than Bank A's estimate of the fair value of the loan portfolio. ##### [805-10-55-94](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-94) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:bf10faaf62579b27c6aec90af9a5167568840da48a63e4b2c502f4ca35a8b3f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A first considers the guidance in paragraphs [805-10-55-5A through 55-5C](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5A) . Bank A concludes that the loan portfolio does not consist of similar identifiable assets. Bank A also concludes that there is significant fair value associated with different groups of financial assets and the acquired workforce. As such, Bank A concludes that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and that it must further evaluate whether the set has met the minimum requirements to be considered a business. ##### [805-10-55-95](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-95) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:c7820bd4276c9f2361efaec739a0446068cc208f45dcee7f97127f2b4b3e480a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The set has outputs through the continuation of revenues (interest income). Consequently, Bank A considers the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) to determine whether the set includes both an input and a substantive process that together significantly contribute to the ability to create outputs. ##### [805-10-55-96](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-96) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:37.779Z to 2026-09-10T01:22:37.779Z Record version: sha256:dd7f2e5a64808dda645c0f2f895520e6d3970f8889dfbce75075019481f61798 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A evaluates the criteria in paragraph [805-10-55-5E](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) and concludes that the criterion in paragraph [805-10-55-5E(a)](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-5E) is met because the set includes an organized workforce that performs processes (customer relationship management and credit risk management) critical to the ability to continue producing outputs; therefore, the set is a business. Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:aff6c3c006e4d95f4980dd2ac91234a458981330d2c00966bcf879f27e094d23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/805/10/#65-transition-and-open-effective-date-information) SEC content: no ##### [805-10-65-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:b1dab72f63910b3b1aecc12c4f118f3baf485b74b24f25d4400e4a7da18c0f0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/01/2010 after the end of the transition period stated in FASB Statement No. 141 (Revised 2007), _Business Combinations_, and No. 164, _Not-for-Profit Entities: Mergers and Acquisitions_. ##### [805-10-65-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:00d684dd0677683357401277607942ac57d3259ecb3cb895863fff3f7021ee8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/18/2012 after the end of the transition period stated in Accounting Standards Update No. 2010-29, _Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations_. ##### [805-10-65-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:e08e39b30215329bec04a2d85a51d016f53c457ecf203bc912d5697a152ed9b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2018 after the end of the transition period stated in Accounting Standards Update No. 2015-16, _Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments_. #### Transition Related to Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ##### [805-10-65-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:d41bdcf21d96e4d49917ec0675c7c6bcb81b7e07af7c264827420ec5f9ceb11d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Accounting Standards Update 2017-01](https://asc.understandingaccounting.org/updates/asu-2017-01/) 2019-6-17 2017-12-16 2017-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 2018-12-16 2019-12-16 The following represents the transition and effective date information related to Accounting Standards Update No. 2017-01, _Business Combinations (Topic 805): Clarifying the Definition of a Business_: 1. a The pending content that links to this paragraph shall be effective for [public business entities](https://asc.understandingaccounting.org/glossary/p/#public-business-entity "A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.") for annual periods beginning after December 15, 2017, including interim periods within those periods. 2. b The pending content that links to this paragraph shall be effective for all other entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. 3. c Earlier application of the pending content that links to this paragraph is permitted for transactions for which the acquisition date occurs before the issuance date or the effective date of the pending content that links to this paragraph only when the transaction has not been reported in financial statements that have been issued or made available for issuance. 4. d Earlier application of the pending content that links to this paragraph is permitted for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized that occur before the issuance date or the effective date of the pending content that links to this paragraph only when the transaction has not been reported in financial statements issued or made available for issuance. 5. e An entity shall apply the pending content that links to this paragraph prospectively as of the beginning of the period of adoption. #### Transition Related to Accounting Standards Update No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity ##### [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:40.178Z to 2026-09-10T01:22:40.178Z Record version: sha256:27d93cbf48e2134c4e19424aa68949e084f11be3e3b9131fd51a8c99a7ccab60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Accounting Standards Update 2025-03](https://asc.understandingaccounting.org/updates/asu-2025-03/) 2028-6-13 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 The following represents the transition and effective date information related to Accounting Standards Update No. 2025-03, _Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity_: **Effective date and early adoption** 1. a All entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. 2. b Early adoption of the pending content that links to this paragraph is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance). If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall adopt the pending content as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period. **Transition method** 1. c An entity shall apply the pending content that links to this paragraph on a prospective basis to all [business combinations](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.") that have an [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") that occurs on or after the date of initial application of the pending content. **Transition disclosures** 1. d An entity applying the pending content that links to this paragraph shall disclose in both the interim reporting period (if applicable) and the annual reporting period of the change the nature of and reason for the change in accounting principle. Source downloaded (UTC): 2026-09-10T01:22:46.628Z to 2026-09-10T01:22:46.628Z Record version: sha256:d0bb17fd8fa7cf3861e5fc5d960e60ebd2a52e0334ea57a0751c54e30aa3d594 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-00-status) SEC content: yes ##### [805-10-S00-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:46.628Z to 2026-09-10T01:22:46.628Z Record version: sha256:d036008fdf0acc5452682f252ecdbe0d1a0d5335d312b117077bb86ef7abdac8 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
805-10-S25-1AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S30-1AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S30-2AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S30-3AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S50-2AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S50-3AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-1AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-2AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-3AmendedAccounting Standards Update No. 2009-0709/15/2009
805-10-S55-4AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S55-5SupersededAccounting Standards Update No. 2012-0308/27/2012
805-10-S99-2AmendedAccounting Standards Update No. 2012-0308/27/2012
805-10-S99-2AmendedAccounting Standards Update No. 2010-2208/19/2010
805-10-S99-3AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-4AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-5AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-6AmendedAccounting Standards Update No. 2009-0207/01/2009
805-10-S99-7AmendedAccounting Standards Update No. 2009-0207/01/2009
Source downloaded (UTC): 2026-09-10T01:22:50.648Z to 2026-09-10T01:22:50.648Z Record version: sha256:5fe59f6305b358504a1423154d2b61cac3b772fab60aa52f69f3a98838653370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-25-recognition) SEC content: yes ##### [805-10-S25-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:50.648Z to 2026-09-10T01:22:50.648Z Record version: sha256:04e5262b52e5fe0d06fa65923202d3ecbb1a720d80a51ed834eeda033a632938 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:ff387bd397d9fce7d66a7681b755f734aa8461dab6ee42ca19859b21a5843ca7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-30-initial-measurement) SEC content: yes ##### [805-10-S30-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:0a87c909534840a73d89d31151e459d88058aff29650fa6c7617c826bb13eba3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S30-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:9d6d9202c6043f1a9bd8b80fc4a932d6c96270342ef3909e316c3b165dca728a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S30-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:beb049ce03d09215d4731fd10618baba7839d6d0370e7c823e173ee5effb0522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Contribution of Businesses to a Newly Formed Joint Venture ##### [805-10-S30-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-S30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:52.711Z to 2026-09-10T01:22:52.711Z Record version: sha256:702197aa234d73b04add84b024aa7ad9c26f4a29d3ffdd263e760760b52a21e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [805-10-S99-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-8), SEC Observer Comment: Accounting by a Joint Venture for Businesses Received at Its Formation, for SEC Staff views on that issue. Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:7e9e8cb6236f7e0dc00a97a627fa30e83c7f1bfccb3b0491010b31783658423b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-50-disclosure) SEC content: yes #### Pro Forma Disclosure ##### [805-10-S50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:44e0be04fb5f2574dacf8a764cace873bcf82a4f6be68126559932e8ad708a89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [270-10-S99-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-S99-1), Regulation S-X Rule 10-1, for rules pertaining to supplemental pro forma disclosure in a business combination. ##### [805-10-S50-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:d5e648528b37c231a8be70adbe11b4846a1fec558c4431be3bb12476a53112a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S50-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:56.360Z to 2026-09-10T01:22:56.360Z Record version: sha256:b2c4c61287340098c26299f44378684b3adb0343fdb2ac486986f0a9fec5852f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:2f0867871950328981b10058532639c187af2c05e7c45981fe4331a9fb042890 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S55: SEC 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-55-implementation-guidance-and-illustrations) SEC content: yes ##### [805-10-S55-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:15114ec72d9cc25da756b908991aa5a9c098820a88358f26dbc39661c9577491 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S55-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:a8973406bb54f2e6d34f074196b21fdb543636a2e6eb0e8f43cee75bfb8a5950 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Business Combinations Prior to an Initial Public Offering ##### [805-10-S55-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:ce6b23d86d455ed79c79c23e4c6f9adce5a24d15174c41adfeef3c44a52ce15c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [805-10-S99-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-2), SAB Topic 2.A.8, for SEC Staff views on the accounting for business combinations prior to or contemporaneous with an initial public offering. ##### [805-10-S55-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:ffa66d4e2d9ad95a9232a792f7d7d5117802e1177cb61f5a5f35f180a7b5c7f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S55-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-S55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:22:59.749Z to 2026-09-10T01:22:59.749Z Record version: sha256:2a4f9d7b08c1f328af60068778a3b017b9b525be392b0b0ad51bad407503499d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:aba86300689bfabd290f27a0dcf79db50ce5e931bdd133d17ae1d873e42daba4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/805/10/#sec-99-sec-materials) SEC content: yes ##### [805-10-S99-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:e840d8c047cba3bac63a253aa69dd9a399be005f7e50adacbaa8fb499548f707 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### SEC Staff Guidance ##### [805-10-S99-2](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:8a735edb6d71cdb32b18ec7ace6e63e3cd45338a307a3f23e5c4b4e37dfe4c08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 2.A.8, Business Combinations Prior to an Initial Public Offering. - Facts: Two or more businesses combine in a single combination just prior to or contemporaneously with an initial public offering. - Question: Does the guidance in SAB Topic 5.G apply to business combinations entered into just prior to or contemporaneously with an initial public offering? - Interpretive Response: No. The guidance in SAB Topic 5.G is intended to address the transfer, just prior to or contemporaneously with an initial public offering, of nonmonetary assets in exchange for a company's stock. The guidance in SAB Topic 5.G is not intended to modify the requirements of FASB ASC Topic 805. Accordingly, the staff believes that the combination of two or more businesses should be accounted for in accordance with FASB ASC Topic 805. ##### [805-10-S99-3](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:4887a8757f2535cc41f02795d983440d75e8b18f8c538ad966b8de5975d1b0f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:d457a6b40db86c48da8b038107d06a46e2093d00d5c6918415d8b4189d87d98d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:88a27f49d6e0c974bed8072b2f642aeea1d99bdf138c2d924b9c0f791e9b16c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-6](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:3a196d916a84b852ff61ce90d3b585a540f5d4ed3be3bfe5ffecf5015a2d43a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-7](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:327fd1525b6a5c071f8a97435d4a9eacad7931d87ecaf06e2717036ebc4e4f45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-10-S99-8](https://asc.understandingaccounting.org/asc/805/10/#805-10-S99-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:02.215Z to 2026-09-10T01:23:02.215Z Record version: sha256:eaf64bbfabada53f81837b07dda662470555b702d7f7452b51eba3b7b89a7f87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Observer Comment: Accounting by a Joint Venture for Businesses Received at Its Formation. - The SEC staff will object to a conclusion that did not result in the application of Topic 805 to transactions in which businesses are contributed to a newly formed, jointly controlled entity if that entity is not a joint venture. The SEC staff also would object to a conclusion that joint control is the only defining characteristic of a joint venture. Source downloaded (UTC): 2026-09-10T01:23:05.700Z to 2026-09-10T01:23:57.518Z Record version: sha256:56d35a3f770ad82210e31c2d3bf8b3e89f5880fd30d252105bd8f821904e9ac0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20: Business Combinations — Identifiable Assets and Liabilities, and Any Noncontrolling Interest ### Machine-generated study aids ```json { "summary": "ASC 805-20 governs one piece of the acquisition method: recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest (NCI) in the acquiree. The core rules are that at the acquisition date the acquirer recognizes these items separately from goodwill (if they meet the asset/liability definitions and are part of the exchange, not a separate transaction) and measures them at acquisition-date fair value, subject to a closed list of recognition and measurement exceptions (income taxes, employee benefits, indemnification assets, reacquired rights, share-based payments, held-for-sale assets, certain contingencies, leases, PCD assets, contract assets/liabilities). Private companies and NFPs may elect an accounting alternative that subsumes most customer-related intangibles and all noncompetition agreements into goodwill.", "key_points": [ "As of the acquisition date the acquirer recognizes, separately from goodwill, the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree (805-20-25-1); items must meet the asset/liability definitions (805-20-25-2) and be part of the exchange rather than a separate transaction (805-20-25-3), so expected exit or employee-termination costs are not liabilities at the acquisition date.", "Intangible assets are recognized apart from goodwill if identifiable — meeting either the separability criterion or the contractual-legal criterion (805-20-25-10, 805-20-55-2 through 55-5) — which often means recognizing assets the acquiree never recorded, such as internally developed brands, patents, and customer relationships (805-20-25-4); an assembled workforce and items that are not assets are subsumed into goodwill (805-20-55-6 through 55-7).", "The measurement principle is acquisition-date fair value (805-20-30-1), with no separate valuation allowance for assets measured at fair value (805-20-30-4) and nonfinancial assets measured at highest and best use even if the acquirer intends defensive or no use (805-20-30-6); exceptions to fair value are listed in 805-20-30-12 (income taxes, employee benefits, indemnification assets, reacquired rights, share-based payment awards, held-for-sale assets, certain contingencies, leases, PCD assets, contract assets and liabilities).", "NCI is measured at acquisition-date fair value, using quoted prices for the shares not held by the acquirer when available; per-share values of the acquirer's interest and the NCI may differ because of a control premium or a discount for lack of control (805-20-30-7 through 30-8).", "Assets and liabilities arising from contingencies are recognized at acquisition-date fair value if that fair value can be determined during the measurement period (805-20-25-19); otherwise they are recognized only if it is probable an asset existed or a liability had been incurred and the amount can be reasonably estimated (805-20-25-20), measured at that reasonably estimable amount (805-20-30-23), with unrecognized contingencies thereafter accounted for under Topic 450 (805-20-25-20B).", "Reacquired rights are identifiable intangible assets measured on the remaining contractual term, ignoring potential renewals (805-20-25-14, 805-20-30-20), amortized over that remaining contractual period (805-20-35-2), with a settlement gain or loss recognized for off-market terms (805-20-25-15); an indemnification asset is recognized when the indemnified item is recognized and measured on the same basis (805-20-25-27 through 25-28) and derecognized only when collected, sold, or lost (805-20-40-3).", "Under the private company/NFP accounting alternative, customer-related intangibles are not recognized separately from goodwill unless capable of being sold or licensed independently, and noncompetition agreements are never recognized separately (805-20-25-30); the election requires adopting the Topic 350-20 goodwill amortization alternative (805-20-15-4) and does not extend to contract assets or leases (805-20-25-32 through 25-33)." ], "categories": [ "Business combinations", "Recognition", "Initial measurement", "Intangibles and goodwill" ], "audience_level": "intermediate", "student_note": "This is the workhorse subtopic for purchase accounting problems: nearly every exam question turns on which intangibles must be recognized apart from goodwill and which items fall into the exception list rather than being measured at fair value. The most common misunderstanding is assuming everything is at fair value — income taxes, employee benefits, reacquired rights, replacement share-based awards, held-for-sale assets, leases, PCD assets, and contract assets/liabilities follow other GAAP, and planned restructuring or termination costs are never acquisition-date liabilities.", "related_topics": [ "805-10", "805-30", "805-740", "350-30", "842-10", "606" ], "key_concepts": [ "acquisition method", "identifiable intangible assets", "separability criterion", "contractual-legal criterion", "noncontrolling interest fair value", "reacquired rights", "indemnification asset", "private company accounting alternative" ] } ``` Source downloaded (UTC): 2026-09-10T01:23:05.700Z to 2026-09-10T01:23:05.700Z Record version: sha256:3a2f7c7be75ce0d3296c8258228d71035e67062e369eda19498781ff01598a29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/20/#00-status) SEC content: no ##### [805-20-00-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:05.700Z to 2026-09-10T01:23:05.700Z Record version: sha256:59569e9efb500483f66171c28c479b24b114d539d53f93348e717c8b90faced2 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
AcquireeAmendedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Bargain Purchase OptionSupersededAccounting Standards Update No. 2016-0202/25/2016
Bargain Renewal OptionSupersededAccounting Standards Update No. 2016-0202/25/2016
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
Compliance Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Contract AssetAddedAccounting Standards Update No. 2014-1812/23/2014
Contract LiabilityAddedAccounting Standards Update No. 2021-0810/28/2021
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental Credit ObligationAddedAccounting Standards Update No. 2026-0205/19/2026
ExchangeAddedAccounting Standards Update No. 2025-1012/04/2025
Finance LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Financial Asset (1st def.)SupersededAccounting Standards Update No. 2016-1912/14/2016
Financial Asset (1st def.)AddedAccounting Standards Update No. 2016-1306/16/2016
Financial Asset (2nd def.)AddedAccounting Standards Update No. 2016-1912/14/2016
Financial Statements Are Available to Be IssuedSupersededAccounting Standards Update No. 2016-0303/07/2016
Financial Statements Are Available to Be IssuedAddedAccounting Standards Update No. 2014-1812/23/2014
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAmendedAccounting 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
Income TaxesAddedAccounting Standards Update No. 2026-0205/19/2026
Indirectly Related to the Leased PropertySupersededAccounting Standards Update No. 2016-0202/25/2016
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
LeaseAmendedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2014-1812/23/2014
Lease LiabilityAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ReceivableAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAmendedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Monetary AssetsAddedAccounting Standards Update No. 2025-1012/04/2025
Net Investment in the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Noncancelable Lease TermSupersededAccounting Standards Update No. 2016-0202/25/2016
Nonreciprocal Transfer (1st def.)AddedAccounting Standards Update No. 2026-0205/19/2026
Operating LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Performance ObligationAddedAccounting Standards Update No. 2021-0810/28/2021
Private CompanyAddedAccounting Standards Update No. 2014-1812/23/2014
ProbableAddedAccounting Standards Update No. 2026-0205/19/2026
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Public Business EntityAddedAccounting Standards Update No. 2014-1812/23/2014
Purchased Financial Assets with Credit DeteriorationAmendedAccounting Standards Update No. 2016-1912/14/2016
Purchased Financial Assets with Credit DeteriorationAddedAccounting Standards Update No. 2016-1306/16/2016
Purchased Seasoned LoansAddedAccounting Standards Update No. 2025-0811/12/2025
ReinsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
Right-of-Use AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Standalone Selling PriceAddedAccounting Standards Update No. 2021-0810/28/2021
SubleaseAddedAccounting Standards Update No. 2016-0202/25/2016
Transaction PriceAddedAccounting Standards Update No. 2021-0810/28/2021
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Unguaranteed Residual AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
805-20-05-3AddedAccounting Standards Update No. 2014-1812/23/2014
805-20-05-4AddedAccounting Standards Update No. 2014-1812/23/2014
805-20-15-1AAmendedAccounting Standards Update No. 2019-0605/30/2019
805-20-15-1AAddedAccounting Standards Update No. 2016-0303/07/2016
805-20-15-2AmendedAccounting Standards Update No. 2023-0508/23/2023
805-20-15-2AmendedAccounting Standards Update No. 2019-0605/30/2019
805-20-15-2 through 15-4
AddedAccounting Standards Update No. 2014-1812/23/2014
805-20-15-4AmendedAccounting Standards Update No. 2021-0303/30/2021
805-20-15-4AmendedAccounting Standards Update No. 2019-0605/30/2019
805-20-25-1AmendedAccounting Standards Update No. 2019-0605/30/2019
805-20-25-1AmendedAccounting Standards Update No. 2014-1812/23/2014
805-20-25-2AmendedAccounting Standards Update No. 2024-0203/29/2024
805-20-25-5AmendedAccounting Standards Update No. 2025-1012/04/2025
805-20-25-5AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-8AmendedAccounting Standards Update No. 2016-1912/14/2016
805-20-25-8AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-9AmendedAccounting Standards Update No. 2026-0205/19/2026
805-20-25-9AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-10AAddedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-11AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-12AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-13SupersededAccounting Standards Update No. 2016-0202/25/2016
805-20-25-15B through 25-15D
AddedAccounting Standards Update No. 2026-0205/19/2026
805-20-25-16AmendedAccounting Standards Update No. 2025-1012/04/2025
805-20-25-16AmendedAccounting Standards Update No. 2021-0810/28/2021
805-20-25-16AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-17AmendedAccounting Standards Update No. 2025-1012/04/2025
805-20-25-17AmendedAccounting Standards Update No. 2021-0810/28/2021
805-20-25-17AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-28AAddedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-28BAddedAccounting Standards Update No. 2016-0202/25/2016
805-20-25-28CAddedAccounting Standards Update No. 2021-0810/28/2021
805-20-25-28DAddedAccounting Standards Update No. 2025-1012/04/2025
805-20-25-29 through 25-33
AddedAccounting Standards Update No. 2014-1812/23/2014
805-20-30-2AmendedAccounting Standards Update No. 2026-0205/19/2026
805-20-30-2AmendedAccounting Standards Update No. 2025-1012/04/2025
805-20-30-2AmendedAccounting Standards Update No. 2016-1306/16/2016
805-20-30-4AmendedAccounting Standards Update No. 2016-1306/16/2016
805-20-30-4AAmendedAccounting Standards Update No. 2025-0811/12/2025
805-20-30-4AAddedAccounting Standards Update No. 2016-1306/16/2016
805-20-30-4BAmendedAccounting Standards Update No. 2025-0811/12/2025
805-20-30-4BAddedAccounting Standards Update No. 2016-1306/16/2016
805-20-30-6 through 30-8
AmendedAccounting Standards Update No. 2011-0405/12/2011
805-20-30-10AmendedAccounting Standards Update No. 2026-0205/19/2026
805-20-30-10AmendedAccounting Standards Update No. 2016-1306/16/2016
805-20-30-10 through 30-12
AmendedAccounting Standards Update No. 2025-1012/04/2025
805-20-30-10 through 30-12
AmendedAccounting Standards Update No. 2021-0810/28/2021
805-20-30-10 through 30-12
AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-30-12AmendedAccounting Standards Update No. 2025-0811/12/2025
805-20-30-12AmendedAccounting Standards Update No. 2026-0205/19/2026
805-20-30-12AmendedAccounting Standards Update No. 2025-0811/12/2025
805-20-30-12AmendedAccounting Standards Update No. 2016-1306/16/2016
805-20-30-24AddedAccounting Standards Update No. 2016-0202/25/2016
805-20-30-25AddedAccounting Standards Update No. 2016-0202/25/2016
805-20-30-26AmendedAccounting Standards Update No. 2025-0811/12/2025
805-20-30-26AddedAccounting Standards Update No. 2016-1306/16/2016
805-20-30-27 through 30-30
AddedAccounting Standards Update No. 2021-0810/28/2021
805-20-30-31AddedAccounting Standards Update No. 2025-1012/04/2025
805-20-30-32AddedAccounting Standards Update No. 2026-0205/19/2026
805-20-35-4AmendedAccounting Standards Update No. 2012-0610/23/2012
805-20-35-4ASupersededAccounting Standards Update No. 2012-0610/23/2012
805-20-35-4BAmendedAccounting Standards Update No. 2016-1306/16/2016
805-20-35-4BAddedAccounting Standards Update No. 2012-0610/23/2012
805-20-35-4CAddedAccounting Standards Update No. 2012-0610/23/2012
805-20-35-6AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-35-7AmendedAccounting Standards Update No. 2016-1912/14/2016
805-20-35-7AmendedAccounting Standards Update No. 2014-0905/28/2014
805-20-50-1 through 50-5
AmendedAccounting Standards Update No. 2025-1112/08/2025
805-20-50-1AmendedAccounting Standards Update No. 2019-1111/26/2019
805-20-50-1AmendedMaintenance Update 2016-11 (PDF)06/27/2016
805-20-50-1AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-50-4AmendedAccounting Standards Update No. 2015-1006/12/2015
805-20-50-4AAmendedAccounting Standards Update No. 2015-1609/25/2015
805-20-50-4AAddedAccounting Standards Update No. 2015-1006/12/2015
805-20-50-5AddedAccounting Standards Update No. 2021-0810/28/2021
805-20-55-2AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-55-9AmendedAccounting Standards Update No. 2011-0405/12/2011
805-20-55-31AmendedAccounting Standards Update No. 2016-0202/25/2016
805-20-65-1AddedAccounting Standards Update No. 2012-0610/23/2012
805-20-65-2AmendedAccounting Standards Update No. 2019-0605/30/2019
805-20-65-2AmendedAccounting Standards Update No. 2016-0303/07/2016
805-20-65-2AddedAccounting Standards Update No. 2014-1812/23/2014
805-20-65-3AddedAccounting Standards Update No. 2021-0810/28/2021
Source downloaded (UTC): 2026-09-10T01:23:09.220Z to 2026-09-10T01:23:09.220Z Record version: sha256:cc340fc09f2c7869e4200c7782945ceafbc26f7457737a82bc77fb767df0c7a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/20/#05-overview-and-background) SEC content: no ##### [805-20-05-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:09.220Z to 2026-09-10T01:23:09.220Z Record version: sha256:270ee90cdf88b15c3db04ee5d12a7f4894e9108eac3b2f35c985b1d73673bb5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on one aspect of the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4))—the recognition and measurement of all of the following: 1. a [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 2. b Liabilities assumed 3. c [Noncontrolling interests](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."), if any, 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."). ##### [805-20-05-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:09.220Z to 2026-09-10T01:23:09.220Z Record version: sha256:28069aba73c6a5b23da04065bdae2fd824e1e915829d5a56ea0acaa63c40adc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remaining aspects of the acquisition method are addressed in Subtopics 805-10 and 805-30. Subtopic 805-30 addresses the recognition and measurement of [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.") or a gain from a bargain purchase. Subtopic 805-10 addresses all of the following: 1. a Identification of 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 Determination of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c Particular types of [business combinations](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.") 4. d Measurement period 5. e Determination of what is part of a business combination. ##### [805-20-05-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:09.220Z to 2026-09-10T01:23:09.220Z Record version: sha256:93b4e8109a39412788c08d3bbe425f4053a7e5306caad317cf9f695238825845 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic is presented in the following two Subsections: 1. a General 2. b Accounting Alternative. ### Accounting Alternative ##### [805-20-05-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:09.220Z to 2026-09-10T01:23:09.220Z Record version: sha256:daec3e6db0d133d481b3eb40d69d66e3df272ff100b4e8805df4c8aaff410f2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Accounting Alternative Subsections of this Subtopic provide guidance for an entity within the scope of paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) that elects the accounting alternative for the recognition of identifiable intangible assets acquired in a business combination. Source downloaded (UTC): 2026-09-10T01:23:11.322Z to 2026-09-10T01:23:11.322Z Record version: sha256:e454d0c3e4d3a34b51c65362465ab953f166f40a2178e32f3cf75a58778d924d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/20/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-20-15-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:11.322Z to 2026-09-10T01:23:11.322Z Record version: sha256:a0df69a7d170e28fc093206242c53a477620029674f596c45a9c26387028c4a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 805-10-15. ### Accounting Alternatives ##### [805-20-15-1A](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:11.322Z to 2026-09-10T01:23:11.322Z Record version: sha256:9986b3d32ef9cb0efe5c9f81b6b594345286e46708e4f9e1b192118856cce315 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-20-15-2 through 15-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) and [805-20-25-29 through 25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-29) provide guidance for an entity electing the accounting alternative in this Subtopic. See paragraph [805-20-65-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2) for transition guidance for [private companies](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") and [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.")on applying the accounting alternative in this Subtopic. ##### [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:11.322Z to 2026-09-10T01:23:11.322Z Record version: sha256:45c85f462540bd1ae86a856564fbe4ea3c3111cc693dbdd5abc1aa985d7055e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A private company or not-for-profit entity may make an accounting policy election to apply the accounting alternative in this Subtopic. The guidance in the Accounting Alternative Subsections of this Subtopic applies when a private company or not-for-profit entity is required to recognize or otherwise consider the fair value of intangible assets as a result of any one of the following transactions: 1. a Applying the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4)for all entities and Subtopic 958-805 for additional guidance for not-for-profit entities) 2. b Assessing the nature of the difference between the carrying amount of an investment and the amount of underlying equity in net assets of an investee when applying the equity method of accounting in accordance with Topic 323 on investments—equity method and joint ventures 3. c Adopting fresh-start reporting in accordance with Topic 852 on reorganizations 4. d Accounting for the formation of a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") in accordance with Subtopic 805-60. ##### [805-20-15-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:11.322Z to 2026-09-10T01:23:11.322Z Record version: sha256:f3172dcaf2f0daf687e50678b54724b58e23db68b7c896bddae955112d5abee3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that elects the accounting alternative shall apply all of the related recognition requirements upon election. The accounting alternative, once elected, shall be applied to all future transactions that are identified in paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2). ##### [805-20-15-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:11.322Z to 2026-09-10T01:23:11.322Z Record version: sha256:a2f73fe15a3116bafcb9258a5b8d888f1060e53b04f4ae326732f2ef1faf2e42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that elects this accounting alternative must adopt the accounting alternative for amortizing [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.") in the Accounting Alternatives Subsections of Topic 350-20 on intangibles—goodwill and other. If the accounting alternative for amortizing goodwill was not adopted previously, it should be adopted on a prospective basis as of the adoption of the accounting alternative in this Subtopic. For example, upon adoption, existing goodwill should be amortized on a straight-line basis over 10 years, or less than 10 years if the entity demonstrates that another useful life is more appropriate. However, an entity that elects the accounting alternative for amortizing goodwill is not required to adopt the accounting alternative in this Subtopic. Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:bc39e1564264464cd6cd71eaee230b0fc95b86a98d2b946256c73c87a404d940 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/20/#25-recognition) SEC content: no #### Recognition Principle ##### [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:a947d60500e6ad3183fa1910cce14f44168343aed09301c51e85a2f8d43250d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."), 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.") shall recognize, separately from [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."), 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."). Recognition of identifiable assets acquired and liabilities assumed is subject to the conditions specified in paragraphs [805-20-25-2 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) . However, an entity (the acquirer) within the scope of paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) may elect to apply the accounting alternative for the recognition of identifiable intangible assets acquired in a business combination as described in paragraphs [805-20-25-29 through 25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-29) . ##### [805-20-25-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:eb33496efbaa454c25fe64deefe2fea45a55009d0fd0db0d89842b55b7ad9e84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements, at the acquisition date. For example, costs the acquirer expects but is not obligated to incur in the future to effect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree's employees are not liabilities at the acquisition date. Therefore, the acquirer does not recognize those costs as part of applying the acquisition method. Instead, the acquirer recognizes those costs in its postcombination financial statements in accordance with other applicable generally accepted accounting principles (GAAP). Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [105-10-65-9](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-9)To qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must exist at the acquisition date. For example, costs the acquirer expects but is not obligated to incur in the future to effect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree's employees are not liabilities at the acquisition date. Therefore, the acquirer does not recognize those costs as part of applying the acquisition method. Instead, the acquirer recognizes those costs in its postcombination financial statements in accordance with other applicable generally accepted accounting principles (GAAP). ##### [805-20-25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:542ebbb6151808cc1d1137a9d5f61ff2fc0965b0d242c6052353bd5fe30f87df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must be part of what the acquirer and the acquiree (or its former owners) exchanged in the [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.") transaction rather than the result of separate transactions. The acquirer shall apply the guidance in paragraphs [805-10-25-20 through 25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-20) to determine which assets acquired or liabilities assumed are part of the exchange for the acquiree and which, if any, are the result of separate transactions to be accounted for in accordance with their nature and the applicable GAAP. ##### [805-20-25-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:c25854d572afd1c6af4768f0a3f9bf7c6cca112c961fa2ffab37ca83fd09b3f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer's application of the recognition principle and conditions may result in recognizing some assets and liabilities that the acquiree had not previously recognized as assets and liabilities in its financial statements. For example, the acquirer recognizes the acquired identifiable [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.)"), such as a brand name, a patent, or a customer relationship, that the acquiree did not recognize as assets in its financial statements because it developed them internally and charged the related costs to expense. ##### [805-20-25-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0cc5e662391c96289803f72d6e344dc9e8581cc284e57faa6e144803dfeb247c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-20-25-11 through 25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-11) provide guidance on recognizing operating leases and paragraphs [805-20-55-2 through 55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2) provide guidance on recognizing intangible assets. Paragraphs [805-20-25-17 through 25-28B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic and Subtopic 805-740 provide limited exceptions to the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . 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)Paragraphs [805-20-25-11 through 25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-11) provide guidance on recognizing operating leases and paragraphs [805-20-55-2 through 55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2) provide guidance on recognizing intangible assets. Paragraphs [805-20-25-17 through 25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic and Subtopic 805-740 provide limited exceptions to the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . ##### [805-20-25-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:90cde8f2000a1c9874153a7abda03812366e25df6ec3244c915b32f7f9967b23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the acquisition date, the acquirer shall classify or designate the identifiable assets acquired and liabilities assumed as necessary to subsequently apply other GAAP. The acquirer shall make those classifications or designations on the basis of the contractual terms, economic conditions, its operating or accounting policies, and other pertinent conditions as they exist at the acquisition date. ##### [805-20-25-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:3d55920ea800b9f4b86c5a40ec89f4f9386f6e568f2ce9f3796ae9f92f83ca8e 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. Examples of classifications or designations that the acquirer shall make on the basis of the pertinent conditions as they exist at the acquisition date include but are not limited to the following: 1. a Classification of particular investments in securities as trading, available for sale, or held to maturity in accordance with Section 320-10-25 2. b Designation of a derivative instrument as a hedging instrument in accordance with paragraph [815-10-05-4](https://asc.understandingaccounting.org/asc/815/10/#815-10-05-4) 3. c Assessment of whether an embedded derivative should be separated from the host contract in accordance with Section 815-15-25 (which is a matter of classification as this Subtopic uses that term). ##### [805-20-25-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0c9ff7ac156e6ab43c7a85458e3b45dda76d0f29b9329ce563a02cf326978998 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides the following two exceptions to the principle in paragraph [805-20-25-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-6): 1. a Classification of a lease of an acquiree shall be in accordance with the guidance in paragraph [842-10-55-11](https://asc.understandingaccounting.org/asc/842/10/#842-10-55-11) 2. b Classification of a contract written by an entity that is in the scope of Subtopic 944-10 as an insurance or [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contract or a deposit contract. The acquirer shall classify that contract on the basis of the contractual terms and other factors at the inception of the contract (or, if the terms of the contract have been modified in a manner that would change its classification, at the date of that modification, which might be the acquisition date). #### Recognizing Particular Assets Acquired and Liabilities Assumed ##### [805-20-25-9](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-9) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:5ce44d126d84add38444c1c00e5752ca1d3c7c721f07c2b7e4eaa23864932861 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on recognizing identifiable intangible assets, including reacquired rights, follows. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Guidance on recognizing particular assets acquired and liabilities assumed is as follows. ##### [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:b7ef9fc1d6b5a81613efa1d983a4b432e0570ec67b502c67e59e02ab6f582ee2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize separately from goodwill the identifiable intangible assets acquired in a business combination. An intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion described in the definition of identifiable. Additional guidance on applying that definition is provided in paragraphs [805-20-25-14 through 25-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) , [805-20-55-2 through 55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2) , and Example 1 (see paragraph [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52)). For guidance on the recognition and subsequent measurement of a [defensive intangible asset](https://asc.understandingaccounting.org/glossary/d/#defensive-intangible-asset "An acquired intangible asset in a situation in which an entity does not intend to actively use the asset but intends to hold (lock up) the asset to prevent others from obtaining access to the asset."), see Subtopic 350-30. ##### [805-20-25-10A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:7140b0e27e1df7994212918872a5d181b903a46efefd2c5e4c4df1d0a2ad4e97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An identifiable intangible asset may be associated with a [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."), which may be evidenced by market participants' willingness to pay a price for the lease even if it is at market terms. For example, a lease of gates at an airport or of retail space in a prime shopping area might provide entry into a market or other future economic benefits that qualify as identifiable intangible assets, such as a customer relationship. In that situation, the acquirer shall recognize the associated identifiable intangible asset(s) in accordance with paragraph [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10). ##### [805-20-25-11](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:f7d075bc6d3c3fc450cf75dbc58a364fcdb83aa8c8f32f11af3a556ca1374d44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize assets or liabilities related to an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") in which the acquiree is the [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") as required by paragraphs [805-20-25-10A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10A) and [805-20-25-28A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28A). ##### [805-20-25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:e47921a41f627005c4f21e4150ac840840fb22a485f2d68ffce71266cebcc52d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of whether the acquiree is the lessee or the [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration."), the acquirer shall determine whether the terms of each of an acquiree's operating leases are favorable or unfavorable compared with the market terms of leases of the same or similar items at the acquisition date. If the acquiree is a lessor, the acquirer shall recognize an intangible asset if the terms of an operating lease are favorable relative to market terms and a liability if the terms are unfavorable relative to market terms. If the acquiree is a lessee, the acquirer shall adjust the measurement of the acquired [right-of-use asset](https://asc.understandingaccounting.org/glossary/r/#right-of-use-asset "An asset that represents a lessee's right to use an underlying asset for the lease term.") for any favorable or unfavorable terms in accordance with paragraph [805-20-30-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-24). ##### [805-20-25-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:289c1176d8cef90e6df0309afaca0ab4f797db40ea8d1e7cb6e1d91a988aa838 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-02](https://asc.understandingaccounting.org/updates/asu-2016-02/) ##### [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:c4c18b792d20b63c4bac3f2cf498152d8e2b79b0052558f83f51a1a1fb3678a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As part of a business combination, an acquirer may reacquire a right that it had previously granted to the acquiree to use one or more of the acquirer's recognized or unrecognized assets. Examples of such rights include a right to use the acquirer's trade name under a franchise agreement or a right to use the acquirer's technology under a technology licensing agreement. A reacquired right is an identifiable intangible asset that the acquirer recognizes separately from goodwill. Paragraph [805-20-30-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-20) provides guidance on measuring a reacquired right, and paragraph [805-20-35-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-2) provides guidance on the subsequent accounting for a reacquired right. ##### [805-20-25-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:bc52dfcaf168d82901b3a9cf8a2bc7923cd6fee63734fa2bcd83552f09359a9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the terms of the contract giving rise to a reacquired right are favorable or unfavorable relative to the terms of current market transactions for the same or similar items, the acquirer shall recognize a settlement gain or loss. Paragraph [805-10-55-21](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-21) provides guidance for measuring that settlement gain or loss. ##### [805-20-25-15A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:a43df8c104f3eb7a108b50ce4c8f0857ac74a3814b371242e52a4e3d6ff17113 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination shall be recognized initially at fair value in accordance with the guidance for contingent consideration arrangements in paragraph [805-30-25-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-5). ##### [805-20-25-15B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15B) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:580fce23d0877b646f2c7352de75270662977083462e37c8e8a7fdfd160bf1a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An acquirer shall recognize an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An enforceable right that is acquired, internally generated, granted by a regulatory agency or its designee(s), or received in a nonreciprocal transfer that is not a grant from a regulator or its designee(s) that meets all of the following criteria:Lacks physical substance and is not a financial asset.Is represented to prevent, control, reduce, or remove emissions or other pollution.Is, or previously was, separately transferable in an exchange transaction. If an item is no longer separately transferable in an exchange transaction, an entity must be able to use that item to satisfy an environmental credit obligation to meet this criterion.Is not an income tax credit that may be used to settle an entity’s income tax liability, regardless of whether the entity has a tax liability or intends to use the credit for that purpose.An environmental credit that meets the above criteria may exist in a variety of forms, including (but not limited to) credits, certificates, allowances, and offsets.") acquired in a business combination as an asset, regardless of whether it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the acquirer will use that environmental credit to settle an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(P) December 16, 2027; (N) December 16, 2028818-10-65-1A regulatory compliance obligation arising from existing or enacted laws, statutes, or ordinances represented to prevent, control, reduce, or remove emissions or other pollution that may be settled with environmental credits. Obligations within the scope of Subtopic 410-30 are not environmental credit obligations."), transfer the environmental credit in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "An exchange (or exchange transaction) is a reciprocal transfer between two entities that results in one of the entities acquiring assets or services or satisfying liabilities by surrendering other assets or services or incurring other obligations.") transaction, or use the environmental credit in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "Nonreciprocal transfer is a transfer of assets or services in one direction, either from an entity to its owners (whether or not in exchange for their ownership interests) or to another entity, or from owners or another entity to the entity. An entity's reacquisition of its outstanding stock is an example of a nonreciprocal transfer."). An environmental credit recognized as an asset in a business combination shall subsequently be accounted for in accordance with Topic 818, including the recognition reassessment requirements in paragraph [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2). ##### [805-20-25-15C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15C) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:b72bfd8c58d25c3581975c2d4947a87f1330c0693f80e8eacfcc0386184c1da6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An item acquired in a business combination that does not meet the definition of an environmental credit solely because it is not separately transferable in an exchange transaction at the acquisition date is not an identifiable asset and shall not be recognized as an asset. ##### [805-20-25-15D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15D) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:f314a4878dc713a5d878dd21ead7396c6e8cad991c0b8a74aee457a3709e00ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)When evaluating whether an environmental credit obligation liability should be recognized in a business combination, an entity shall determine whether environmental credits would be due assuming that the acquisition date is the end of the regulatory compliance period, regardless of whether the regulatory compliance period ends after the acquisition date. #### Exceptions to the Recognition Principle ##### [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:aac0267b4db4a04f22182e36447d6fcb49a22a4de932040c09948584b16b0663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs [805-20-25-17 through 25-28C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1). The acquirer shall apply the specified GAAP or the specified requirements rather than that recognition principle to determine when to recognize the assets or liabilities identified in paragraphs [805-20-25-17 through 25-28C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17). That will result in some items being recognized either by applying recognition conditions in addition to those in paragraphs [805-20-25-2 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) or by applying the requirements of other GAAP, with results that differ from applying the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . 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)This Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs [805-20-25-17 through 25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1). The acquirer shall apply the specified GAAP or the specified requirements rather than that recognition principle to determine when to recognize the assets or liabilities identified in paragraphs[805-20-25-17 through 25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) . That will result in some items being recognized either by applying recognition conditions in addition to those in paragraphs [805-20-25-2 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-2) or by applying the requirements of other GAAP, with results that differ from applying the recognition principle and conditions in paragraphs [805-20-25-1 through 25-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) . ##### [805-20-25-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:548842ecd09e0979d8f995a616914c7c1297c9aa5d96f80d940939b7201d83eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance is presented on all of the following exceptions to the recognition principle: 1. a Assets and liabilities arising from contingencies 2. b Income taxes 3. c Employee benefits 4. d Indemnification assets 5. e Leases 6. f [Contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance).") and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer."). 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)Guidance is presented on all of the following exceptions to the recognition principle: 1. a Assets and liabilities arising from contingencies 2. b Income taxes 3. c Employee benefits 4. d Indemnification assets 5. e Leases 6. f [Contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance).") and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.") 7. g [Grants 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)."). ##### [805-20-25-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:eb6e1ac8f0e0e15d006ac4c568db4ee164d2e424092d387b2ff311340e0ac8a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-25-18A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:cb3c41d069799b229f53e8aa085323e1d1d90cfb560875cf431bd01f87c11071 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following recognition guidance in paragraphs [805-20-25-19 through 25-20B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) applies to assets and liabilities meeting both of the following conditions: 1. a Assets acquired and liabilities assumed that would be within the scope of Topic 450 if not acquired or assumed in a business combination 2. b Assets or liabilities arising from contingencies that are not otherwise subject to specific guidance in this Subtopic. ##### [805-20-25-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:badd0bd3d88d86bf08ccb0dc7bfc4ab21447fc76bc012dc92c766b1bc9c4b0c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition-date fair value of the asset or liability arising from a contingency can be determined during the measurement period, that asset or liability shall be recognized at the acquisition date. For example, the acquisition-date fair value of a warranty obligation often can be determined. ##### [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:f631d2bfc17231b6352ad23a407a023c35e2dd6dce6bf485de5783e9a364f7ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition-date fair value of the asset or liability arising from a contingency cannot be determined during the measurement period, an asset or a liability shall be recognized at the acquisition date if both of the following criteria are met: 1. a Information available before the end of the measurement period indicates that it is probable that an asset existed or that a liability had been incurred at the acquisition date. It is implicit in this condition that it must be probable at the acquisition date that one or more future events confirming the existence of the asset or liability will occur. 2. b The amount of the asset or liability can be reasonably estimated. ##### [805-20-25-20A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:5773df6715e72ba6b958ce63dae697fc4a6812088dc5ca513f76b0df011809e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The criteria in paragraph [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) shall be applied using the guidance in Topic 450 for application of similar criteria in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). ##### [805-20-25-20B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20B) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:db5ff9e483117ba92ea0b027baf160a2fd26af69fe18707c375683bcef7bf40d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the recognition criteria in paragraphs [805-20-25-19 through 25-20A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) are not met at the acquisition date using information that is available during the measurement period about facts and circumstances that existed as of the acquisition date, the acquirer shall not recognize an asset or liability as of the acquisition date. In periods after the acquisition date, the acquirer shall account for an asset or a liability arising from a contingency that does not meet the recognition criteria at the acquisition date in accordance with other applicable GAAP, including Topic 450, as appropriate. ##### [805-20-25-21](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:789934ae399aa50c6877d9cd8fecfd94f10211b133db63003d63f7aab8fe0c4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 805-740-25 establishes the recognition guidance for accounting for income taxes in a business combination. ##### [805-20-25-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:44e58bfed2beee9420d62b084a5fb3bce815027e95b1333a812633cf6bcc4d66 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize a liability (or asset, if any) related to the acquiree's employee benefit arrangements in accordance with other GAAP. For example, employee benefits in the scope of the guidance identified in paragraphs [805-20-25-23 through 25-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-23) would be recognized in accordance with that guidance and as specified in those paragraphs. ##### [805-20-25-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0823bcc3fd63f674bb69bbcf73f847b42926e71bf11a5623a24dbee9cb4af4cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on defined benefit pension plans is presented in Subtopic 715-30. If an acquiree sponsors a single-employer defined benefit pension plan, the acquirer shall recognize as part of the business combination an asset or a liability representing the funded status of the plan (see paragraph [715-30-25-1](https://asc.understandingaccounting.org/asc/715/30/#715-30-25-1)). Paragraph [805-20-30-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15) provides guidance on determining that funded status. If an acquiree participates in a multiemployer plan, and it is probable as of the acquisition date that the acquirer will withdraw from that plan, the acquirer shall recognize as part of the business combination a withdrawal liability in accordance with Subtopic 450-20. ##### [805-20-25-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:0b3ac8510c5c15f68394362deac50428e21af2696fba449cd6261f0327523ac1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Settlements, Curtailments, and Certain Termination Benefits Subsections of Sections 715-30-25 and 715-30-35 establish the recognition guidance related to accounting for settlements and curtailments of defined benefit pension plans and certain termination benefits. ##### [805-20-25-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:c48e5cedd5a2233abf5348fc9534386720bb9b5eadbd7a3d5293a9c478aa6251 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on defined benefit other postretirement plans is presented in Subtopic 715-60. If an acquiree sponsors a single-employer defined benefit postretirement plan, the acquirer shall recognize as part of the business combination an asset or a liability representing the funded status of the plan (see paragraph [715-60-25-1](https://asc.understandingaccounting.org/asc/715/60/#715-60-25-1)). Paragraph [805-20-30-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15) provides guidance on determining that funded status. If an acquiree participates in a multiemployer plan and it is probable as of the acquisition date that the acquirer will withdraw from that plan, the acquirer shall recognize as part of the business combination a withdrawal liability in accordance with Subtopic 450-20. ##### [805-20-25-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:68cea7db22db94ce5e75dbc777303cb79a06e2422b2ef6ed35f41af15e647d48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See also the recognition-related guidance for the following other employee benefit arrangements: 1. a One-time termination benefits in connection with exit or disposal activities. See Section 420-10-25. 2. b Compensated absences. See Section 710-10-25. 3. c Deferred compensation contracts. See Section 710-10-25. 4. d Nonretirement postemployment benefits. See Section 712-10-25. ##### [805-20-25-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:7336d8ad8c0bd4e31e3d2c1d7f5c2a216f310e8e0fb9373b6f2282a1d0f288f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The seller in a business combination may contractually indemnify the acquirer for the outcome of a contingency or uncertainty related to all or part of a specific asset or liability. For example, the seller may indemnify the acquirer against losses above a specified amount on a liability arising from a particular contingency; in other words, the seller will guarantee that the acquirer's liability will not exceed a specified amount. As a result, the acquirer obtains an indemnification asset. The acquirer shall recognize an indemnification asset at the same time that it recognizes the indemnified item, measured on the same basis as the indemnified item, subject to the need for a valuation allowance for uncollectible amounts. Therefore, if the indemnification relates to an asset or a liability that is recognized at the acquisition date and measured at its acquisition-date fair value, the acquirer shall recognize the indemnification asset at the acquisition date measured at its acquisition-date fair value. ##### [805-20-25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:6a585e55976ae149c28c46c91f8ff9632d9990b5d96841214d662cd0b2ca7b4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some circumstances, the indemnification may relate to an asset or a liability that is an exception to the recognition or measurement principles. For example, an indemnification may relate to a contingency that is not recognized at the acquisition date because it does not satisfy the criteria for recognition in paragraphs [805-20-25-18A through 25-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) at that date. In those circumstances, the indemnification asset shall be recognized and measured using assumptions consistent with those used to measure the indemnified item, subject to management's assessment of the collectibility of the indemnification asset and any contractual limitations on the indemnified amount. ##### [805-20-25-28A](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:e240b1f8fe78db4ff06a90a07f9697ed74c84a83506610ed5851bb5d0accb907 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize assets and liabilities arising from leases of an acquiree in accordance with Topic 842 on leases (taking into account the requirements in paragraph [805-20-25-8(a)](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-8)). ##### [805-20-25-28B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28B) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:1d755082eda7491596936ebed7f9f2e00c9cee6ff19a474fac3ec1edd69cbafc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For leases for which the acquiree is a lessee, the acquirer may elect, as an accounting policy election by class of underlying asset and applicable to all of the entity's acquisitions, not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less. This includes not recognizing an intangible asset if the terms of an operating lease are favorable relative to market terms or a liability if the terms are unfavorable relative to market terms. ##### [805-20-25-28C](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28C) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:6094c70f1ed9ad786f9123ea69d4eb8f62627904a23bdd5666e38ccea56bb692 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize a contract asset or contract liability in accordance with Topic 606 on revenue from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). This includes a contract asset or contract liability from the following: 1. a Contracts with customers 2. b Other contracts to which the provisions of Topic 606 apply. ##### [805-20-25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28D) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:d8127aa04c99572bb8c90774b0457af30bc36794f003fd62340c8660210b682d 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)For a grant related to income, an acquirer shall recognize deferred income in accordance with Topic 832 on [government grants](https://asc.understandingaccounting.org/glossary/g/#government-grant "(P) December 16, 2028; (N) December 16, 2029832-10-65-2A transfer of a monetary asset or a tangible nonmonetary asset, other than in an exchange transaction (including an exchange transaction that may be at a significant discount to fair value), from a government to an entity except for a not-for-profit entity and an employee benefit plan within the scope of Topics 960, 962, and 965 on plan accounting.") at the acquisition date, unless an entity has fully complied with the conditions attached to a government grant, in which case the acquirer shall not recognize deferred income. ### Accounting Alternatives ##### [805-20-25-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:28d8374628fd606c9b165987797501a08d37b23c8ddd8a69b5df7ffac3c1353c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subsection applies to entities within the scope of paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) that elect the accounting alternative for the recognition of identifiable intangible assets acquired in a business combination. #### Identifiable Intangible Assets ##### [805-20-25-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:ed2747ab55cc2e52fd28af69343ea5c81abdf783fdbb94449ec4a55a001cf0ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [intangible asset](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.)") is [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.") if it meets either the separability criterion or the contractual-legal criterion described in the definition of identifiable. However, under the accounting alternative, 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.") shall not recognize separately from [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.") the following intangible assets: 1. a Customer-related intangible assets unless they are capable of being sold or licensed independently from other assets of a business 2. b Noncompetition agreements. ##### [805-20-25-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:4d00fb383401a1f10d1ef9d4480d746aac0f00f8b9c3bcc3687020570399c66a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Customer-related intangible assets often would not meet criterion (a) in paragraph [805-20-25-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-30) for recognition. Customer-related intangible assets that would meet that criterion for recognition under this accounting alternative are those that are capable of being sold or licensed independently from the other assets of a business. Examples of customer-related intangible assets are listed in paragraph [805-20-55-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-20). Many of the customer-related intangible assets that would meet criterion (a) for recognition also would be considered contract-based intangible assets as described in paragraph [805-20-55-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-31). Customer-related intangible assets that may meet that criterion for recognition include but are not limited to: 1. a Mortgage servicing rights 2. b Commodity supply contracts 3. c Core deposits 4. d Customer information (for example, names and contact information). ##### [805-20-25-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:ca1bee962c4d4166c3459caebf9f3d18cb1bec4fc47fe0c0743f682d3ddc2e11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance)."), as used in Topic 606 on revenue from contracts with customers, are not considered to be customer-related intangible assets for purposes of applying this accounting alternative. Therefore, contract assets are not eligible to be subsumed into goodwill and shall be recognized separately. ##### [805-20-25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:19.290Z to 2026-09-10T01:23:19.290Z Record version: sha256:3ed018cbf049e3db90fd04c7ecc0e19ca1370a708c38fdebc91ca66dc965c61b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") is not considered to be a customer-related intangible asset for purposes of applying this accounting alternative. Therefore, favorable and unfavorable leases are not eligible to be subsumed into goodwill and shall be recognized separately. Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:bad641db13390b16587172188958ab44fa26be0a05454f9197d29f8b30d8de8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/20/#30-initial-measurement) SEC content: no #### Measurement Principle ##### [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:5623f3548ae4e16dcffb947a0a4b76b7c888155b44ff2f8635d3489eeb1b602e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall measure 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.") at their [acquisition-date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.")[fair values](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."). ##### [805-20-30-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:8fdfbbebc490d26384058f2bce5623e73b4b811ced82bd1a7d148dab50027733 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Exceptions to the measurement principle are identified and their accounting treatment is addressed in paragraphs [805-20-30-10 through 30-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) . 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)Exceptions to the measurement principle are identified and their accounting treatment is addressed in paragraphs [805-20-30-10 through 30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) . Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Exceptions to the measurement principle are identified and their accounting treatment is addressed in paragraphs [805-20-30-10 through 30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) . #### Measuring the Fair Values of Particular Identifiable Assets and a Noncontrolling Interest in an Acquiree ##### [805-20-30-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:72d5bc7baf76441e2b44d0016f333388f0aab9f7cadd36b12e11ff56c1938951 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance demonstrates the application of the measurement principle in paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) to specific situations in 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.") including guidance on measuring the fair values of particular identifiable assets and a noncontrolling interest in an acquiree. ##### [805-20-30-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:4e6f692a938b7ddafa4262780af0cd83fe5c1deb98767ac19dec6cb4fc2ed8ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall not recognize a separate valuation allowance as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") for assets acquired in a business combination that are measured at their acquisition-date fair values because the effects of uncertainty about future cash flows are included in the fair value measure, unless the assets acquired are financial assets for which the acquirer shall refer to the guidance in paragraphs [805-20-30-4A through 30-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4A) . ##### [805-20-30-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4A) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:ba3967ea10a33a51b0fae033834f3bc8585d8e7f2441508b0e871bf4a32cb587 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For acquired financial assets that are not [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis."), the acquirer shall record the purchased financial assets at the acquisition-date fair value. Additionally, for these financial assets within the scope of Topic 326, an allowance shall be recorded with a corresponding charge to credit loss expense as of the reporting date. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)For acquired financial assets that are not [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")or [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans."), the acquirer shall record the acquired financial assets at the acquisition-date fair value. Additionally, for these financial assets within the scope of Topic 326, an allowance shall be recorded with a corresponding charge to credit loss expense as of the reporting date. ##### [805-20-30-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4B) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:c43eb6f96049e2658121d1caab2955e90b5ef0a82e820b41f6e905e8f7943db6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For assets accounted for as purchased financial assets with credit deterioration (which includes beneficial interests that meet the criteria in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)), an acquirer shall recognize an allowance in accordance with Topic 326 with a corresponding increase to the amortized cost basis of the financial asset(s) as of the acquisition date. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)For assets accounted for as purchased financial assets with credit deterioration (which includes beneficial interests that meet the criteria in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)) and purchased seasoned loans, an acquirer shall recognize an allowance in accordance with Topic 326 with a corresponding increase to the amortized cost basis of the financial asset(s) as of the acquisition date. ##### [805-20-30-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:1c50bceabef32c6871ba9bd7b66445c1e702e8cf3d1318269b73e2ca02fecfbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall measure the acquisition-date fair value of an asset, such as a building or a patent or other intangible asset, that is subject to an operating lease in which the acquiree is the lessor separately from the lease contract. In other words, the fair value of the asset shall be the same regardless of whether it is subject to an operating lease. In accordance with paragraph [805-20-25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-12), the acquirer separately recognizes an asset or a liability if the terms of the lease are favorable or unfavorable relative to market terms. ##### [805-20-30-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:7c5c7870a9e8d36ae45c47a1dc81a7837ddcf74f86ae0c62aee6e8c3317ef977 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To protect its competitive position, or for other reasons, the acquirer may intend not to use an acquired nonfinancial asset actively, or it may not intend to use the asset according to its highest and best use. For example, that might be the case for an acquired research and development intangible asset that the acquirer plans to use defensively by preventing others from using it. Nevertheless, the acquirer shall measure the fair value of the nonfinancial asset in accordance with Subtopic 820-10 assuming its highest and best use by market participants in accordance with the appropriate valuation premise, both initially and for purposes of subsequent impairment testing. ##### [805-20-30-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:38a4dc5c74365ef7d005998ed1c033b140e3450ef788c15792b8de34d347005f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) requires the acquirer to measure a noncontrolling interest in the acquiree at its fair value at the acquisition date. An acquirer sometimes will be able to measure the acquisition-date fair value of a noncontrolling interest on the basis of a quoted price in an active market for the equity shares (that is, those not held by the acquirer). In other situations, however, a quoted price in an active market for the equity shares will not be available. In those situations, the acquirer would measure the fair value of the noncontrolling interest using another valuation technique. ##### [805-20-30-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:196303e94c4aeb698caf1e6eb2b88a90859fb98e4964bbc2e522e82c3465735c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fair values of the acquirer's interest in the acquiree and the noncontrolling interest on a per-share basis might differ. The main difference is likely to be the inclusion of a control premium in the per-share fair value of the acquirer's interest in the acquiree or, conversely, the inclusion of a discount for lack of control (also referred to as a noncontrolling interest discount) in the per-share fair value of the noncontrolling interest if market participants would take into account such a premium or discount when pricing the noncontrolling interest. #### Measurement of Assets and Liabilities Arising from Contingencies ##### [805-20-30-9](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:8a3a5eaec70f1dba2e5b200ccbf3ba3ef9a5749d784df17cd9473c3aec8531da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-20-25-18A through 25-20B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) establish the requirements related to recognition of certain assets and liabilities arising from [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur."). Initial measurement of assets and liabilities meeting the recognition criteria in paragraph [805-20-25-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-19) shall be at acquisition-date fair value. Guidance on the initial measurement of other assets and liabilities from contingencies not meeting the recognition criteria of that paragraph, but meeting the criteria in paragraph [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) is at paragraph [805-20-30-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-23). ##### [805-20-30-9A](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-9A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:2b37eca3f320bebb61dc3b2174b6886d34b0882fde6aa60b570bf57a7aca6727 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination shall be measured initially at fair value in accordance with the guidance for contingent consideration arrangements in paragraph [805-30-25-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-5). #### Exceptions to the Measurement Principle ##### [805-20-30-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:e65ec6edf4852f8034f13fa718e35455deb8f738630761354fb839da0c7971c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) notes that the Business Combinations Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs [805-20-30-12 through 30-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12) specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) measurement principle. The acquirer shall apply the specified GAAP or the specified requirements rather than that measurement principle to determine how to measure the assets or liabilities identified in paragraphs [805-20-30-12 through 30-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12) . That will result in some items being measured at an amount other than their acquisition-date fair values. 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)Paragraph [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) notes that the Business Combinations Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs [805-20-30-12 through 30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12) specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) measurement principle. The acquirer shall apply the specified GAAP or the specified requirements rather than that measurement principle to determine how to measure the assets or liabilities identified in paragraphs[805-20-30-12 through 30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12) . That will result in some items being measured at an amount other than their acquisition-date fair values. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Paragraph [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16) notes that the Business Combinations Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Paragraphs [805-20-30-12 through 30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12) specify the types of identifiable assets and liabilities that include items for which this Subtopic provides limited exceptions to the paragraph [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) measurement principle. The acquirer shall apply the specified GAAP or the specified requirements rather than that measurement principle to determine how to measure the assets or liabilities identified in paragraphs[805-20-30-12 through 30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12) . That will result in some items being measured at an amount other than their acquisition-date fair values. ##### [805-20-30-11](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-11) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:7dfd4594b5de58e3bb9383a58df0b2675b4877403b2fb7cf56de4e5d7b477e10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in paragraph [805-20-25-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17), income taxes, employee benefits, indemnification assets, leases, and [contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance).") and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.") are also exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1). 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)As noted in paragraph [805-20-25-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-17), income taxes, employee benefits, indemnification assets, leases, [contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance).") and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer."), and [grants 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).")are also exceptions to the recognition principle in paragraph [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1). ##### [805-20-30-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-12) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:4864689e2abc345c190a48a9828e4a2c228d7b48a8d3ddac10098839fbc3efa0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance is presented on all of the following exceptions to the measurement principle: 1. a Income taxes 2. b Employee benefits 3. c Indemnification assets 4. d Reacquired rights 5. e Share-based payment awards 6. f Assets held for sale 7. g Certain assets and liabilities arising from contingencies 8. h Leases 9. i [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.") 10. j Contract assets and contract liabilities. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)Guidance is presented on all of the following exceptions to the measurement principle: 1. a Income taxes 2. b Employee benefits 3. c Indemnification assets 4. d Reacquired rights 5. e Share-based payment awards 6. f Assets held for sale 7. g Certain assets and liabilities arising from contingencies 8. h Leases 9. i [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.") 10. j Contract assets and contract liabilities. 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)Guidance is presented on all of the following exceptions to the measurement principle: 1. a Income taxes 2. b Employee benefits 3. c Indemnification assets 4. d Reacquired rights 5. e Share-based payment awards 6. f Assets held for sale 7. g Certain assets and liabilities arising from contingencies 8. h Leases 9. i [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.") 10. j Contract assets and contract liabilities 11. k Grants related to income. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Guidance is presented on all of the following exceptions to the measurement principle: 1. a Income taxes 2. b Employee benefits 3. c Indemnification assets 4. d Reacquired rights 5. e Share-based payment awards 6. f Assets held for sale 7. g Certain assets and liabilities arising from contingencies 8. h Leases 9. i [Purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.") 10. j Contract assets and contract liabilities 11. k Grants related to income 12. l [Environmental credit obligations.](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(P) December 16, 2027; (N) December 16, 2028818-10-65-1A regulatory compliance obligation arising from existing or enacted laws, statutes, or ordinances represented to prevent, control, reduce, or remove emissions or other pollution that may be settled with environmental credits. Obligations within the scope of Subtopic 410-30 are not environmental credit obligations.") ##### [805-20-30-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:bd0c3c734e9629966584642933eab2a5b678e91f23cd54d1c4decd33e1ef1cb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 805-740-30 establishes the measurement guidance related to accounting for income taxes in a business combination. ##### [805-20-30-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:09c54b22c6d4ff1e42af5d5756132a4fcf709a72ccb2d6e75bdbb555952e5a30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall measure a liability (or asset, if any) related to the acquiree's employee benefit arrangements in accordance with other GAAP. For example, employee benefits in the scope of the guidance identified in paragraphs [805-20-30-15 through 30-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15) would be measured in accordance with that guidance and as specified in those paragraphs. ##### [805-20-30-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:9cc5c8f65ae9a873c0470e33cdcbeaefa0e2a677dc571de9c064431b039f3f46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on defined benefit pension plans is presented in Subtopic 715-30. Guidance on defined benefit other postretirement plans is presented in Subtopic 715-60. Paragraphs [805-20-25-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-23) and [805-20-25-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-25) require an acquirer to recognize as part of a business combination an asset or a liability representing the funded status of a single-employer defined benefit pension or postretirement plan. In determining that funded status, the acquirer shall exclude the effects of expected plan amendments, terminations, or curtailments that at the acquisition date it has no obligation to make. The projected benefit obligation assumed shall reflect any other necessary changes in assumptions based on the acquirer's assessment of relevant future events. ##### [805-20-30-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:15745a883fffa0723f8a2af3b52ff3914e488c098653fb6297257c6585fc444c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Settlements, Curtailments, and Certain Termination Benefits Subsection of Section 715-30-35 establishes the measurement guidance related to accounting for settlements and curtailments of defined benefit pension plans and certain termination benefits. ##### [805-20-30-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:cf5ffde4b4140021dd31a95a8128a65d2505d44adc398fdcebf8f91e314b858b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See also measurement-related guidance for the following other employee benefit arrangements: 1. a One-time termination benefits in connection with exit or disposal activities. See Section 420-10-30. 2. b Compensated absences. See Section 710-10-25. 3. c Deferred compensation contracts. See Section 710-10-30. 4. d Nonretirement postemployment benefits. See Section 712-10-25. ##### [805-20-30-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:4720683510621062920d64e1b4fedbd3f934bf38531e3439281a904b077ece28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-25-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) requires that the acquirer recognize an indemnification asset at the same time that it recognizes the indemnified item, measured on the same basis as the indemnified item, subject to the need for a valuation allowance for uncollectible amounts. That paragraph also requires that, if the indemnification relates to an asset or a liability that is recognized at the acquisition date and measured at its acquisition-date fair value, the acquirer recognize the indemnification asset at the acquisition date measured at its acquisition-date fair value. For an indemnification asset measured at fair value, the effects of uncertainty about future cash flows because of collectibility considerations are included in the fair value measure and a separate valuation allowance is not necessary, as noted in paragraph [805-20-30-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-4). ##### [805-20-30-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:1e53b9c0172bbc75176827c9bed70858cc4f1129143a6f063546164e45642a64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28) states that in some circumstances, the indemnification may relate to an asset or a liability that is an exception to the recognition or measurement principles, and provides an example of an indemnification that may relate to a contingency that is not recognized at the acquisition date because it does not satisfy the criteria for recognition in paragraphs [805-20-25-18A through 25-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) at that date. Alternatively, an indemnification may relate to an asset or a liability, for example, one that results from an uncertain tax position that is measured on a basis other than acquisition-date fair value. (Paragraph [805-20-30-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-13) identifies the business-combination-related measurement requirements for income taxes.) Paragraph [805-20-25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28) establishes that in those circumstances, the indemnification asset shall be recognized and measured using assumptions consistent with those used to measure the indemnified item, subject to management's assessment of the collectibility of the indemnification asset and any contractual limitations on the indemnified amount. ##### [805-20-30-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:d1064e972ea4f1a574553cf879bd7cda2fa5eb2bec968139122fb5a4fa5da1df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall measure the value of a reacquired right recognized as an intangible asset in accordance with paragraph [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) on the basis of the remaining contractual term of the related contract regardless of whether market participants would consider potential contractual renewals in determining its fair value. ##### [805-20-30-21](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:34dc252ea0be91c46ab5eb8752f4a1eecf090a476b13a94cfd01924276c3034c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall measure a liability or an equity instrument related to the replacement of an acquiree's share-based payment awards with share-based payment awards of the acquirer in accordance with the method in Topic 718. The Business Combinations Topic refers to the result of that method as the fair-value-based measure of the award. Paragraphs [805-30-30-9 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) and [805-30-55-6 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) provide additional guidance. ##### [805-20-30-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:4dc0355adfad2325e7b2d33d667568a81057fa5f81f37f6aeee7397cd5fac646 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall measure an acquired long-lived asset (or disposal group) that is classified as held for sale at the acquisition date in accordance with Subtopic 360-10, at fair value less cost to sell in accordance with paragraphs [360-10-35-38](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-38) and [360-10-35-43](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-43). ##### [805-20-30-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:af56c4183aeead49d85f6dcb183e51560759cc4251bb6fb6c46c0650d4ce64b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Initial measurement of assets and liabilities meeting the recognition criteria in paragraph [805-20-25-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-20) shall be at the amount that can be reasonably estimated by applying the guidance in Topic 450 for application of similar criteria in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). ##### [805-20-30-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:d1421d3650af6e839561d6854c12dbab5d2fcce17146b5249d0ea8061be56ef8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") in which the acquiree is a [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration."), the acquirer shall measure the [lease liability](https://asc.understandingaccounting.org/glossary/l/#lease-liability "A lessee's obligation to make the lease payments arising from a lease, measured on a discounted basis.") at the present value of the remaining [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor."), as if the acquired lease were a new lease of the acquirer at the acquisition date. The acquirer shall measure the [right-of-use asset](https://asc.understandingaccounting.org/glossary/r/#right-of-use-asset "An asset that represents a lessee's right to use an underlying asset for the lease term.") at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. ##### [805-20-30-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:5678a91c784ebfdec9da4818791dee4ff82d65a0efed8caa018ea6be1e7631e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For leases in which the acquiree is a lessor of a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."), the acquirer shall measure its [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") as the sum of both of the following (which will equal the fair value of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") at the acquisition date): 1. a The [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") at the present value, discounted using the rate implicit in the lease, of the following, as if the acquired lease were a new lease at the acquisition date: 1. 1 The remaining lease payments 2. 2 The amount the lessor expects to derive from the underlying asset following the end of the lease term that is guaranteed by the lessee or any other third party unrelated to the lessor. 2. b The [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") as the difference between the fair value of the underlying asset at the acquisition date and the carrying amount of the lease receivable, as determined in accordance with (a), at that date. The acquirer shall take into account the terms and conditions of the lease in calculating the acquisition-date fair value of an underlying asset that is subject to a sales-type lease or a direct financing lease by the acquiree-lessor. ##### [805-20-30-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-26) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:bfc6ff2a5c266b29bb78f86661d2dbbb992a534ef6e6fd1cb74e45b8adae522d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer shall recognize [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.") (including beneficial interests meeting the conditions in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)) in accordance with Section 326-20-30 for financial instruments measured at amortized cost or Section 326-30-30 for available-for-sale debt securities. Paragraphs [326-20-55-57 through 55-78](https://asc.understandingaccounting.org/asc/326/20/#326-20-55-57) illustrate how the guidance is applied for purchased financial assets with credit deterioration measured at amortized cost. Paragraphs [326-30-55-5 through 55-7](https://asc.understandingaccounting.org/asc/326/30/#326-30-55-5) illustrate how the guidance is applied to available-for-sale debt securities. An acquirer shall not accrete into interest income the credit losses embedded in the purchase price for purchased financial assets with credit deterioration. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)
Editor's Note: The content of paragraph 805-20-30-26 will be amended upon transition, together with a change in the heading noted below.
> Purchased Financial Assets with Credit Deterioration and Purchased Seasoned Loans
An acquirer shall recognize [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.") (including beneficial interests meeting the conditions in paragraph [325-40-30-1A](https://asc.understandingaccounting.org/asc/325/40/#325-40-30-1A)) and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.")in accordance with Section 326-20-30 for financial instruments measured at amortized cost or Section 326-30-30 for available-for-sale debt securities. Paragraphs [326-20-55-57 through 55-78](https://asc.understandingaccounting.org/asc/326/20/#326-20-55-57) illustrate how the guidance is applied for purchased financial assets with credit deterioration measured at amortized cost. Paragraphs [326-30-55-5 through 55-7](https://asc.understandingaccounting.org/asc/326/30/#326-30-55-5) illustrate how the guidance is applied to available-for-sale debt securities. An acquirer shall not accrete into interest income the credit losses embedded in the purchase price for purchased financial assets with credit deterioration and purchased seasoned loans. ##### [805-20-30-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:6aaf904653ee221e69326f94a50ac90e14d441bc8124db8ad7f2610b97eef95d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer shall measure a contract asset or contract liability in accordance with Topic 606 on revenue from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). This includes a contract asset or contract liability from the following: 1. a Contracts with customers 2. b Other contracts to which the provisions of Topic 606 apply. ##### [805-20-30-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:978e6631c2679313a9c887b0edf0195fbe2ee44b6d8e8a8cfc31977a25593d3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer shall measure the contract assets and contract liabilities of the acquired contract as if the acquirer had originated the acquired contract. Topic 606 specifies when certain assessments and estimates should be made, for example, as of contract inception or on a recurring basis. At the acquisition date, the acquirer shall make those assessments as of the dates required by Topic 606. ##### [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:b74b47e4e16624fbc9d6382ea3e7fd14615a99bceb7724ffdbfb044b257a3f15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer may use one or more of the following practical expedients when applying paragraphs [805-20-30-27 through 30-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-27) at the acquisition date: 1. a For contracts that were modified before the acquisition date, an acquirer may reflect the aggregate effect of all modifications that occur before the acquisition date when: 1. 1 Identifying the satisfied and unsatisfied [performance obligations](https://asc.understandingaccounting.org/glossary/p/#performance-obligation "A promise in a contract with a customer to transfer to the customer either: A good or service (or a bundle of goods or services) that is distinct A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.") 2. 2 Determining the [transaction price](https://asc.understandingaccounting.org/glossary/t/#transaction-price "The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.") 3. 3 Allocating the transaction price to the satisfied and unsatisfied performance obligations. 2. b For all contracts, for purposes of allocating the transaction price, an acquirer may determine the [standalone selling price](https://asc.understandingaccounting.org/glossary/s/#standalone-selling-price "The price at which an entity would sell a promised good or service separately to a customer.") at the acquisition date (instead of the contract inception date) of each performance obligation in the contract. ##### [805-20-30-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:c020b6387b7d0ab246ae9506217fcfd479977636a5c858e20f3a47b773e0efca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For any of the practical expedients in paragraph [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29) that an acquirer uses, the acquirer shall apply that expedient on an acquisition-by-acquisition basis. Each practical expedient that is elected shall be applied consistently to all contracts acquired in the same business combination. In addition, the acquirer shall provide the disclosures in paragraph [805-20-50-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-5). ##### [805-20-30-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-31) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:d93090b2a7e831c57216f726403a4166fb3e370b896e95c51bc7510a7755d760 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)Deferred income recognized in accordance with paragraph [805-20-25-28D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-28D) shall be measured in accordance with Topic 832 on [government grants](https://asc.understandingaccounting.org/glossary/g/#government-grant "(P) December 16, 2028; (N) December 16, 2029832-10-65-2A transfer of a monetary asset or a tangible nonmonetary asset, other than in an exchange transaction (including an exchange transaction that may be at a significant discount to fair value), from a government to an entity except for a not-for-profit entity and an employee benefit plan within the scope of Topics 960, 962, and 965 on plan accounting.") at the acquisition date. ##### [805-20-30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-32) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:23.165Z to 2026-09-10T01:23:23.165Z Record version: sha256:79ccb721b8db3eeb4edef8de2ee7a6691d66add91c5440f59f90828f2402f376 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An acquirer shall measure an environmental credit obligation liability assumed in a business combination in accordance with the initial measurement requirements of Topic 818. Paragraph [818-30-30-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-1) specifies that an environmental credit obligation liability may have a funded portion and an unfunded portion. When measuring the funded portion in accordance with paragraph [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2), an acquirer shall consider only [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An enforceable right that is acquired, internally generated, granted by a regulatory agency or its designee(s), or received in a nonreciprocal transfer that is not a grant from a regulator or its designee(s) that meets all of the following criteria:Lacks physical substance and is not a financial asset.Is represented to prevent, control, reduce, or remove emissions or other pollution.Is, or previously was, separately transferable in an exchange transaction. If an item is no longer separately transferable in an exchange transaction, an entity must be able to use that item to satisfy an environmental credit obligation to meet this criterion.Is not an income tax credit that may be used to settle an entity’s income tax liability, regardless of whether the entity has a tax liability or intends to use the credit for that purpose.An environmental credit that meets the above criteria may exist in a variety of forms, including (but not limited to) credits, certificates, allowances, and offsets.") acquired in the business combination that will be classified as [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An environmental credit recognized as an asset in accordance with Topic 818 and probable of being used to settle an environmental credit obligation."). If applicable, the unfunded portion of an environmental credit obligation liability measured in accordance with paragraph [818-30-30-3(b)](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3) shall consider only the acquiree’s existing purchase commitments and unconditional rights. Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:171a72428296a74c08045c8c6fcc6a4f1dba911257aa1d0c281aa68caa99bfa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/20/#35-subsequent-measurement) SEC content: no #### Guidance on Specific Business-Combination-Related Items ##### [805-20-35-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:ddac27c55937aeaff0c1e874c25b7ba6cb09d43a530c10e665380820a3e5ea8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Topic directly establishes generally accepted accounting principles (GAAP) for [business combinations](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.") related to recognition and initial measurement. Paragraph [805-10-35-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-1) cites the general requirement for 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.") to subsequently measure and account for assets acquired, liabilities assumed or incurred, and equity instruments issued in 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.") in accordance with other applicable generally accepted accounting principles (GAAP). However, that paragraph also identifies specific items for which this Topic provides guidance. This Subtopic provides guidance on several of those specific items as follows. ##### [805-20-35-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:c5fd3d5cdc2c2ecc5efdd60ea3435f7ad9fb70b01adcb899bdd4f3586a647540 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reacquired right recognized as an [intangible asset](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.)") in accordance with paragraph [805-20-25-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-14) shall be amortized over the remaining contractual period of the contract in which the right was granted. An acquirer that subsequently sells a reacquired right to a third party shall include the carrying amount of the intangible asset in determining the gain or loss on the sale. ##### [805-20-35-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:63b01611637cc516aef4069db3d7ded8d782c0bead8b8420460b70f586da0bea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer shall develop a systematic and rational basis for subsequently measuring and accounting for assets and liabilities arising from [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") depending on their nature. ##### [805-20-35-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:63d519670612f51557ab933e24a9a46d47e6fc2a5283f99aae4a6ae6a6675581 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At each subsequent reporting date, the acquirer shall measure an indemnification asset that was recognized in accordance with paragraphs [805-20-25-27 through 25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) at the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") on the same basis as the indemnified liability or asset, subject to any contractual limitations on its amount, except as noted in paragraph [805-20-35-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4B), and, for an indemnification asset that is not subsequently measured at its fair value, management's assessment of the collectibility of the indemnification asset. ##### [805-20-35-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4A) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:1391a639791e6506a6a95ae4e99ec40bb3e28d209b20e75f4cb3f25fbf55affc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-06](https://asc.understandingaccounting.org/updates/asu-2012-06/). ##### [805-20-35-4B](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4B) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:6c83bfb6ad8075df207b82cd716da31699dd0a2c2b767216147e43269584a795 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An indemnification asset recognized at the acquisition date in accordance with paragraphs [805-20-25-27 through 25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) as a result of a government-assisted acquisition of a financial institution involving an indemnification agreement shall be subsequently measured on the same basis as the indemnified item. For example, if the expected cash flows on indemnified assets increase such that a previously recorded valuation allowance is reversed, an entity shall account for the associated decrease in the indemnification assets immediately in earnings. ##### [805-20-35-4C](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-4C) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:c99ae8c46615b451e7be70ea6a199155595e2b3e3868d2bb9d2b75942a86ba45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination shall be measured subsequently in accordance with the guidance for contingent consideration arrangements in paragraph [805-30-35-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1). #### Additional Guidance on Subsequent Measurement of Assets Acquired, Liabilities Assumed or Incurred, and Any Noncontrolling Interests in a Business Combination ##### [805-20-35-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:31bdd554b2c9255e0110468cbc640fb12ffa7a6d4e61a521472227a3c766d6b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Additional guidance on subsequently measuring and accounting for assets acquired in a business combination is addressed in Subtopic 350-30, which prescribes the accounting for [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.")[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.)") acquired in a business combination, including recognition of intangible assets used in research and development activities, regardless of whether those assets have an alternative future use, and their classification as indefinite-lived until the completion or abandonment of the associated research and development efforts. ##### [805-20-35-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:9fc4d9851ec605adda210e764772f9eec2febb4d62a01b1a41b848abb1606eea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Leasehold improvements acquired in a business combination shall be amortized over the shorter of the useful life of the assets and the remaining [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") at the date of acquisition. However, if the lease transfers ownership of the underlying asset to the lessee, or the lessee is reasonably certain to exercise an option to purchase the underlying asset, the lessee shall amortize the leasehold improvements to the end of their useful life. ##### [805-20-35-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:1898399200056a4af8d6760e372c591dd36bcca78424ad8ea582906de8a2c3de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 944on insurance provides guidance on the subsequent accounting for an insurance or [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contract acquired in a business combination. ##### [805-20-35-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:27.129Z to 2026-09-10T01:23:27.129Z Record version: sha256:5cb5ff5a123ac8f6ddb42c0c06731eac6ad19e7e905890ae4d0251778d6f0e9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Additional guidance on accounting for changes in a parent's ownership interest in a subsidiary after [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") is obtained is provided in paragraphs [810-10-45-22 through 45-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-22) and Example 1 (see paragraph [810-10-55-4B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4B)). Source downloaded (UTC): 2026-09-10T01:23:29.973Z to 2026-09-10T01:23:29.973Z Record version: sha256:d4a241c0cc22022bb856848422061718ae21e35f1e855221b8f873f4be095053 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/805/20/#40-derecognition) SEC content: no ##### [805-20-40-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:29.973Z to 2026-09-10T01:23:29.973Z Record version: sha256:592da2b7e28462ebaba1a047e3e6ba46187265f0037f7de3fe13767bd4b03b02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Business Combinations Topic directly establishes generally accepted accounting principles (GAAP) for business combinations related to recognition and initial measurement. Paragraph [805-10-35-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-35-1) cites the general requirement for 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.") to subsequently measure and account for assets acquired, liabilities assumed or incurred, and equity instruments issued in 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.") in accordance with other applicable GAAP. However, that paragraph also identifies specific items for which the Business Combinations Topic provides guidance. This Section provides guidance on one of those specific items as follows. ##### [805-20-40-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:29.973Z to 2026-09-10T01:23:29.973Z Record version: sha256:eeb45051e15a0b7f773f8cf532ec93d64d790aede158ca3ea834eecef8e95dd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Indemnification Assets ##### [805-20-40-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:29.973Z to 2026-09-10T01:23:29.973Z Record version: sha256:719f38e5a08a10828a82e2f7b757b3918d2b111c514e7be12e2369ef148d1534 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall derecognize an indemnification asset recognized in accordance with paragraphs [805-20-25-27 through 25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) only when it collects the asset, sells it, or otherwise loses the right to it. Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z Record version: sha256:d3277de4c2a6200748e348ceacc83a5f99a6745395c6d54e9cd60c6dab4cb2a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/20/#50-disclosure) SEC content: no #### Business Combinations Occurring during a Current Reporting Period or after the Reporting Date but before the Financial Statements Are Issued ##### [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z Record version: sha256:eb88946d6693063f846dd8d3ece5031e00c33c1266b095fb3e316beb620d94bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) identifies one of the objectives of disclosures about 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."). To meet that objective, 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.") shall disclose all of the following information for each business combination that occurs during the reporting period: 1. a For indemnification assets, all of the following: 1. 1 The amount recognized as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 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. 2. b For acquired receivables not subject to the requirements of Subtopic 326-20 relating to purchased financial assets with credit deterioration, all of the following: 1. 1 The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the receivables (unless those receivables arise from [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") by the lessor for which the acquirer shall disclose the amounts recognized as of the acquisition date) 2. 2 The gross contractual amounts receivable 3. 3 The best estimate at the acquisition date of the contractual cash flows not expected to be collected. The disclosures shall be provided by major class of receivable, such as loans, net investment in sales-type or direct financing leases in accordance with Subtopic 842-30 on leases—lessor, and any other class of receivables. 3. c The amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed (see Example 5 \[paragraph [805-10-55-37](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37)\]). 4. d For contingencies, the following disclosures shall be included in the note that describes the business combination: 1. 1 For assets and liabilities arising from contingencies recognized at the acquisition date: 1. i The amounts recognized at the acquisition date and the measurement basis applied (that is, at fair value or at an amount recognized in accordance with Topic 450 and Section 450-20-25) 2. ii The nature of the contingencies. An acquirer may aggregate disclosures for assets or liabilities arising from contingencies that are similar in nature. 2. 2 For contingencies that are not recognized at the acquisition date, the disclosures required by Topic 450 if the criteria for disclosures in that Topic are met. An acquirer may aggregate disclosures for assets and liabilities arising from contingencies that are similar in nature. 5. e For each business combination in which the acquirer holds less than 100 percent of the equity interests 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.") at the acquisition date, both of the following: 1. 1 The fair value of the noncontrolling interest in the acquiree at the acquisition date 2. 2 The valuation technique(s) and significant inputs used to measure the fair value of the noncontrolling interest. 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)Paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) identifies one of the objectives of disclosures about 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."). To meet that objective, 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.") shall disclose in interim and annual reporting periods all of the following information for each business combination that occurs during the reporting period: 1. a For indemnification assets, all of the following: 1. 1 The amount recognized as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 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. 2. b For acquired receivables not subject to the requirements of Subtopic 326-20 relating to purchased financial assets with credit deterioration, all of the following: 1. 1 The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the receivables (unless those receivables arise from [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") by the lessor for which the acquirer shall disclose the amounts recognized as of the acquisition date) 2. 2 The gross contractual amounts receivable 3. 3 The best estimate at the acquisition date of the contractual cash flows not expected to be collected. The disclosures shall be provided by major class of receivable, such as loans, net investment in sales-type or direct financing leases in accordance with Subtopic 842-30 on leases—lessor, and any other class of receivables. 3. c The amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed (see Example 5 \[paragraph [805-10-55-37](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-37)\]). 4. d For contingencies, the following disclosures shall be included in the note that describes the business combination: 1. 1 For assets and liabilities arising from contingencies recognized at the acquisition date: 1. i The amounts recognized at the acquisition date and the measurement basis applied (that is, at fair value or at an amount recognized in accordance with Topic 450 and Section 450-20-25) 2. ii The nature of the contingencies. An acquirer may aggregate disclosures for assets or liabilities arising from contingencies that are similar in nature. 2. 2 For contingencies that are not recognized at the acquisition date, the disclosures required by Topic 450 if the criteria for disclosures in that Topic are met. An acquirer may aggregate disclosures for assets and liabilities arising from contingencies that are similar in nature. 5. e For each business combination in which the acquirer holds less than 100 percent of the equity interests 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.") at the acquisition date, both of the following: 1. 1 The fair value of the noncontrolling interest in the acquiree at the acquisition date 2. 2 The valuation technique(s) and significant inputs used to measure the fair value of the noncontrolling interest. ##### [805-20-50-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z Record version: sha256:0d43281c1889dd957685766f7e06f97ba4344fe4d95636a66f82a8b70cfd9c95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For individually immaterial business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by paragraph [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) 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 business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by paragraph [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) in the aggregate in interim and annual reporting periods. ##### [805-20-50-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z Record version: sha256:06de78483a7354e3cbaa8e45a674669cdc0ad03cea9dd325beb2c013ad266540 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1) unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. 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 acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-20-50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-1)in interim and annual reporting periods unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. In that situation, the acquirer shall describe which disclosures could not be made and the reason why they could not be made. #### The Financial Effects of Adjustments That Relate to Business Combinations That Occurred in the Current or Previous Reporting Periods ##### [805-20-50-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z Record version: sha256:e1c82eab58590dabf9c2fe6d06d2349b5b21202336d1d3f2f767ecda46507981 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) identifies the second objective of disclosures about the effects of business combinations that occurred in the current or previous reporting periods. To meet the objective in that paragraph, the acquirer shall disclose the information in paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) for each material business combination or in the aggregate for individually immaterial business combinations 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)Paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) identifies the second objective of disclosures about the effects of business combinations that occurred in the current or previous reporting periods. To meet the objective in that paragraph, in interim and annual reporting periods the acquirer shall disclose the information in paragraph [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively. ##### [805-20-50-4A](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-4A) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z Record version: sha256:c9580745fc4c1b700874408bc3348a9bff31bbd9953a50493ebcbd42987484aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the initial accounting for a business combination is incomplete (see paragraphs [805-10-25-13 through 25-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) ) for particular assets, liabilities, noncontrolling interests, or items of consideration and the amounts recognized in the financial statements for the business combination thus have been determined only provisionally, the acquirer shall disclose the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively to meet the objective in paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5): 1. a The reasons why the initial accounting is incomplete 2. b The assets, liabilities, equity interests, or items of consideration for which the initial accounting is incomplete 3. c The nature and amount of any measurement period adjustments recognized during the reporting period in accordance with paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17), including separately the amount of adjustment to current-period income statement line items relating to the income effects that would have been recognized in previous periods if the adjustment to provisional amounts were recognized as of the acquisition date. Alternatively, an acquirer may present those amounts separately on the face of the income statement. 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 initial accounting for a business combination is incomplete (see paragraphs [805-10-25-13 through 25-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) ) for particular assets, liabilities, noncontrolling interests, or items of consideration and the amounts recognized in the financial statements for the business combination thus have been determined only provisionally, the acquirer shall disclose in interim and annual reporting periods the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively to meet the objective in paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5): 1. a The reasons why the initial accounting is incomplete 2. b The assets, liabilities, equity interests, or items of consideration for which the initial accounting is incomplete 3. c The nature and amount of any measurement period adjustments recognized during the reporting period in accordance with paragraph [805-10-25-17](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-17), including separately the amount of adjustment to current-period income statement line items relating to the income effects that would have been recognized in previous periods if the adjustment to provisional amounts were recognized as of the acquisition date. Alternatively, an acquirer may present those amounts separately on the face of the income statement. #### Exceptions to the Measurement Principle ##### [805-20-50-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-50-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:23:33.413Z to 2026-09-10T01:23:33.413Z Record version: sha256:c1d34978dc7e1f344f7dcc7a6ab3a83af78be296597115abe031427d80e55379 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For any of the practical expedients in paragraph [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29) that an acquirer uses, the acquirer shall disclose all of the following information: 1. a The expedients that have been used 2. b To the extent reasonably possible, a qualitative assessment of the estimated effect of applying each of those expedients. 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 any of the practical expedients in paragraph [805-20-30-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-29) that an acquirer uses, the acquirer shall disclose all of the following information in interim and annual reporting periods: 1. a The expedients that have been used 2. b To the extent reasonably possible, a qualitative assessment of the estimated effect of applying each of those expedients. Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:33e66e07eccf94760812ea6acd65f9793d692b88d0c941a51aa13385db2b51a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/20/#55-implementation-guidance-and-illustrations) SEC content: no ##### [805-20-55-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:e8ff5b86b44210c594ab442ab9a9b1ac6a4bbf944efa73e40d43a7660280837d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides additional guidance and illustrations that address the application of accounting requirements for [business combinations](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.") to [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 and liabilities and to [noncontrolling interests](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."). #### Implementation Guidance ##### [805-20-55-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:cc26ae5972e6dd45ea2193f996e6d3cf5ffad838999612e1a645d5cd6ff32462 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10) establishes that an intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion described in the definition of identifiable. An [intangible asset](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 meets the contractual-legal criterion is identifiable even if the asset is not transferable or separable from 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.") or from other rights and obligations. For example: 1. a An acquiree leases a manufacturing facility to a [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") under an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") that has terms that are favorable relative to market terms. The lease terms explicitly prohibit transfer of the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") (through either sale or [sublease](https://asc.understandingaccounting.org/glossary/s/#sublease "A transaction in which an underlying asset is re-leased by the lessee (or intermediate lessor) to a third party (the sublessee) and the original (or head) lease between the lessor and the lessee remains in effect.")). The amount by which the lease terms are favorable compared with the pricing of current market transactions for the same or similar items is an intangible asset that meets the contractual-legal criterion for recognition separately from [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."), even though 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.") cannot sell or otherwise transfer the lease contract. See also paragraph [805-20-25-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-12). 2. b An acquiree owns and operates a nuclear power plant. The license to operate that power plant is an intangible asset that meets the contractual-legal criterion for recognition separately from goodwill, even if the acquirer cannot sell or transfer it separately from the acquired power plant. An acquirer may recognize the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the operating license and the fair value of the power plant as a single asset for financial reporting purposes if the useful lives of those assets are similar. 3. c An acquiree owns a technology patent. It has licensed that patent to others for their exclusive use outside the domestic market, receiving a specified percentage of future foreign revenue in exchange. Both the technology patent and the related license agreement meet the contractual-legal criterion for recognition separately from goodwill even if selling or exchanging the patent and the related license agreement separately from one another would not be practical. ##### [805-20-55-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:6cc6bf9305c962c779cf950636ddd0ba9f88473338cabb768a1f059c9d641f11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The separability criterion means that an acquired intangible asset is capable of being separated or divided from the acquiree and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability. An intangible asset that the acquirer would be able to sell, license, or otherwise exchange for something else of value meets the separability criterion even if the acquirer does not intend to sell, license, or otherwise exchange it. ##### [805-20-55-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:7b69bc67aefc98f8b8da06647a2e1a0b6ff5dc7a459d99b6063e8a10c7b4aed8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquired intangible asset meets the separability criterion if there is evidence of exchange transactions for that type of asset or an asset of a similar type, even if those transactions are infrequent and regardless of whether the acquirer is involved in them. For example, customer and subscriber lists are frequently licensed and thus meet the separability criterion. Even if an acquiree believes its customer lists have characteristics different from other customer lists, the fact that customer lists are frequently licensed generally means that the acquired customer list meets the separability criterion. However, a customer list acquired in 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.") 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 customers. ##### [805-20-55-5](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:59c0b3bcade331e79a70e71de05f5cc4f882e1336fe98167958eb3674003ecc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An intangible asset that is not individually separable from the acquiree or combined entity meets the separability criterion if it is separable in combination with a related contract, identifiable asset, or liability. For example: 1. a Market participants exchange deposit liabilities and related depositor relationship [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.)") in observable exchange transactions. Therefore, the acquirer should recognize the depositor relationship intangible asset separately from goodwill. 2. b An acquiree owns a registered trademark and documented but unpatented technical expertise used to manufacture the trademarked product. To transfer ownership of a trademark, the owner is also required to transfer everything else necessary for the new owner to produce a product or service indistinguishable from that produced by the former owner. Because the unpatented technical expertise must be separated from the acquiree or combined entity and sold if the related trademark is sold, it meets the separability criterion. ##### [805-20-55-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:677fec9b077ac7faa75528bca5cad90f19888a6216e3638ad303fe85151aafdb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer subsumes into goodwill the value of an acquired intangible asset that is not identifiable as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."). For example, an acquirer may attribute value to the existence of an assembled workforce, which is an existing collection of employees that permits the acquirer to continue to operate an acquired business from the acquisition date. An assembled workforce does not represent the intellectual capital of the skilled workforce―the (often specialized) knowledge and experience that employees of an acquiree bring to their jobs. Because the assembled workforce is not an identifiable asset to be recognized separately from goodwill, any value attributed to it is subsumed into goodwill. ##### [805-20-55-7](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:4677e0b03c197f1f513560bbb148310a45e7ce79bf75eff81abf35e02dc8b41b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer also subsumes into goodwill any value attributed to items that do not qualify as assets at the acquisition date. For example, the acquirer might attribute value to potential contracts the acquiree is negotiating with prospective new customers at the acquisition date. Because those potential contracts are not themselves assets at the acquisition date, the acquirer does not recognize them separately from goodwill. The acquirer should not subsequently reclassify the value of those contracts from goodwill for events that occur after the acquisition date. However, the acquirer should assess the facts and circumstances surrounding events occurring shortly after the acquisition to determine whether a separately recognizable intangible asset existed at the acquisition date. ##### [805-20-55-8](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:7423c6efbfa01dc5f4a03e5231bce298f5c686f1aadb4cab106cbc45e13dab6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After initial recognition, an acquirer accounts for intangible assets acquired in a business combination in accordance with the provisions of Subtopics 350-30and 360-10. However, as described in paragraph [350-10-15-4](https://asc.understandingaccounting.org/asc/350/10/#350-10-15-4), the accounting for some acquired intangible assets after initial recognition is prescribed in other standards. ##### [805-20-55-9](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:a63352c1acd1a874804da7dd59c042689b8460ca7f682eb657a873e454f579c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The identifiability criteria determine whether an intangible asset is recognized separately from goodwill. However, the criteria neither provide guidance for measuring the fair value of an intangible asset nor restrict the assumptions used in measuring the fair value of an intangible asset. For example, the acquirer would take into account the assumptions that market participants would use when pricing the intangible asset, such as expectations of future contract renewals, in measuring fair value. It is not necessary for the renewals themselves to meet the identifiability criteria. (However, see paragraph [805-20-30-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-20), which establishes an exception to the fair value measurement principle for reacquired rights recognized in a business combination.) ##### [805-20-55-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:74c1631c3a25f8da7e4a2fce6133a5d19b8ea9d16c1c56ed265fd33b284bb443 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [350-30-35-21 through 35-28](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-21) provide guidance for determining whether indefinite-lived intangible assets should be combined into a single unit of account to test for impairment if they are operated as a single asset and essentially are inseparable from one another. ##### [805-20-55-11](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:1f43ccbd4e8655b30c24c7ea5f0b6bcfb2d74e0782715ee10e3215a5eed9a701 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance presents examples of identifiable intangible assets acquired in a business combination. Some of the examples may have characteristics of assets other than intangible assets. The acquirer should account for those assets in accordance with their substance. The examples are not intended to be all-inclusive. ##### [805-20-55-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:187d1a5174076e5b10dc9f0e83c3e83e388c5d66212ad7ed5701696fbb6d6d03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Intangible assets designated with the symbol # are those that arise from contractual or other legal rights. Those designated with the symbol \* do not arise from contractual or other legal rights but are separable. Intangible assets designated with the symbol # might also be separable, but separability is not a necessary condition for an asset to meet the contractual-legal criterion. ##### [805-20-55-13](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:a1fc08b31fb96ce9bfdc8828c02f1dc1b0da56d32d218e487480975a5529db2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance is organized as follows: 1. a Marketing-related intangible assets 2. b Customer-related intangible assets 3. c Artistic-related intangible assets 4. d Contract-based intangible assets 5. e Technology-based intangible assets. ##### [805-20-55-14](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:32963fa88a5ed24b6d87e40dab674c82444580119eeffe805f1a1e903d7c204e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Marketing-related intangible assets are primarily used in the marketing or promotion of products or services. Examples of marketing-related intangible assets are: 1. a Trademarks, trade names, service marks, collective marks, certification marks # 2. b Trade dress (unique color, shape, package design) # 3. c Newspaper mastheads # 4. d Internet domain names # 5. e Noncompetition agreements. # ##### [805-20-55-15](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:ce5a9e93ed6bc465b4b6d05f579609cfaf7bf9164ce9ead11f087157c42c2837 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on trademarks, trade names, service marks, collective marks, certification marks, and internet domain names follows. ##### [805-20-55-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:15057e3bd64e69caa3f77498bd827a018eed9ce84858467a856fc13192ac1b91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Trademarks are words, names, symbols, or other devices used in trade to indicate the source of a product and to distinguish it from the products of others. A service mark identifies and distinguishes the source of a service rather than a product. Collective marks identify the goods or services of members of a group. Certification marks certify the geographical origin or other characteristics of a good or service. ##### [805-20-55-17](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:3f23479573d8b842dae4ac412859731e19d2b1fdd9d842ed47be71b10e4e74f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Trademarks, trade names, service marks, collective marks, and certification marks may be protected legally through registration with governmental agencies, continuous use in commerce, or by other means. If it is protected legally through registration or other means, a trademark or other mark acquired in a business combination is an intangible asset that meets the contractual-legal criterion. Otherwise, a trademark or other mark acquired in 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.") can be recognized separately from goodwill if the separability criterion is met, which normally it would be. ##### [805-20-55-18](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:f8f575ffe1642c88c7a9412285e7445b8a1cb9e89953a73b508ddba83fbcb646 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The terms _brand_ and _brand name_, often used as synonyms for trademarks and other marks, are general marketing terms that typically refer to a group of complementary assets such as a trademark (or service mark) and its related trade name, formulas, recipes, and technological expertise. This Subtopic does not preclude an entity from recognizing, as a single asset separately from goodwill, a group of complementary intangible assets commonly referred to as a brand if the assets that make up that group have similar useful lives. ##### [805-20-55-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:7dda199f69df4054168c3acb5964763286c2e5d32a793efe70a3b7989d166423 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An internet domain name is a unique alphanumeric name that is used to identify a particular numeric internet address. Registration of a domain name creates an association between that name and a designated computer on the internet for the period of the registration. Those registrations are renewable. A registered domain name acquired in a business combination meets the contractual-legal criterion. ##### [805-20-55-20](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:00ea16b8b39e832c2e43e98a9f1401f2d2c51434fe73878c00d782962ee7fb68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of customer-related intangible assets are: 1. a Customer lists \* 2. b Order or production backlog # 3. c Customer contracts and related customer relationships # 4. d Noncontractual customer relationships. \* ##### [805-20-55-21](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:7e2e93447d1ca8e1b0fb5476fc653e0d71bf974c2e95dae7b885581594bdd86c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A customer list consists of information about customers, such as their names and contact information. A customer list also may be in the form of a database that includes other information about the customers, such as their order histories and demographic information. A customer list generally does not arise from contractual or other legal rights. However, customer lists are frequently leased or exchanged. Therefore, a customer list acquired in a business combination normally meets the separability criterion. ##### [805-20-55-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:6ce468f5001732248824a52e5ff78dfb5082e04e20d39a52dbf9f68d7ce28968 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An order or production backlog arises from contracts such as purchase or sales orders. An order or production backlog acquired in a business combination meets the contractual-legal criterion even if the purchase or sales orders are cancelable. ##### [805-20-55-23](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:9cddc03d391a449588da7e23aba6e260c859221b1fc2e15a4c1799505151cda1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity establishes relationships with its customers through contracts, those customer relationships arise from contractual rights. Therefore, customer contracts and the related customer relationships acquired in a business combination meet the contractual-legal criterion, even if confidentiality or other contractual terms prohibit the sale or transfer of a contract separately from the acquiree. ##### [805-20-55-24](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:e0cb21e369bfd07ed4f59a0b63d5522bef19c4cd0252b5abb52d2156072b431c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A customer contract and the related customer relationship may represent two distinct intangible assets. Both the useful lives and the pattern in which the economic benefits of the two assets are consumed may differ. ##### [805-20-55-25](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:6aa2c3f70fe986e8fbaf41bf4d276bb85570951f11dad09c87b292824ddcf66d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A customer relationship exists between an entity and its customer if the entity has information about the customer and has regular contact with the customer, and the customer has the ability to make direct contact with the entity. Customer relationships meet the contractual-legal criterion if an entity has a practice of establishing contracts with its customers, regardless of whether a contract exists at the acquisition date. Customer relationships also may arise through means other than contracts, such as through regular contact by sales or service representatives. As noted in paragraph [805-20-55-22](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-22), an order or a production backlog arises from contracts such as purchase or sales orders and therefore is considered a contractual right. Consequently, if an entity has relationships with its customers through these types of contracts, the customer relationships also arise from contractual rights and therefore meet the contractual-legal criterion. ##### [805-20-55-26](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:ccd9ffd999b19c8f9e01f2f83ea619c1c6c35f425fc301ab6745061f67040529 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52)) for illustrations of customer contract and customer relationship intangible assets acquired in a business combination. ##### [805-20-55-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:89a23c3287e6e1c43cfec2ee9ee8e8b06b4cd08261488ca4f0e44642d13703d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A customer relationship acquired in a business combination that does not arise from a contract may nevertheless be identifiable because the relationship is separable. Exchange transactions for the same asset or a similar asset that indicate that other entities have sold or otherwise transferred a particular type of noncontractual customer relationship would provide evidence that the noncontractual customer relationship is separable. For example, relationships with depositors are frequently exchanged with the related deposits and therefore meet the criteria for recognition as an intangible asset separately from goodwill. ##### [805-20-55-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:7fa8d657599c341b1908b92136ee0f12d8da61731ce7e72a42bcff83f474bb0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52)) for illustrations of customer contract and customer relationship intangible assets acquired in a business combination. ##### [805-20-55-29](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:4d58a865addc1b8ccef227b36a2078d9bc25087ce195e5b8658b9752ccef7149 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of artistic-related intangible assets are: 1. a Plays, operas, ballets # 2. b Books, magazines, newspapers, other literary works # 3. c Musical works such as compositions, song lyrics, advertising jingles # 4. d Pictures, photographs # 5. e Video and audiovisual material, including motion pictures or films, music videos, television programs. # ##### [805-20-55-30](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:2752551fe67b961e25bfed38486595ad465564675f2f5362fd05ec4d25d7e18e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Artistic-related assets acquired in a business combination are identifiable if they arise from contractual or legal rights such as those provided by copyright. The holder can transfer a copyright, either in whole through an assignment or in part through a licensing agreement. An acquirer is not precluded from recognizing a copyright intangible asset and any related assignments or license agreements as a single asset, provided they have similar useful lives. ##### [805-20-55-31](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:e4a483cb90f0f66715dac8d3682f425aac1ac2683de1868d3fd2040d8f6068d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contract-based intangible assets represent the value of rights that arise from contractual arrangements. Customer contracts are one type of contract-based intangible asset. If the terms of a contract give rise to a liability (for example, if the terms of a customer contract are unfavorable relative to market terms), the acquirer recognizes it as a liability assumed in the business combination. Examples of contract-based intangible assets are: 1. a Licensing, royalty, standstill agreements # 2. b Advertising, construction, management, service or supply contracts # 3. c Operating lease agreements of a lessor # 4. d Construction permits # 5. e Franchise agreements # 6. f Operating and broadcast rights # 7. g Servicing contracts such as mortgage servicing contracts # 8. h Employment contracts # 9. i Use rights such as drilling, water, air, timber cutting, and route authorities. # ##### [805-20-55-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:769bd48a5138513349f74a729e291203bc64e36a749e457d1d862fa2a0d3d70a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on servicing contracts, employment contracts, and use rights follows. ##### [805-20-55-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:34eae6024511785613267394614866b421a2867764e66e115e611eb058f07b41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contracts to service financial assets are one type of contract-based intangible asset. Although servicing is inherent in all financial assets, it becomes a distinct asset or liability by either of the following: 1. a If the transfer of the servicer's financial assets met the requirements for sale accounting 2. b Through the separate acquisition or assumption of a servicing obligation that does not relate to financial assets of the combined entity. ##### [805-20-55-34](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:89bb9eaed33114e249e31d279c4454ab0ab0ed7f293e3d20b037e7e27f1beebb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 860 provides guidance on accounting for servicing contracts. ##### [805-20-55-35](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:cc4a5ae7cdf4b950312dff8a42898d0e5127f109b8fde46d7ac344f3f97b64a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If mortgage loans, credit card receivables, or other financial assets are acquired in a business combination with the servicing obligation, the inherent servicing rights are not a separate intangible asset because the fair value of those servicing rights is included in the measurement of the fair value of the acquired financial asset. ##### [805-20-55-36](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:a77392ce5315853dea80936c9c38821375b91ef61abcd077062d22fd2f8b701e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Employment contracts that are beneficial contracts from the perspective of the employer because the pricing of those contracts is favorable relative to market terms are one type of contract-based intangible asset. ##### [805-20-55-37](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:e0b0eba2f85a0c626ddc5cd44bf401913f377e338052aed8d8c670d65cd3b2a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Use rights such as drilling, water, air, timber cutting, and route authorities are contract-based intangible assets to be accounted for separately from goodwill. Particular use rights may have characteristics of tangible, rather than intangible, assets. For example, [mineral rights](https://asc.understandingaccounting.org/glossary/m/#mineral-rights "The legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits.") are tangible assets. An acquirer should account for use rights based on their nature. ##### [805-20-55-38](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:f7b9564468bfb7a27231d7bdcc89615370f32f5becbbc5c3a285e7f05de20a77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of technology-based intangible assets are: 1. a Patented technology # 2. b Computer software and mask works # 3. c Unpatented technology \* 4. d Databases, including title plants \* 5. e Trade secrets, such as secret formulas, processes, recipes. # ##### [805-20-55-39](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:c568b4c51599927a99e9fe0ba17a46f4542312284e00cb78a5d2755f3a511540 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on computer software and mask works, databases, including title plants, and trade secrets such as secret formulas, processes, and recipes follows. ##### [805-20-55-40](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:c6f2f0d12ec0e41f70235f401853fe9a9e83ada735716099216852e150462d7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computer software and program formats acquired in a business combination that are protected legally, such as by patent or copyright, meet the contractual-legal criterion for identification as intangible assets. ##### [805-20-55-41](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:1667785a904de3f1af2317a66882647aa1d8c3a3c709713750f19408f9f0d0ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Mask works are software permanently stored on a read-only memory chip as a series of stencils or integrated circuitry. Mask works may have legal protection. Mask works with legal protection that are acquired in a business combination meet the contractual-legal criterion for identification as intangible assets. ##### [805-20-55-42](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:dc2f5bd33633c1286903639f9dd77b9b637170b469ff939d89ed30c55ff0a06b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Databases are collections of information, often stored in electronic form, such as on computer disks or files. A database that includes original works of authorship may be entitled to copyright protection. A database acquired in a business combination that is protected by copyright meets the contractual-legal criterion. However, a database typically includes information created as a consequence of an entity's normal operations, such as customer lists, or specialized information, such as scientific data or credit information. Databases that are not protected by copyright can be, and often are, exchanged, licensed, or leased to others in their entirety or in part. Therefore, even if the future economic benefits from a database do not arise from legal rights, a database acquired in a business combination meets the separability criterion. ##### [805-20-55-43](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:852c66e4208f9ca8f5f49481c865ffd1e314365526db701359bc8c6b768da611 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Title plants constitute a historical record of all matters affecting title to parcels of land in a particular geographical area. Title plant assets are bought and sold, either in whole or in part, in exchange transactions or are licensed. Therefore, title plant assets acquired in a business combination meet the separability criterion. ##### [805-20-55-44](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:f47c2df799e1eda0474809c953f795c69282e00687e9969fda91c4b627c81f00 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A trade secret is “information, including a formula, pattern, recipe, compilation, program, device, method, technique, or process that (1) derives independent economic value, actual or potential, from not being generally known and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy," according to _The New Role of Intellectual Property in Commercial Transactions_ (Simensky and Breyer 1998). ##### [805-20-55-45](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:aa50c4dec322bc228cea18a86a65145b38aac9691971ad5d008771c20fa9d4b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the future economic benefits from a trade secret acquired in a business combination are legally protected, that asset meets the contractual-legal criterion. Otherwise, trade secrets acquired in a business combination are identifiable only if the separability criterion is met, which is likely to be the case. ##### [805-20-55-46](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:d9a1f0dae47a09d645248d0cc9debff0174fbd39ea2613d6d58b70a7dae78aa3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-55-47](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:38a9afc7707c1442c4b788896aae6d804846c044e82668017ce6658ecd1118e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-55-48](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:ca331c338f097704abe7973a440f8f0f63b19d2ca4b3ae66571f29fe1fb8fda6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-55-49](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:504a8b166f383e6649b52f3bb59600902095055a17173a91fe9eb8eab8b222bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-55-50](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:5d61fa187eae826a51418e7a5e720edfc4878f5fd27d64a00713719690fcbb5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that has agreed to a business combination may develop a plan to terminate certain employees. The plan will be implemented only if the combination is consummated, but the entity assesses the likelihood of the combination to be probable. In this circumstance, when terminated, the employees will be entitled to termination benefits under a preexisting plan or contractual relationship. The termination of the employees also may affect the entity's assumptions in estimating its obligations for pension benefits, other postretirement benefits, and postemployment benefits; that is, the termination of the employees may trigger curtailment losses or the recording of a contractual termination benefit. ##### [805-20-55-51](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:32ba1aeb80c3e733157c4c4c6bf978f91892e79422fe77e74fc5d830a7e93904 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability for the contractual termination benefits and the curtailment losses under employee benefit plans that will be triggered by the consummation of the business combination shall not be recognized when it is probable that the business combination will be consummated; rather it shall be recognized when the business combination is consummated. #### Illustrations ##### [805-20-55-52](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:744c40e9be186e7642497f7ebf0560f0fd56592ae897ef98a9c6d72ea4c2189a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the guidance in paragraphs [805-20-55-23 through 55-27](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-23) on recognition of customer contract and customer relationship intangible assets acquired in a business combination: 1. a Five-year supply agreement (Case A) 2. b One customer, contract in one of two lines of business (Case B) 3. c Purchase and sales orders (Case C) 4. d Cancelable contracts (Case D). ##### [805-20-55-53](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:5e9a8c33a8c7be70454e8c92b8aa93d2fdb8c69b792ca9ac1c5c4febc968a937 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In each of the Cases, the Acquirer acquires Target in a business combination on December 31, 20X5. ##### [805-20-55-54](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:796f64ab81af8b88aa78005f4af5cf678e21eb0cdd3538a6c43b9410b5ca5c8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Target has a five-year agreement to supply goods to Customer. Both Target and Acquirer believe that Customer will renew the agreement at the end of the current contract. The agreement is not separable. The agreement, whether cancelable or not, meets the contractual-legal criterion. Additionally, because Target establishes its relationship with Customer through a contract, not only the agreement itself but also Target's customer relationship with Customer meet the contractual-legal criterion. ##### [805-20-55-55](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:0c8c2f6a87a9d65845aaa38e03929b71933f10652dd0c3097098ced4151277e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Target manufactures goods in two distinct lines of business: sporting goods and electronics. Customer purchases both sporting goods and electronics from Target. Target has a contract with Customer to be its exclusive provider of sporting goods but has no contract for the supply of electronics to Customer. Both Target and Acquirer believe that only one overall customer relationship exists between Target and Customer. The contract to be Customer's exclusive supplier of sporting goods, whether cancelable or not, meets the contractual-legal criterion. Additionally, because Target establishes its relationship with Customer through a contract, the customer relationship with Customer meets the contractual-legal criterion. Because Target has only one customer relationship with Customer, the fair value of that relationship incorporates assumptions about Target's relationship with Customer related to both sporting goods and electronics. However, if Acquirer determines that the customer relationships with Customer for sporting goods and for electronics are separate from each other, Acquirer would assess whether the customer relationship for electronics meets the separability criterion for identification as an intangible asset. ##### [805-20-55-56](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:b613f599f5b94cd63ac4276ecd8f9b2f13a43a05b9f2c158b5c193e40ea21fa7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Target does business with its customers solely through purchase and sales orders. At December 31, 20X5, Target has a backlog of customer purchase orders from 60 percent of its customers, all of whom are recurring customers. The other 40 percent of Target's customers also are recurring customers. However, as of December 31, 20X5, Target has no open purchase orders or other contracts with those customers. Regardless of whether they are cancelable or not, the purchase orders from 60 percent of Target's customers meet the contractual-legal criterion. Additionally, because Target has established its relationship with 60 percent of its customers through contracts, not only the purchase orders but also Target's customer relationships meet the contractual-legal criterion. Because Target has a practice of establishing contracts with the remaining 40 percent of its customers, its relationship with those customers also arises through contractual rights and therefore meets the contractual-legal criterion even though Target does not have contracts with those customers at December 31, 20X5. ##### [805-20-55-57](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:2a8629a7fd33bdf31fa6cdefd57e24ac69a7f620cfee65f3c15013600405e23d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Target has a portfolio of one-year motor insurance contracts that are cancelable by policyholders. Because Target establishes its relationships with policyholders through insurance contracts, the customer relationship with policyholders meets the contractual-legal criterion. The guidance in Subtopic 350-30 applies to the customer relationship intangible asset. ##### [805-20-55-58](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:d51e5e9315828e7849768b2a11ffa4105a4139c8063c7bac7116c8af6f22268b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-55-59](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:a9449b00f7057df3187856067ff5f2583adad9b3fd320eca0a0b602bd9ffdfba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [805-20-55-60](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:36.397Z to 2026-09-10T01:23:36.397Z Record version: sha256:5f60d44b0d01c6c059a8e7b5e36a7f98e6bd892c4c02a86486363bfa67b9b1ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T01:23:39.838Z to 2026-09-10T01:23:39.838Z Record version: sha256:b2aaf67a168c440d6e8e400a5993f490d0c116bef6eeeb70418f2dd1af3a8d51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/805/20/#65-transition-and-open-effective-date-information) SEC content: no ##### [805-20-65-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:39.838Z to 2026-09-10T01:23:39.838Z Record version: sha256:13871e44e64137bb018b1188138762f6e5f5a4b6a4ce610f8fd509f122b1d6d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/02/2014 after the end of the transition period stated in Accounting Standards Update No. 2012-06, _Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution_. #### Transition Related to Accounting Standards Updates No. 2014-18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination, and No. 2019-06, Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities ##### [805-20-65-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:39.838Z to 2026-09-10T01:23:39.838Z Record version: sha256:45c43eba63d8f3ea81cf1a7014e92d09afe73cc3d066dfaef88d6cf4228a52fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following represents the transition information related to Accounting Standards Updates No. 2014-18, _Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination,_and No. 2019-06, _Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities,_referenced in paragraph [805-20-15-1A](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-1A): 1. a Upon adoption of the Accounting Alternative Subsections of this Subtopic, that guidance shall be effective prospectively to the first transaction that is identified in paragraph [805-20-15-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-2) after the adoption of the accounting alternative. 2. b Customer-related intangible assets and noncompetition agreements that exist as of the beginning of the period of adoption shall continue to be subsequently measured in accordance with Topic 350 on intangibles—goodwill and other. That is, existing customer-related intangible assets and noncompetition agreements should not be subsumed into goodwill upon adoption of the Accounting Alternative Subsections of this Subtopic. 3. c [Subparagraph superseded by Accounting Standards Update No. 2016-03](https://asc.understandingaccounting.org/updates/asu-2016-03/). 4. d A private company or not-for-profit entity that makes an accounting policy election to apply the guidance in the Accounting Alternative Subsections of this Subtopic for the first time need not justify that the use of the accounting alternative is preferable as described in paragraph [250-10-45-2](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-2). ##### [805-20-65-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-65-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:39.838Z to 2026-09-10T01:23:39.838Z Record version: sha256:96a1bc30fcbc4a05871aab639e7bc770328be4e350c018a7bc4d9fafa14a858d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2021-08, _Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers._ Source downloaded (UTC): 2026-09-10T01:23:46.490Z to 2026-09-10T01:23:46.490Z Record version: sha256:0483524b3861d0e763011fbbf32bdd528e6db121beb9379c2cbe41449b326078 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-00-status) SEC content: yes ##### [805-20-S00-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:46.490Z to 2026-09-10T01:23:46.490Z Record version: sha256:8578847c709f693d69882cd1a2fc9b46a1a91ea468269dea9a04ddf5cd03a563 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
805-20-S50-1SupersededAccounting Standards Update No. 2012-0308/27/2012
805-20-S55-1SupersededAccounting Standards Update No. 2012-0308/27/2012
805-20-S55-2SupersededAccounting Standards Update No. 2012-0308/27/2012
805-20-S99-1SupersededAccounting Standards Update No. 2010-2208/19/2010
805-20-S99-2SupersededAccounting Standards Update No. 2010-2208/19/2010
805-20-S99-3AmendedAccounting Standards Update No. 2010-0401/15/2010
Source downloaded (UTC): 2026-09-10T01:23:49.872Z to 2026-09-10T01:23:49.872Z Record version: sha256:85ef25bd87daa90371abc2a6c45c65cbaf0532bf098eb9fd1e1dde1b9b46ec56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-30-initial-measurement) SEC content: yes #### Use of Residual Method to Value Acquired Assets Other Than Goodwill ##### [805-20-S30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:49.872Z to 2026-09-10T01:23:49.872Z Record version: sha256:073b86f87e302ef0ef4703e597e5df86fd047093b3d2738650051e48c0a8bee8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [805-20-S99-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-3), SEC Staff Announcement: Use of the Residual Method to Value Acquired Assets Other than Goodwill, for SEC Staff views regarding the use of the residual method. Source downloaded (UTC): 2026-09-10T01:23:52.284Z to 2026-09-10T01:23:52.284Z Record version: sha256:5719e3792679ee1d6d5e05f8bc79918c67e153489ad4b8227593ee8d6845f9bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-50-disclosure) SEC content: yes ##### [805-20-S50-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:52.284Z to 2026-09-10T01:23:52.284Z Record version: sha256:37bd205c7c5f4339a54ad657503dca00774627ead9848ad68934381e22a7cfb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T01:23:55.305Z to 2026-09-10T01:23:55.305Z Record version: sha256:66689cb841ee2d91c6bed2f5589a64436eee4872ac3de5cd5aa160cd4ee5a5cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-S55: SEC 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-55-implementation-guidance-and-illustrations) SEC content: yes ##### [805-20-S55-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:55.305Z to 2026-09-10T01:23:55.305Z Record version: sha256:259011721a5404f95a2307203141446c0e5c33eaa32494c1075360baee1abdc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). ##### [805-20-S55-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-S55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:55.305Z to 2026-09-10T01:23:55.305Z Record version: sha256:d6ecfbccce9b267698aeec269d28d63542470b2a93be6815d50e2da4adcf2f02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:fb61c0828048e6423b03c96b7827863662fd12813796d1658690d72ceb199c15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-20-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/805/20/#sec-99-sec-materials) SEC content: yes ##### [805-20-S99-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:abcc9d5c0f96afbd612823f608b6f922fc92a4d7bf75e69d2a22407fdc850b41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-22](https://asc.understandingaccounting.org/updates/asu-2010-22/). ##### [805-20-S99-2](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:121e39bc7a0b5467d28be6407e16e1980db4ffe4ff7d98d101ff73ff1b4cd84a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-22](https://asc.understandingaccounting.org/updates/asu-2010-22/). #### SEC Staff Guidance ##### [805-20-S99-3](https://asc.understandingaccounting.org/asc/805/20/#805-20-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:23:57.518Z to 2026-09-10T01:23:57.518Z Record version: sha256:f23f2b0efc10697be3cd9fc58308454697e8690ffbf008b9f0915f03f8afa00f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Staff Announcement: Use of Residual Method to Value Acquired Assets Other than Goodwill. - Paragraph [805-20-25-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-10) discusses the recognition of identifiable intangible assets acquired in a business combination. The SEC staff is aware of instances in which registrants have asserted that certain intangible assets that arise from legal or contractual rights cannot be separately and directly valued (hereinafter referred to as a "direct value method") because the nature of the particular asset makes it fundamentally indistinguishable from goodwill in a business combination (for example, cellular/spectrum licenses, cable franchise agreements, and so forth). Accordingly, some have applied a policy of assigning purchase price to all other identifiable assets and liabilities as provided in Topic 805, with the remaining residual amount being allocated to the "indistinguishable" intangible asset. In those instances, there is either no goodwill recognized or the amount of goodwill recognized uses a technique other than the one specified in paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1). These methods have been referred to as "the residual method" of valuing intangible assets and have been used in the telecommunications, broadcasting, and cable industries. - Some have asserted that the residual method provides an acceptable approach for determining the fair value of the intangible asset to which the residual is assigned, either because it approximates the value that would be attained from a direct value method or because they believe that other methods of valuation are not practicable under the circumstances. Others have indicated that the residual method should be used as a proxy for fair value of the intangible asset in these situations, since the fair value of the intangible asset in question is not determinable. When it is or has been used in assigning purchase price, the residual method is also often used in impairment tests. - The SEC staff believes that the residual method does not comply with the requirements of Topic 805. Except for certain exceptions noted in paragraphs [805-20-30-10 through 30-12](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) , identifiable intangible assets that meet the recognition criteria shall be recorded at fair value. Paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) discusses the initial measurement of goodwill. - The SEC staff notes that a fundamental distinction between other recognized intangible assets and goodwill is that goodwill is both defined and measured as an excess or residual asset, while other recognized intangible assets are required to be measured at fair value. The SEC staff does not believe that the application of the residual method to the valuation of intangible assets can be assumed to produce amounts representing the fair values of those assets. The SEC staff also notes that valuation difficulty does not provide relief from the requirements in paragraphs [805-20-25-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-1) and [805-20-30-1](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-1) to separately recognize intangible assets at fair value apart from goodwill. Furthermore, the SEC staff notes that the same types of assets being valued using the residual method by some entities are being valued using a direct value method by other entities. Accordingly, the SEC staff believes the residual method should no longer be used to value intangible assets other than goodwill. Rather, a direct value method should be used to determine the fair value of all intangible assets required to be recognized at fair value under Topic 805. - Impairment testing of intangible assets similarly should not rely on a residual method and should, instead, comply with the provisions of Topic 350. Source downloaded (UTC): 2026-09-10T01:24:00.736Z to 2026-09-10T01:24:28.219Z Record version: sha256:a8b9104b1c4e0b57839cebe03b1bd718b61b45c7a37d50a9764aa3a532f428d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30: Business Combinations — Goodwill or Gain from Bargain Purchase, Including Consideration Transferred ### Machine-generated study aids ```json { "summary": "ASC 805-30 covers the piece of the acquisition method that produces goodwill or a bargain purchase gain. Goodwill equals the excess of (a) consideration transferred at acquisition-date fair value plus the fair value of any noncontrolling interest plus the acquisition-date fair value of any previously held equity interest, over (b) the net of the acquisition-date amounts of identifiable assets acquired and liabilities assumed (805-30-30-1); if (b) exceeds (a), the acquirer must first reassess its identification and measurement of all items and then recognize the remaining excess as a gain in earnings. It also governs measurement of consideration transferred, including contingent consideration and share-based payment replacement awards.", "key_points": [ "Goodwill is recognized at the acquisition date as the excess of the sum of consideration transferred (generally acquisition-date fair value), the fair value of any noncontrolling interest, and the acquisition-date fair value of any previously held equity interest over the net of the acquisition-date amounts of identifiable assets acquired and liabilities assumed (805-30-25-1; 805-30-30-1).", "In a bargain purchase, the acquirer must first reassess whether it correctly identified all assets acquired and liabilities assumed and review its measurement procedures (including NCI, previously held interest, and consideration transferred); any remaining excess is recognized as a gain in earnings attributed to the acquirer (805-30-25-2 through 25-4; 805-30-30-5 through 30-6).", "Consideration transferred is the sum of acquisition-date fair values of assets transferred, liabilities incurred to former owners, and equity interests issued, and can include cash, other assets, a business, contingent consideration, equity instruments, options, warrants, and member interests (805-30-30-7); transferred assets retained within the combined entity are carried at carrying amount with no gain or loss (805-30-30-8).", "Contingent consideration is recognized at acquisition-date fair value as part of consideration transferred and classified as a liability, equity, or asset under Subtopics 480-10 and 815-40 (805-30-25-5 through 25-7); post-acquisition, equity-classified amounts are not remeasured while asset/liability-classified amounts are remeasured to fair value each reporting date through earnings unless part of a Topic 815 hedge (805-30-35-1).", "If the acquirer is obligated to replace acquiree share-based payment awards, the portion of the replacement award's fair-value-based measure attributable to precombination vesting is included in consideration transferred, and the remainder (including any excess of the replacement award's measure over the acquiree award's fair value) is postcombination compensation cost (805-30-30-9 through 30-12; 805-30-55-8 through 55-10).", "For employee awards, the precombination portion equals the acquiree award's fair-value-based measure times the ratio of precombination service to the greater of the total service period or the acquiree award's original service period; if the acquirer is not obligated to replace expiring awards, all of the replacement award is postcombination compensation cost (805-30-30-10; 805-30-55-8).", "Required disclosures include a qualitative description of the factors comprising goodwill, the fair value of total consideration and each major class, contingent consideration terms and range of outcomes, goodwill deductible for tax purposes, goodwill by reportable segment, and for a bargain purchase the gain amount, income statement line item, and reasons for the gain (805-30-50-1)." ], "categories": [ "Business combinations", "Initial measurement", "Stock compensation", "Disclosure" ], "audience_level": "intermediate", "student_note": "Exam questions almost always test the goodwill formula (remember NCI is measured at full fair value and any previously held equity interest is remeasured to fair value) and the mandatory reassessment step before booking a bargain purchase gain. A common misunderstanding is thinking contingent consideration classified as equity gets remeasured through earnings — only asset/liability-classified contingent consideration is remeasured (805-30-35-1).", "related_topics": [ "805-10", "805-20", "805-740", "350-20", "718", "958-805" ], "key_concepts": [ "goodwill", "bargain purchase gain", "consideration transferred", "contingent consideration", "noncontrolling interest fair value", "replacement share-based payment awards", "precombination vesting", "business combination achieved in stages" ] } ``` Source downloaded (UTC): 2026-09-10T01:24:00.736Z to 2026-09-10T01:24:00.736Z Record version: sha256:91e0a15bfa4683e8156b0b2835308488777688fe75d7a4a636d22e7f0a7b445e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/30/#00-status) SEC content: no ##### [805-30-00-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:00.736Z to 2026-09-10T01:24:00.736Z Record version: sha256:6cdfb988165f6498eb6c06a5289032e73041e387c603085df2e08c7ad5e538f4 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
AcquireeAmendedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAmendedAccounting Standards Update No. 2010-0701/28/2010
Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Private CompanyAddedAccounting Standards Update No. 2019-0605/30/2019
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
805-30-15-1AmendedAccounting Standards Update No. 2010-0701/28/2010
805-30-15-2AddedAccounting Standards Update No. 2010-0701/28/2010
805-30-30-7AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-30-9AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-30-10AmendedAccounting Standards Update No. 2010-0802/02/2010
805-30-30-11 through 30-13
AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-35-3AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-50-1 through 50-4
AmendedAccounting Standards Update No. 2025-1112/08/2025
805-30-50-1AmendedAccounting Standards Update No. 2024-0311/04/2024
805-30-50-4AmendedAccounting Standards Update No. 2021-0303/30/2021
805-30-50-4AmendedAccounting Standards Update No. 2019-0605/30/2019
805-30-50-4AmendedAccounting Standards Update No. 2011-0405/12/2011
805-30-55-2AmendedAccounting Standards Update No. 2011-0405/12/2011
805-30-55-6 through 55-13
AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-55-9AAddedAccounting Standards Update No. 2018-0706/20/2018
805-30-55-11AmendedAccounting Standards Update No. 2016-0903/30/2016
805-30-55-17 through 55-24
AmendedAccounting Standards Update No. 2018-0706/20/2018
805-30-55-25 through 55-35
AddedAccounting Standards Update No. 2018-0706/20/2018
Source downloaded (UTC): 2026-09-10T01:24:02.525Z to 2026-09-10T01:24:02.525Z Record version: sha256:332ff0a3b46b1931f27d5c769ee2f52af12938dcdd14bcf6fe8ca3aab300c85a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/30/#05-overview-and-background) SEC content: no ##### [805-30-05-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:02.525Z to 2026-09-10T01:24:02.525Z Record version: sha256:7f04adbdb92f69bf3545ff02e11b0bcc342228cd2d1bea2c4044a93f7ca8c90c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on one aspect of the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4))—the recognition and measurement of either [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.") or a gain from a bargain purchase. ##### [805-30-05-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:02.525Z to 2026-09-10T01:24:02.525Z Record version: sha256:c326601f7c6db26800e6b355c98a40a0c0e4715b8293f0d32a63fe0327a04836 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remaining aspects of the acquisition method are addressed in Subtopics 805-10 and 805-20. Subtopic 805-20 addresses the recognition and measurement of identifiable assets acquired, 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."). Subtopic 805-10 addresses all of the following: 1. a Identification of 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 Determination of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 3. c Particular types of [business combinations](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.") 4. d Measurement period 5. e Determination of what is part of a business combination. Source downloaded (UTC): 2026-09-10T01:24:04.452Z to 2026-09-10T01:24:04.452Z Record version: sha256:3282088593b0878ccf5ebe02a81479d3fad42b5658523cb17a7a04eb510e5dbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-30-15-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:04.452Z to 2026-09-10T01:24:04.452Z Record version: sha256:c0ee2b0791012c3d5530e66905fb0e26a816e2908b5b6591325b9fa078299451 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 805-10-15, with specific exceptions noted below. #### Entities ##### [805-30-15-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:04.452Z to 2026-09-10T01:24:04.452Z Record version: sha256:06fdda3ef441f480ce5c4167c00fa6fe0491e545286d1b94f3c19a7ad941165e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to [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). NFPs apply the guidance in Subtopic 958-805 for measuring goodwill acquired, a contribution received, and consideration transferred. Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:9fc0ee0bd8ed6d1af3b75c267a07a86700370abf044f3d1e2909337eaa988a87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/30/#25-recognition) SEC content: no #### Goodwill Recognition ##### [805-30-25-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:2f86d17edfacf8fcd18b82305459d8670aeca7fb568a8e7d1ac9afd48efbbe5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall recognize [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.") as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."), measured as described in paragraph [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1). #### Gain from Bargain Purchase ##### [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:4e66e352efd3c8d573d70ec1b919bcd9b78dd677f8b74dd67bd5ae328c918180 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Occasionally, an acquirer will make a bargain purchase, which is 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.") in which the amount in paragraph [805-30-30-1(b)](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) exceeds the aggregate of the amounts specified in (a) in that paragraph. If that excess remains after applying the requirements in paragraph [805-30-25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-4), the acquirer shall recognize the resulting gain in earnings on the acquisition date. The gain shall be attributed to the acquirer. Example 1 (see paragraph [805-30-55-14](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-14)) provides an illustration of this guidance. ##### [805-30-25-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:3dfa670cd1bb237c33bc120847b54f048c73f94e18062c4058c7cb0f9d710329 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A bargain purchase might happen, for example, in a business combination that is a forced sale in which the seller is acting under compulsion. However, the recognition or measurement exceptions for particular items identified in paragraphs [805-20-25-16](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-16), and [805-20-30-10](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-10) also may result in recognizing a gain (or change the amount of a recognized gain) on a bargain purchase. ##### [805-30-25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:fbfce1032993c2936d9d3fff806dd001fbd289266917fc8452722d9599d028c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Before recognizing a gain on a bargain purchase, the acquirer shall reassess whether it has correctly identified all of the assets acquired and all of the liabilities assumed and shall recognize any additional assets or liabilities that are identified in that review. See paragraphs [805-30-30-4 through 30-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-4) for guidance on the review of measurement procedures in connection with a reassessment required by this paragraph. #### Contingent Consideration ##### [805-30-25-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:d6cf1625d97c4e90f6edbf810a56c202eefc7323926ef874fcfe6be340d53b61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consideration the acquirer transfers in exchange for 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.") includes any asset or liability resulting from 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.") arrangement. The acquirer shall recognize the acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of contingent consideration as part of the consideration transferred in exchange for the acquiree. ##### [805-30-25-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:39422ef18007a1d6f73026ed69c8cef07182ce36d4dee00fc5af4c94584e91c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall classify an obligation to pay contingent consideration as a liability or as equity in accordance with Subtopics 480-10 and 815-40 or other applicable generally accepted accounting principles (GAAP). For example, Subtopic 480-10 provides guidance on whether to classify as a liability a contingent consideration arrangement that is, in substance, a put option written by the acquirer on the market price of the acquirer's shares issued in the business combination. ##### [805-30-25-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:11.890Z to 2026-09-10T01:24:11.890Z Record version: sha256:da44d0a2293a5b46d4a898b482465040d5a48da82bbf9773462e49cc42000234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall classify as an asset a right to the return of previously transferred consideration if specified conditions are met. Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:4b1836fcdf71b19d80a5e52443b07b8c6d5f0528b80b4a621db5a6d6cab48c79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/30/#30-initial-measurement) SEC content: no #### Measurement of Goodwill ##### [805-30-30-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:79cebd0e988d178a2e551123462a2956f2a29dd02e985878ffae9d5219ff68f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall recognize [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.") as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."), measured as the excess of (a) over (b): 1. a The aggregate of the following: 1. 1 The consideration transferred measured in accordance with this Section, which generally requires acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") (see paragraph [805-30-30-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-7)) 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 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.") achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest 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 this Topic. ##### [805-30-30-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:348508b473700949993f390de47fbf15ccad0e6d5fad674384e9453c164fdba4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination in which the acquirer and the acquiree (or its former owners) exchange only equity interests, the acquisition-date fair value of the acquiree's equity interests may be more reliably measurable than the acquisition-date fair value of the acquirer's equity interests. If so, the acquirer shall determine the amount of goodwill by using the acquisition-date fair value of the acquiree's equity interests instead of the acquisition-date fair value of the equity interests transferred. ##### [805-30-30-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:5c8cae8d17aff1daf048471d3a053613115a8535ffd12fba2790d1e57ac88aa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To determine the amount of goodwill in a business combination in which no consideration is transferred, the acquirer shall use the acquisition-date fair value of the acquirer's interest in the acquiree determined using a valuation technique in place of the acquisition-date fair value of the consideration transferred (see paragraph [805-30-30-1(a)(1)](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1)). Paragraphs [805-30-55-3 through 55-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-3) provide additional guidance on applying the acquisition method to combinations of [mutual entities](https://asc.understandingaccounting.org/glossary/m/#mutual-entity "An entity other than an investor-owned entity that provides dividends, lower costs, or other economic benefits directly and proportionately to its owners, members, or participants. Mutual insurance entities, credit unions, and farm and rural electric cooperatives are examples of mutual entities."), including measuring the acquisition-date fair value of the acquiree's equity interests using a valuation technique. #### Required Reassessment of Measurement Procedures in a Bargain Purchase ##### [805-30-30-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:8ba8637f2b2dc927793b9f7bbabc10ccde3b0bcec286590b4b77b63b1bbdb21f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As explained in paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2), an acquirer will occasionally make a bargain purchase, which is a business combination in which the amount in paragraph [805-30-30-1(b)](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) exceeds the aggregate of the amounts specified in (a) in that paragraph. ##### [805-30-30-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:4b0666ed459d95db0be9962268464d2ea861c450117a442ddaaf3173ba9c2cb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-30-25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-4) requires the acquirer to reassess whether it has correctly identified all of the assets acquired and all of the liabilities assumed before recognizing a gain on a bargain purchase. As part of that required reassessment, the acquirer shall then review the procedures used to measure the amounts this Topic requires to be recognized at the acquisition date for all of the following: 1. a The identifiable assets acquired and liabilities assumed 2. b The noncontrolling interest in the acquiree, if any 3. c For a business combination achieved in stages, the acquirer's previously held equity interest in the acquiree 4. d The consideration transferred. ##### [805-30-30-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:fc18d7f2e41116250383c38686f931ed0156fded5c40dcacbd5b2af438a568e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the review is to ensure that the measurements appropriately reflect consideration of all available information as of the acquisition date. #### Consideration Transferred ##### [805-30-30-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:ca35c14c8139a2e198e274352a43773a292d1d6c461dfa32555713d02bb1bc7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consideration transferred in a business combination 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, the liabilities incurred by the acquirer to former owners of the acquiree, and the equity interests issued by the acquirer. (However, any portion of the acquirer's share-based payment awards exchanged for awards held by the acquiree's grantees that is included in consideration transferred in the business combination shall be measured in accordance with paragraph [805-20-30-21](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-21) rather than at fair value.) Examples of potential forms of consideration include the following: 1. a Cash 2. b Other assets 3. c 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 subsidiary of the acquirer 4. d [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.") (see paragraphs [805-30-25-5 through 25-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-5) ) 5. e Common or preferred equity instruments 6. f Options 7. g Warrants 8. h Member interests of mutual entities. ##### [805-30-30-8](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:8d699eec92d27f6e0e6c7548dba9d0dfe0c44568d3396123d8a1bfb7c6436958 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consideration transferred may include assets or liabilities of the 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 acquirer shall remeasure the transferred assets or liabilities to their fair values as of the acquisition date and recognize the resulting gains or losses, if any, in earnings. However, sometimes the transferred assets or liabilities remain within the combined entity after the business combination (for example, because the assets or liabilities were transferred to the acquiree rather than to its former owners), and the acquirer therefore retains control of them. In that situation, the acquirer shall measure those assets and liabilities at their carrying amounts immediately before the acquisition date and shall not recognize a gain or loss in earnings on assets or liabilities it controls both before and after the business combination. ##### [805-30-30-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:8c298482b13628aca31a08d05a5c55bf7949529e0fa1b9ed1a593e3cd02f1842 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquirer may exchange its share-based payment awards for awards held by grantees of the acquiree. This Topic refers to such awards as replacement awards. Exchanges of share options or other share-based payment awards in conjunction with a business combination are modifications of share-based payment awards in accordance with Topic 718. If the acquirer is obligated to replace the acquiree awards, either all or a portion of the fair-value-based measure of the acquirer's replacement awards shall be included in measuring the consideration transferred in the business combination. The acquirer is obligated to replace the acquiree awards if the acquiree or its grantees have the ability to enforce replacement. For example, for purposes of applying this requirement, the acquirer is obligated to replace the acquiree's awards if replacement is required by any of the following: 1. a The terms of the acquisition agreement 2. b The terms of the acquiree's awards 3. c Applicable laws or regulations. ##### [805-30-30-10](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:41f431f443439171051137865541e9089cc2e107b4825e51bdabd9dac66b89cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In situations in which acquiree awards would expire as a consequence of a business combination and the acquirer replaces those awards even though it is not obligated to do so, all of the fair-value-based measure of the replacement awards shall be recognized as compensation cost in the postcombination financial statements. That is, none of the fair-value-based measure of those awards shall be included in measuring the consideration transferred in the business combination. ##### [805-30-30-11](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:9ea476e415853c261203a0d6c59386eb09cdfd58298f000f65bc08e61bcc76e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To determine the portion of a replacement award that is part of the consideration transferred for the acquiree, the acquirer shall measure both the replacement awards granted by the acquirer and the acquiree awards as of the acquisition date in accordance with Topic 718. The portion of the fair-value-based measure of the replacement award that is part of the consideration transferred in exchange for the acquiree equals the portion of the acquiree award that is attributable to precombination vesting. ##### [805-30-30-12](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:24e35af0d124e2122301a01372236dd0f0b480df63b09b686e2fdaac5d4830e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall attribute a portion of a replacement award to postcombination vesting if it requires postcombination vesting, regardless of whether grantees had rendered all of the service or delivered all of the goods required in exchange for their acquiree awards before the acquisition date. The portion of a nonvested replacement award attributable to postcombination vesting equals the total fair-value-based measure of the replacement award less the amount attributed to precombination vesting. Therefore, the acquirer shall attribute any excess of the fair-value-based measure of the replacement award over the fair value of the acquiree award to postcombination vesting. ##### [805-30-30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:15.431Z to 2026-09-10T01:24:15.431Z Record version: sha256:769d95f811cc13d99b0b207c8fdad9d238b7fc3d35e99a0b4547da6a21ae4d17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-30-55-6 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) , [805-740-25-10 through 25-11](https://asc.understandingaccounting.org/asc/740/805/#740-805-25-10) , [805-740-45-5 through 45-6](https://asc.understandingaccounting.org/asc/740/805/#740-805-45-5) , and Example 2 (see paragraph [805-30-55-17](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-17)) provide additional guidance and illustrations on distinguishing between the portion of a replacement award that is attributable to precombination vesting, which the acquirer includes in the consideration transferred in the business combination, and the portion that is attributed to postcombination vesting, which the acquirer recognizes as compensation cost in its postcombination financial statements. Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:f9f6e69ae8050ada3d69d2f52b69421c934e789ed3e658dec7cc34c748c5f798 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/30/#35-subsequent-measurement) SEC content: no #### Contingent Consideration ##### [805-30-35-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:3e09da7eea1c2696d8a406f16bf0f6f0641faeed0c5307b0956562cae9e0da0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some changes in the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of [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.") that 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.") 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. However, changes resulting from events after the acquisition date, such as meeting an earnings target, reaching a specified share price, or reaching a milestone on a research and development project, are not measurement period adjustments. The acquirer shall account for changes in the fair value of contingent consideration that are not measurement period adjustments as follows: 1. a Contingent consideration classified as equity shall not be remeasured and its subsequent settlement shall be accounted for within equity. 2. b Contingent consideration classified as an asset or a liability shall be remeasured to fair value at each reporting date until the contingency is resolved. The changes in fair value shall be recognized in earnings unless the arrangement is a hedging instrument for which Topic 815 requires the changes to be initially recognized in other comprehensive income. ##### [805-30-35-1A](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:5ffc176aa0f59c615c1cc81c529b3950b0f575894e18d0c1ab6a1c78757d55e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination shall be measured subsequently in accordance with the guidance for contingent consideration arrangements in the preceding paragraph. #### Goodwill ##### [805-30-35-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:d2c51b2908ca7e0c5655ace58e7ac01d2383c465064d2e0d5bf448b711e80285 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The subsequent measurement of [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.") is addressed in Subtopic 350-20. #### Replacement Share-Based Payment Awards ##### [805-30-35-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:17.606Z to 2026-09-10T01:24:17.606Z Record version: sha256:1f515205f54ed60c421cefe2e531b18da6874ea9704092dd9ab8c51b8d0480ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 718 provides guidance on subsequent measurement and accounting for the portion of replacement share-based payment awards issued by an acquirer that is attributable to future goods or services. Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:439146d75e219609567c089f05538ef4ea2825ead65778b5c56bf4964c684ec0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/30/#50-disclosure) SEC content: no #### Business Combinations Occurring during a Current Reporting Period or after the Reporting Date but before the Financial Statements Are Issued ##### [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:29b5825351fca9a20e3d2cfcf037666263850b9c7ce2b6efbb37337406e08426 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) identifies one of the objectives of disclosures about 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."). To meet that objective, 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.") shall disclose all of the following information for each business combination that occurs during the reporting period: 1. a A qualitative description of the factors that make up 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, such as expected synergies from combining operations 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.") and the acquirer, intangible assets that do not qualify for separate recognition, or other factors. 2. b The acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the total consideration transferred and the acquisition-date fair value of each major class of consideration, such as the following: 1. 1 Cash 2. 2 Other tangible or intangible assets, including 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 subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability 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.") 4. 4 Equity interests of the acquirer, including the number of instruments or interests issued or issuable and the method of determining the fair value of those instruments or interests. 3. c For contingent consideration arrangements, all of the following: 1. 1 The amount recognized as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 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 acquirer is required to disclose segment information in accordance with Subtopic 280-10, the amount of goodwill by reportable segment. If the assignment of goodwill to reporting units required by paragraphs [350-20-35-41 through 35-44](https://asc.understandingaccounting.org/asc/350/20/#350-20-35-41) has not been completed as of the date the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose that fact. 6. f In a bargain purchase (see paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) ), both of the following: 1. 1 The amount of any gain recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) and the line item in the income statement in which the gain is recognized 2. 2 A description of the reasons why the transaction resulted in a gain. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) identifies one of the objectives of disclosures about 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."). To meet that objective, 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.") shall disclose all of the following information for each business combination that occurs during the reporting period: 1. a A qualitative description of the factors that make up 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, such as expected synergies from combining operations 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.") and the acquirer, intangible assets that do not qualify for separate recognition, or other factors. 2. b The acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the total consideration transferred and the acquisition-date fair value of each major class of consideration, such as the following: 1. 1 Cash 2. 2 Other tangible or intangible assets, including 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 subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability 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.") 4. 4 Equity interests of the acquirer, including the number of instruments or interests issued or issuable and the method of determining the fair value of those instruments or interests. 3. c For contingent consideration arrangements, all of the following: 1. 1 The amount recognized as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 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 acquirer is required to disclose segment information in accordance with Subtopic 280-10, the amount of goodwill by reportable segment. If the assignment of goodwill to reporting units required by paragraphs [350-20-35-41 through 35-44](https://asc.understandingaccounting.org/asc/350/20/#350-20-35-41) has not been completed as of the date the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose that fact. 6. f In a bargain purchase (see paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) ), both of the following: 1. 1 The amount of any gain recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) and the line item in the income statement in which the gain is recognized 2. 2 A description of the reasons why the transaction resulted in a gain. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. 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)Paragraph [805-10-50-1](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-1) identifies one of the objectives of disclosures about 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."). To meet that objective, 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.") shall disclose in interim and annual reporting periods all of the following information for each business combination that occurs during the reporting period: 1. a A qualitative description of the factors that make up 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, such as expected synergies from combining operations 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.") and the acquirer, intangible assets that do not qualify for separate recognition, or other factors. 2. b The acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the total consideration transferred and the acquisition-date fair value of each major class of consideration, such as the following: 1. 1 Cash 2. 2 Other tangible or intangible assets, including 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 subsidiary of the acquirer 3. 3 Liabilities incurred, for example, a liability 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.") 4. 4 Equity interests of the acquirer, including the number of instruments or interests issued or issuable and the method of determining the fair value of those instruments or interests. 3. c For contingent consideration arrangements, all of the following: 1. 1 The amount recognized as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") 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 acquirer is required to disclose segment information in accordance with Subtopic 280-10, the amount of goodwill by reportable segment. If the assignment of goodwill to reporting units required by paragraphs [350-20-35-41 through 35-44](https://asc.understandingaccounting.org/asc/350/20/#350-20-35-41) has not been completed as of the date the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose that fact. 6. f In a bargain purchase (see paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) ), both of the following: 1. 1 The amount of any gain recognized in accordance with paragraph [805-30-25-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) and the line item in the income statement in which the gain is recognized 2. 2 A description of the reasons why the transaction resulted in a gain. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ##### [805-30-50-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:2884958ee6ca23454237c8f62ca0e3096b852d1b084c092f41e52e8c9554999e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For individually immaterial business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by paragraph [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) 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 business combinations occurring during the reporting period that are material collectively, the acquirer shall disclose the information required by paragraph [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) in the aggregate in interim and annual reporting periods. ##### [805-30-50-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:146ecfbbd2b9f93641c8c470af9707b03411492e294ae8f0761b5450fa6c1879 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1) unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. 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 acquisition date of a business combination is after the reporting date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), the acquirer shall disclose the information required by paragraph [805-30-50-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-1)in interim and annual reporting periods unless the initial accounting for the business combination is incomplete at the time the financial statements are issued or are available to be issued. In that situation, the acquirer shall describe which disclosures could not be made and the reason why they could not be made. #### The Financial Effects of Adjustments That Relate to Business Combinations That Occurred in the Current or Previous Reporting Periods ##### [805-30-50-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:24:21.604Z to 2026-09-10T01:24:21.604Z Record version: sha256:ab8f96aeb31877845c44b0f9971b02dfb5b0345c8f3f9ad2418a16b8bcc18496 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) identifies the second objective of disclosures about the effects of business combinations that occurred in the current or previous reporting periods. To meet the objective in that paragraph, the acquirer shall disclose the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively: 1. a For each reporting period after the acquisition date until the entity collects, sells, or otherwise loses the right to a contingent consideration asset, or until the entity settles a contingent consideration liability or the liability is cancelled or expires, all of the following: 1. 1 Any changes in the recognized amounts, including any differences arising upon settlement 2. 2 Any changes in the range of outcomes (undiscounted) and the reasons for those changes 3. 3 The disclosures required by Section 820-10-50. 2. b 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). A [private company](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") or [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.") that adopts the accounting alternative for amortizing goodwill in Subtopic 350-20 is not required to disclose the reconciliation. 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)Paragraph [805-10-50-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-50-5) identifies the second objective of disclosures about the effects of business combinations that occurred in the current or previous reporting periods. To meet the objective in that paragraph, the acquirer shall disclose in interim and annual reporting periods the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively: 1. a For each reporting period after the acquisition date until the entity collects, sells, or otherwise loses the right to a contingent consideration asset, or until the entity settles a contingent consideration liability or the liability is cancelled or expires, all of the following: 1. 1 Any changes in the recognized amounts, including any differences arising upon settlement 2. 2 Any changes in the range of outcomes (undiscounted) and the reasons for those changes 3. 3 The disclosures required by Section 820-10-50. 2. b 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). A [private company](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") or [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.") that adopts the accounting alternative for amortizing goodwill in Subtopic 350-20 is not required to disclose the reconciliation. Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:fc3fd9ef5353bf31ddb7c252eb389a47e7e9895fcad5aafa2b4eb20606717018 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/30/#55-implementation-guidance-and-illustrations) SEC content: no ##### [805-30-55-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:68e508b528cd39250a636e61384de32871c894ba7be3d50a515517140c4afebd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides additional guidance and illustrations that address the application of accounting requirements for [business combinations](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.") to [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.") or gain from bargain purchase including consideration transferred. #### Implementation Guidance ##### [805-30-55-2](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:81242d80434c2bdf9c0d133e76bf8070247302663139285e04043af961bdaa73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a business combination achieved without the transfer of consideration, 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.") must substitute the acquisition-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of its 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.") for the acquisition-date fair value of the consideration transferred to measure goodwill or a gain on a bargain purchase (see paragraphs [805-30-30-1 through 30-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-1) ). Subtopic 820-10 provides guidance on using valuation techniques to measure fair value. ##### [805-30-55-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:bb8b4c780823786ac519ee31ee227fa8e1f87fbb109c03c353067fcb43a10839 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When two mutual entities combine, the fair value of the equity or member interests in the acquiree (or the fair value of the acquiree) may be more reliably measurable than the fair value of the member interests transferred by the acquirer. In that situation, paragraph [805-30-30-2 through 30-3](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-2) requires the acquirer to determine the amount of goodwill by using the acquisition-date fair value of the acquiree's equity interests instead of the acquisition-date fair value of the acquirer's equity interests transferred as consideration. In addition, the acquirer in a combination of [mutual entities](https://asc.understandingaccounting.org/glossary/m/#mutual-entity "An entity other than an investor-owned entity that provides dividends, lower costs, or other economic benefits directly and proportionately to its owners, members, or participants. Mutual insurance entities, credit unions, and farm and rural electric cooperatives are examples of mutual entities.") shall recognize the acquiree's net assets as a direct addition to capital or equity in its statement of financial position, not as an addition to retained earnings, which is consistent with the way in which other types of entities apply the acquisition method. ##### [805-30-55-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:527df5e2716b99c9a17e37d4072767fa709bcc190894262a2bcac27166471784 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although they are similar in many ways to other businesses, mutual entities have distinct characteristics that arise primarily because their members are both customers and owners. Members of mutual entities generally expect to receive benefits for their membership, often in the form of reduced fees charged for goods and services or patronage dividends. The portion of patronage dividends allocated to each member is often based on the amount of business the member did with the mutual entity during the year. ##### [805-30-55-5](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:e1816d75522220dd0701f7a15ec9bd89d0985488f817df9624f7a7e5b0f828f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A fair value measurement of a mutual entity should include the assumptions that market participants would make about future member benefits as well as any other relevant assumptions market participants would make about the mutual entity. For example, an estimated cash flow model may be used to determine the fair value of a mutual entity. The cash flows used as inputs to the model should be based on the expected cash flows of the mutual entity, which are likely to reflect reductions for member benefits, such as reduced fees charged for goods and services. ##### [805-30-55-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:2396be81d5a4431ed2ac6235c0a7e263c2c8d9283d3449d015b4c02104b2ba8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the acquirer is obligated to replace the acquiree's share-based payment awards, paragraph [805-30-30-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) requires the acquirer to include either all or a portion of the fair-value-based measure of the replacement awards in the consideration transferred in the business combination. Paragraphs [805-30-55-7 through 55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-7) , [805-740-25-10 through 25-11](https://asc.understandingaccounting.org/asc/740/805/#740-805-25-10) , [805-740-45-5 through 45-6](https://asc.understandingaccounting.org/asc/740/805/#740-805-45-5) , and Example 2 (see paragraph [805-30-55-17](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-17)) provide additional guidance on and illustrate how to determine the portion of an award to include in consideration transferred in a business combination and the portion to recognize as compensation cost in the acquirer's postcombination financial statements. ##### [805-30-55-7](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:e1f49375e397805e33c5c383f91319ff39f70bc46030c4feb5703655fb27ba4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To determine the portion of a replacement award that is part of the consideration exchanged for the acquiree and the portion that is compensation for postcombination vesting, the acquirer first measures both the replacement awards and the acquiree awards as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") in accordance with the requirements of Topic 718. In most situations, those requirements result in use of the fair-value-based measurement method, but that Topic permits use of the calculated value method or the intrinsic value method in specified circumstances. This discussion focuses on the fair-value-based method, but the guidance in paragraphs [805-30-30-9 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) and the additional guidance cited in the preceding paragraph also apply in situations in which Topic 718 permits use of either the calculated value method or the intrinsic value method for both the acquiree awards and the replacement awards. ##### [805-30-55-8](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:f68dce0ae340a15ee53fe4a08724b55063f3153d80a35716e13212297e7b2efa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of an employee replacement award attributable to precombination vesting is the fair-value-based measure of the acquiree award multiplied by the ratio of the precombination employee's service period to the greater of the total service period or the original service period of the acquiree award. (Example 2, Cases C and D \[see paragraphs [805-30-55-21 through 55-24](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-21) \] illustrate that calculation.) The total service period is the sum of the following amounts: 1. a The part of the employee's [requisite service period](https://asc.understandingaccounting.org/glossary/r/#requisite-service-period "The period or periods during which an employee is required to provide service in exchange for an award under a share-based payment arrangement. The service that an employee is required to render during that period is referred to as the requisite service. The requisite service period for an award that has only a service condition is presumed to be the vesting period, unless there is clear evidence to the contrary. If an award requires future service for vesting, the entity cannot define a prior period as the requisite service period. Requisite service periods may be explicit, implicit, or derived, depending on the terms of the share-based payment award.") for the acquiree award that was completed before the acquisition date 2. b The postcombination employee's requisite service period, if any, for the replacement award. ##### [805-30-55-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:1b4b4438c5ceff72043329430a52721b55712a54d2bc815e52d807a88a208e56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The employee's requisite service period includes explicit, implicit, and derived service periods during which employees are required to provide service in exchange for the award (consistent with the requirements of Topic 718). ##### [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:39220a403a2e29aa4341850132e74bf9cbc98ca2329b98407f973d9905dac9a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of a nonemployee replacement award attributable to precombination vesting is based on the fair-value-based measure of the acquiree award multiplied by the percentage that would have been recognized had the grantor paid cash for the goods or services instead of paying with a nonemployee award. For this calculation, the percentage that would have been recognized is the lower of: 1. a The percentage that would have been recognized calculated on the basis of the original vesting requirements of the nonemployee award 2. b The percentage that would have been recognized calculated on the basis of the effective vesting requirements. Effective vesting requirements are equal to the services or goods provided before the acquisition date plus any additional postcombination services or goods required by the replacement award. ##### [805-30-55-10](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:f8c9ef738447e219d6396fb4e8e4a81b70183caf91e86b7aa192593dead34eea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of a nonvested replacement award (for employee and nonemployee) attributable to postcombination vesting, and therefore recognized as compensation cost in the postcombination financial statements, equals the total fair-value-based measure of the replacement award less the amount attributed to precombination vesting. Therefore, the acquirer attributes any excess of the fair-value-based measure of the replacement award over the fair value of the acquiree award to postcombination vesting and recognizes that excess as compensation cost in the postcombination financial statements. ##### [805-30-55-11](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:8a71a21bd926dc2ff9fe65b44f01bdb996e9c3021c222722b477a1c111df3c8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of the accounting policy elected in accordance with paragraph [718-10-35-1D](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-1D) or [718-10-35-3](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-3), the portion of a nonvested replacement award included in consideration transferred shall reflect the acquirer's estimate of the number of replacement awards for which the service is expected to be rendered or the goods are expected to be delivered (that is, an acquirer that has elected an accounting policy to recognize forfeitures as they occur in accordance with paragraph [718-10-35-1D](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-1D) or [718-10-35-3](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-3) should estimate the number of replacement awards for which the service is expected to be rendered or the goods are expected to be delivered when determining the portion of a nonvested replacement award included in consideration transferred). For example, if the fair-value-based measure of the portion of a replacement award attributed to precombination vesting is $100 and the acquirer expects that the service will be rendered for only 95 percent of the instruments awarded, the amount included in consideration transferred in the business combination is $95. Changes in the number of replacement awards for which the service is expected to be rendered or the goods are expected to be delivered are reflected in compensation cost for the periods in which the changes or forfeitures occur—not as adjustments to the consideration transferred in the business combination. If an acquirer's accounting policy is to account for forfeitures as they occur, the amount excluded from consideration transferred (because the service is not expected to be rendered or the goods are not expected to be delivered) should be attributed to the postcombination vesting and recognized in compensation cost over the employee's requisite service period or the nonemployee's vesting period. Recognition of compensation cost for nonemployees should consider the recognition guidance provided in paragraph [718-10-25-2C](https://asc.understandingaccounting.org/asc/718/10/#718-10-25-2C). That is, recognition of the fair value of the nonemployee share-based payment award should be recognized in the same manner as if the grantor had paid cash for the goods or services instead of paying with or using the share-based payment awards. ##### [805-30-55-12](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:5e5255c3cde0b37854bbd11fcbca6af2376d9a882792fbf9be18cbd71a0b0597 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, the effects of other events, such as modifications or the ultimate outcome of awards with performance conditions, that occur after the acquisition date are accounted for in accordance with Topic 718 in determining compensation cost for the period in which an event occurs. If the replacement award for an employee award has a graded vesting schedule, the acquirer shall recognize the related compensation cost in accordance with its policy election for other awards with graded vesting in accordance with paragraph [718-10-35-8](https://asc.understandingaccounting.org/asc/718/10/#718-10-35-8). ##### [805-30-55-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:64f249688932a8f6bd17c19f9c70f44df06a2bb6d449bf32a72fd81eb746294a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The same requirements for determining the portions of a replacement award attributable to precombination and postcombination vesting apply regardless of whether a replacement award is classified as a liability or an equity instrument in accordance with the provisions of paragraphs [718-10-25-6 through 25-19A](https://asc.understandingaccounting.org/asc/718/10/#718-10-25-6). All changes in the fair-value-based measure of awards classified as liabilities after the acquisition date and the related income tax effects are recognized in the acquirer's postcombination financial statements in the period(s) in which the changes occur. #### Illustrations ##### [805-30-55-14](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:7d9fdff0ee003c021bf9d134f3bbea4accebb3cafdbc9e8c50fb677df794108a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) establish the required accounting for a bargain purchase. This Example provides additional guidance on bargain purchases and illustrates its application. ##### [805-30-55-15](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:b10159d018e7ee167704080ea0e37d7ad34a5bc91d355d6f07b1d76c243d9a71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 1, 20X5, the acquiring entity, or Acquirer, acquires 80 percent of the equity interests of the acquiree, or Target, a private entity, in exchange for cash of $150. Because the former owners of Target needed to dispose of their investments in Target by a specified date, they did not have sufficient time to market Target to multiple potential buyers. The management of Acquirer initially measures the separately recognizable identifiable assets acquired and the liabilities assumed as of the acquisition date in accordance with the requirements of the Business Combinations Topic. The identifiable assets are measured at $250, and the liabilities assumed are measured at $50. Acquirer engages an independent consultant who determines that the fair value of the 20 percent [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 Target is $42. The amount of Target's identifiable net assets ($200, calculated as $250 - $50) exceeds the fair value of the consideration transferred plus the fair value of the noncontrolling interest in Target. Therefore, Acquirer reviews the procedures it used to identify and measure the assets acquired and liabilities assumed and to measure the fair value of both the noncontrolling interest in Target and the consideration transferred. After that review, Acquirer decides that the procedures and resulting measures were appropriate. Acquirer measures the gain on its purchase of the 80 percent interest as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-78B784B0-B32E-4F15-AB32-9166A65A0984-low.gif) $ Identifiable net assets acquired ($250 - $50) 200 Less: Fair value of the consideration transferred for Acquirer's 80 percent interest in Target; plus 150 Fair value of noncontrolling interest in Target 42 192 Gain on bargain purchase of 80 percent interest 8 ##### [805-30-55-16](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:27698e624b319a3c5a32f2b3629c743c2b052e4106bbb3fd1620c63622056a38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer would record its acquisition of Target in its consolidated financial statements as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-ACEBDFDE-5D3D-46EB-854C-B950BA3A5B35-low.gif) Identifiable assets acquired $250 Cash $150 Liabilities assumed 50 Gain on the bargain purchase 8 Equity-noncontrolling interest in Target 42 ##### [805-30-55-17](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:156c19052bdb292f96b5b264b2859476924dbf5c98bbc89a71034367685c7fee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the guidance referred to in paragraph [805-30-55-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) for replacement awards that the acquirer was obligated to issue. The Cases assume that all awards are classified as equity and that the awards have only an explicit service period. As discussed in paragraphs [805-30-55-8 through 55-9](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-8) , the acquirer also must take any implicit or derived employee's service periods into account in determining the employee's requisite service period for a replacement award. In these Cases, the acquiring entity is referred to as Acquirer and the acquiree is referred to as Target: 1. a Awards that require no postcombination vesting that are exchanged for acquiree awards for which employees: 1. 1 Have rendered the required service as of the acquisition date (Case A) 2. 2 Have not rendered all of the required service as of the acquisition date (Case D). 2. b Awards that require postcombination vesting that are exchanged for acquiree awards for which employees: 1. 1 Have rendered the required service as of the acquisition date (Case B) 2. 2 Have not rendered all of the required service as of the acquisition date (Case C). ##### [805-30-55-18](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:2d4190e2ee669fe93cbe9330815b1aabba731ffe360a8a62348729b5698c734b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer issues replacement awards of $110 (fair-value-based measure) at the acquisition date for Target awards of $100 (fair-value-based measure) at the acquisition date. No postcombination vesting is required for the replacement awards, and Target's employees had rendered all of the required service for the acquiree awards as of the acquisition date. ##### [805-30-55-19](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:968716e6daa7bfe6d6f0d898d24b216e8326b7001b159d118589d7c96340e36b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount attributable to precombination vesting is the fair-value-based measure of Target's awards ($100) at the acquisition date; that amount is included in the consideration transferred in the business combination. The amount attributable to postcombination vesting is $10, which is the difference between the total value of the replacement awards ($110) and the portion attributable to precombination vesting ($100). Because no postcombination vesting is required for the replacement awards, Acquirer immediately recognizes $10 as compensation cost in its postcombination financial statements. ##### [805-30-55-20](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:25b239710f5d866d5eb886586d1804282bae3bfd1de025778bc2ec8a88e5de1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require one year of postcombination vesting for share-based payment awards of Target for which employees had completed the requisite service period before the business combination. The fair-value-based measure of both awards is $100 at the acquisition date. When originally granted, Target's awards had a requisite service period of four years. As of the acquisition date, the Target employees holding unexercised awards had rendered a total of seven years of service since the grant date. Even though Target employees had already rendered all of the requisite service, Acquirer attributes a portion of the replacement award to postcombination compensation cost in accordance with paragraphs [805-30-30-12 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-12) because the replacement awards require one year of postcombination vesting. The total service period is five years—the requisite service period for the original acquiree award completed before the acquisition date (four years) plus the requisite service period for the replacement award (one year). The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the ratio of the precombination vesting period (4 years) to the total vesting period (5 years). Thus, $80 ($100 × 4 ÷ 5 years) is attributed to the precombination vesting period and therefore included in the consideration transferred in the business combination. The remaining $20 is attributed to the postcombination vesting period and therefore is recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-21](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:a7c8ee4a68d256929a9e877f6486cf90079991b78b95017bb48dc69bb2b0a025 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require one year of postcombination vesting for share-based payment awards of Target for which employees had not yet rendered all of the required services as of the acquisition date. The fair-value-based measure of both awards is $100 at the acquisition date. When originally granted, the awards of Target had a requisite service period of four years. As of the acquisition date, the Target employees had rendered two years' service, and they would have been required to render two additional years of service after the acquisition date for their awards to vest. Accordingly, only a portion of Target's awards is attributable to precombination vesting. ##### [805-30-55-22](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:263da4c36f5bb1447f2bd9b3537788bd434700722fc0f60b3b556c4fce74e0bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The replacement awards require only one year of postcombination vesting. Because employees have already rendered two years of service, the total requisite service period is three years. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the ratio of the precombination vesting period (2 years) to the greater of the total service period (3 years) or the original service period of Target's award (4 years). Thus, $50 ($100 x 2 ÷ 4 years) is attributable to precombination vesting and therefore included in the consideration transferred for the acquiree. The remaining $50 is attributable to postcombination vesting and therefore recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-23](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:a71aa7c72669828666f716f6fcbe3dd01cb0febde2c0ea8d406d4a1a0c4d1695 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Case C, except that Acquirer exchanges replacement awards that require no postcombination vesting for share-based payment awards of Target for which employees had not yet rendered all of the requisite service as of the acquisition date. The terms of the replaced Target awards did not eliminate any remaining requisite service period upon a change in control. (If the Target awards had included a provision that eliminated any remaining requisite service period upon a change in control, the guidance in Case A would apply.) The fair-value-based measure of both awards is $100. Because employees have already rendered two years of service and the replacement awards do not require any postcombination vesting, the total service period is two years. ##### [805-30-55-24](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:4e00497ca39eabf7b3bee442a12b501061c32023a3a7bb2fbf0d5b8c19283ce4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the fair-value-based measure of the replacement awards attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the ratio of the precombination vesting period (2 years) to the greater of the total service period (2 years) or the original service period of Target's award (4 years). Thus, $50 ($100 x 2 ÷ 4 years) is attributable to precombination vesting and therefore included in the consideration transferred for the acquiree. The remaining $50 is attributable to postcombination vesting. Because no postcombination vesting is required to vest in the replacement award, Acquirer recognizes the entire $50 immediately as compensation cost in the postcombination financial statements. ##### [805-30-55-25](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:cbe5fc59803b9d7cd9bc530b2d373019e4d8fdb91cf2daf74d32b832107757bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the guidance referred to in paragraph [805-30-55-6](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-6) for replacement awards that the acquirer was obligated to issue and the attribution guidance for a nonemployee replacement award to precombination and postcombination vesting referenced in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). ##### [805-30-55-26](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:86ffc4a72e1a897248a9e5b7f17da3e6bd3597fbf710dbae98496123dfaf080e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In these Cases, the acquiring entity is referred to as Acquirer and the acquiree is referred to as Target: 1. a Awards that require no postcombination vesting that are exchanged for acquiree awards for which grantees: 1. 1 Have met the vesting condition as of the acquisition date (Case A) 2. 2 Have not met the vesting condition as of the acquisition date (Case D). 2. b Awards that require postcombination vesting that are exchanged for acquiree awards for which grantees: 1. 1 Have met the vesting condition as of the acquisition date (Case B) 2. 2 Have not met the vesting condition as of the acquisition date (Case C). ##### [805-30-55-27](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:0dfdb2a33385282f793b27ce10011755e5c6ed95c41fb7cdcb46d986281791f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cases assume the following: 1. a All awards are classified as equity. 2. b The only vesting condition included in the awards, if any, involves the delivery of engines. 3. c Target and Acquirer typically pay cash as each engine is delivered to their suppliers. ##### [805-30-55-28](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:4a288204046384346ad62d389ac2569b8b4952b9bdf24e7a81796561e84c75c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer issues replacement awards of $110 (fair-value-based measure) at the acquisition date for Target awards of $100 (fair-value-based measure) at the acquisition date. No postcombination vesting is required for the replacement awards, and Target's grantee has delivered all the engines necessary for the acquiree awards as of the acquisition date. ##### [805-30-55-29](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:e79bdc939700f968068b55af6c7235372443386fb3692ac2507c024008ac6528 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount attributable to precombination vesting is the fair-value-based measure of Target's awards ($100) at the acquisition date; that amount is included in the consideration transferred in the business combination. The amount attributable to postcombination vesting is $10, which is the difference between the total value of the replacement awards ($110) and the portion attributable to precombination vesting ($100). Because no postcombination vesting is required for the replacement awards, Acquirer immediately recognizes $10 as compensation cost in its postcombination financial statements. ##### [805-30-55-30](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:77edb6094dde1a5669458d819b3302ca80c854b82961e6bca52e16bde6cfc79b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require the delivery of another 10 engines postcombination for share-based payment awards of Target for which the grantee had met the necessary vesting condition to deliver 40 engines before the business combination. The fair-value-based measure of both awards is $100 at the acquisition date. Even though the grantee already had met the vesting condition for the acquiree's award, Acquirer attributes a portion of the replacement award to postcombination compensation cost in accordance with paragraphs [805-30-30-12 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-12) because the replacement awards require the delivery of an additional 10 engines. ##### [805-30-55-31](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:0c39c28f533ea37a0c360e98e126028eb93549815cc94ccf28d06192e1143c5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the percentage that would have been recognized for the award. The percentage that would have been recognized is the lower of the calculation on the basis of the original vesting requirements and the percentage that would have been recognized on the basis of the effective vesting requirements as described in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). The percentage that would have been recognized on the basis of the original vesting requirements equals 100 percent, which is calculated as 40 engines delivered divided by 40 engines required to be delivered. The percentage that would have been recognized on the basis of the effective vesting requirements equals 80 percent, which is calculated as 40 engines delivered divided by 50 engines (the sum of 40 engines delivered plus 10 engines required postcombination). Thus, $80 ($100 × 80%) is attributed to the precombination vesting period and therefore is included in the consideration transferred in the business combination. The remaining $20 is attributed to the postcombination vesting period and therefore is recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-32](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:b0d9d1f83bc080df13f2417c7ea14aea7127916670039c9c86885e74674cb7fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquirer exchanges replacement awards that require the delivery of 10 engines postcombination for share-based payment awards of Target for which the grantee had not met the necessary vesting condition to deliver 40 engines before the business combination. The fair-value-based measure of both awards is $100 at the acquisition date. As of the acquisition date, Target grantee has delivered 20 engines, and Target grantee would have been required to deliver an additional 20 engines after the acquisition date for its awards to vest. Accordingly, only a portion of Target's awards is attributable to precombination vesting. ##### [805-30-55-33](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:1c45746a94d1577f8eb90e94eb769b4c8f556a1d9245067b6cead7ddac9d1007 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the percentage that would have been recognized on the award. The percentage that would have been recognized is the lower of the percentage that would have been recognized on the basis of the original vesting requirements and the percentage that would have been recognized on the basis of the effective vesting requirements as described in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). The percentage that would have been recognized on the basis of the original vesting requirements equals 50 percent, which is calculated as 20 engines delivered divided by 40 engines required to be delivered. The percentage that would have been recognized on the basis of the effective vesting requirements equals 66.67 percent, which is calculated as 20 engines delivered divided by 30 engines (the sum of 20 engines delivered plus 10 engines required postcombination). Thus, $50 ($100 × 50%) is attributed to precombination vesting and therefore is included in the consideration transferred in the business combination. The remaining $50 is attributed to the postcombination vesting and therefore is recognized as compensation cost in Acquirer's postcombination financial statements in accordance with Topic 718. ##### [805-30-55-34](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:a486789ccb91944c62eda03033b715c696728019e350b9194647ce872a2f2a38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Case C, except that Acquirer exchanges replacement awards that require no postcombination vesting for share-based payment awards of Target for which the grantee had not met the necessary vesting condition to deliver 40 engines before the business combination. The terms of the replaced Target awards did not eliminate the vesting condition upon a change in control. (If the Target awards had included a provision that eliminated the vesting condition upon a change in control, the guidance in Case A \[see paragraph [805-30-55-28](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-28)\] would apply.) The fair-value-based measure of both awards is $100. ##### [805-30-55-35](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:25.100Z to 2026-09-10T01:24:25.100Z Record version: sha256:5e178306848a4b6be425716c2a55969ee38269f730423107c6a162de11fc1ce0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion attributable to precombination vesting equals the fair-value-based measure of the acquiree award ($100) multiplied by the percentage that would have been recognized on the award. The percentage that would have been recognized is the lower of the percentage that would have been recognized on the basis of the original vesting requirements and the percentage that would have been recognized on the basis of the effective vesting requirements as described in paragraph [805-30-55-9A](https://asc.understandingaccounting.org/asc/805/30/#805-30-55-9A). The percentage that would have been recognized on the basis of the original vesting requirements equals 50 percent, which is calculated as 20 engines delivered divided by 40 engines required to be delivered. The percentage that would have been recognized on the basis of the effective vesting requirements equals 100 percent, which is calculated as 20 engines delivered divided by 20 engines (the sum of 20 engines delivered plus zero engines required postcombination). Thus, $50 ($100 × 50%) is attributed to the precombination vesting and is therefore included in the consideration transferred in the business combination. The remaining $50 is attributed to the postcombination vesting. Because no postcombination vesting is required to vest in the replacement award, Acquirer recognizes the entire $50 immediately as compensation cost in the postcombination financial statements. Source downloaded (UTC): 2026-09-10T01:24:30.047Z to 2026-09-10T01:24:49.395Z Record version: sha256:2e9a764c752939d934d2c751be2ce0f80f2feabdf6554403eed66f0b69208261 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40: Business Combinations — Reverse Acquisitions ### Machine-generated study aids ```json { "summary": "ASC 805-40 explains how to apply the acquisition method when the legal acquirer (the entity that issues equity, often a public shell) is the accounting acquiree and the legal subsidiary is the accounting acquirer — a reverse acquisition. The accounting acquiree must be a business, and all recognition and measurement principles of 805-10, 805-20 and 805-30 (including goodwill) apply, but consideration transferred is imputed as the number of shares the legal subsidiary would have had to issue to give the legal parent's owners their resulting ownership percentage (805-40-30-2). The consolidated statements are issued in the legal parent's name yet are a continuation of the legal subsidiary's financial statements, with the subsidiary's legal capital retroactively restated to the parent's equity structure (805-40-45-1 through 45-2).", "key_points": [ "A transaction is accounted for as a reverse acquisition only if the accounting acquiree meets the definition of a business, and all recognition principles of 805-10, 805-20 and 805-30 — including recognizing goodwill — apply (805-40-25-1).", "The acquisition-date fair value of consideration transferred is based on the number of equity interests the legal subsidiary would hypothetically have had to issue to give the legal parent's owners the same percentage interest in the combined entity, measured using the most reliable measure of fair value (805-40-30-2; 805-40-55-10).", "The legal subsidiary's (accounting acquirer's) assets, liabilities, retained earnings and other equity are carried at precombination carrying amounts, while the legal parent's (accounting acquiree's) assets and liabilities are recognized and measured under the acquisition method (805-40-45-2(a)-(c)).", "Owners of the legal acquiree who do not exchange their shares become a noncontrolling interest, measured at their proportionate share of the legal subsidiary's precombination carrying amounts rather than fair value (805-40-25-2; 805-40-30-3; 805-40-45-2(e)).", "Issued equity in the consolidated balance sheet equals the accounting acquirer's precombination issued equity plus the fair value of consideration effectively transferred, but the number and type of shares reflect the legal parent's equity structure, with comparatives retroactively adjusted (805-40-45-1; 45-2(d); 45-3; illustrated at 805-40-55-14).", "For EPS, weighted-average shares before the acquisition date are the accounting acquirer's historical weighted-average shares multiplied by the exchange ratio, and actual legal acquirer shares thereafter; prior comparative-period EPS uses the accounting acquirer's income over its restated share count (805-40-45-4; 45-5)." ], "categories": [ "Business combinations", "Consolidation", "Financial statement presentation", "Earnings per share" ], "audience_level": "advanced", "student_note": "Reverse acquisitions are the standard accounting model for private companies going public via a shell or SPAC merger, so exam questions focus on identifying the accounting acquirer and computing imputed consideration and goodwill. The most common misunderstanding is thinking the noncontrolling interest is measured at fair value — here it is the NCI's share of the legal subsidiary's precombination carrying amounts (805-40-30-3).", "related_topics": [ "805-10", "805-20", "805-30", "810-10", "260-10", "805-50" ], "key_concepts": [ "reverse acquisition", "accounting acquirer versus legal acquirer", "consideration effectively transferred", "exchange ratio", "noncontrolling interest at precombination carrying amount", "retroactive restatement of legal capital", "goodwill measurement", "earnings per share restatement" ] } ``` Source downloaded (UTC): 2026-09-10T01:24:30.047Z to 2026-09-10T01:24:30.047Z Record version: sha256:62d6c821063f4678dbe49d960a60131e56aa7728115b01c59c66cf6450814390 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/40/#00-status) SEC content: no ##### [805-40-00-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:30.047Z to 2026-09-10T01:24:30.047Z Record version: sha256:c24a877126fbb341a67056c6621308eb9aaad22e3ba1a02047bfce185760c418 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
AcquireeAmendedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAmendedAccounting Standards Update No. 2010-0701/28/2010
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
805-40-55-19AmendedAccounting Standards Update No. 2010-0802/02/2010
Source downloaded (UTC): 2026-09-10T01:24:31.869Z to 2026-09-10T01:24:31.869Z Record version: sha256:2c564c3bf5dff5d1dc2a429f19a79ec760bdd428697b355c94b28668963bbf8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/40/#05-overview-and-background) SEC content: no ##### [805-40-05-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:31.869Z to 2026-09-10T01:24:31.869Z Record version: sha256:241709cd93fe1a5056aadeb3a6fde569f9898dbf080f79b04560ce69747d0248 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides incremental guidance on the application of the acquisition method (as described in paragraph [805-10-05-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-05-4)) to 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.") that is a [reverse acquisition](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition."). ##### [805-40-05-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:31.869Z to 2026-09-10T01:24:31.869Z Record version: sha256:90c5d61d3eee2ebc8cf4511c180dd23e8aa4959f8702a89f74555975924c4504 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As one example of a reverse acquisition, a private operating entity may want to become a public entity but not want to register its equity shares. To become a public entity, the private entity will arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity. In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired. However, application of the guidance in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) results in identifying: 1. a The public entity as 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.") for accounting purposes (the accounting acquiree) 2. b The private entity as 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.") for accounting purposes (the accounting acquirer). Source downloaded (UTC): 2026-09-10T01:24:35.452Z to 2026-09-10T01:24:35.452Z Record version: sha256:fe7f26435640c76527af1cd5aa8771cf0d24fd023cd8294a2ccb2349e7d0c304 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/40/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-40-15-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:35.452Z to 2026-09-10T01:24:35.452Z Record version: sha256:91627af90cc10d8e65e49dc0aafb202fe445a7c57374db7015f988f3a66a3beb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 805-10-15, with specific transaction qualifications noted below. #### Transactions ##### [805-40-15-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:35.452Z to 2026-09-10T01:24:35.452Z Record version: sha256:b5e1fd2dfe8abaab44aaed76e4f89d6c39971a994ffbefee8cab918b7b0a5a3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to [business combinations](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.") that are [reverse acquisitions](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition."). Source downloaded (UTC): 2026-09-10T01:24:41.537Z to 2026-09-10T01:24:41.537Z Record version: sha256:1a547dd0835860c09b29ad6cdcff72e8e01d632e3aec6f97143487666cc84946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/40/#25-recognition) SEC content: no ##### [805-40-25-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:41.537Z to 2026-09-10T01:24:41.537Z Record version: sha256:360284c635f6f2998dbf1ec5721706d3afb835905a1045aff1d97039d81adef0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For 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.") transaction to be accounted for as a [reverse acquisition](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition."), the accounting acquiree must meet the 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."). All of the recognition principles in Subtopics 805-10, 805-20, and 805-30, including the requirement to recognize [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."), apply to a reverse acquisition. #### Noncontrolling Interest ##### [805-40-25-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:41.537Z to 2026-09-10T01:24:41.537Z Record version: sha256:92dedb7faf8c93faa5304129ed063f53915c8646b58525866f8232d0c2c5edd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a reverse acquisition, some of the owners of the legal acquiree (the accounting acquirer) might not exchange their equity interests for equity interests of the legal parent (the accounting acquiree). Those owners are treated as a [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 consolidated financial statements after the reverse acquisition. That is because the owners of the legal acquiree that do not exchange their equity interests for equity interests of the legal acquirer have an interest in only the results and net assets of the legal acquiree―not in the results and net assets of the combined entity. Conversely, even though the legal acquirer is 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.") for accounting purposes, the owners of the legal acquirer have an interest in the results and net assets of the combined entity. Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:ea456696b429fd4bce70ae3bf0b86fa0d6fa3bb4b917d090a156a8c3ef1a69f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/40/#30-initial-measurement) SEC content: no ##### [805-40-30-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:5e1fc01b0b780325790939a7191f4ff56e81f5fd2a7a3a1d0d131a898d832dfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the measurement principles applicable to [business combinations](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.") in Subtopics 805-10, 805-20, and 805-30 apply to a [reverse acquisition](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition."). #### Measuring the Consideration Transferred ##### [805-40-30-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:cd488fa36f654609926fd6b0355ce9afdd25931ef067ae0a449766bd60cf32ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a reverse acquisition, the accounting acquirer usually issues no consideration for 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."). Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer. Accordingly, the [acquisition-date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition. Example 1, Case A (see paragraph [805-40-55-8](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-8)) illustrates that calculation. The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree. #### Noncontrolling Interest ##### [805-40-30-3](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:179f1ebd1c02cf11c75dbb5ab41fab988c6d447685e26b8474dac0da90184839 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their precombination carrying amounts (see paragraph [805-40-45-2(a)](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-2)). Therefore, in a reverse acquisition the noncontrolling interest reflects the noncontrolling shareholders' proportionate interest in the precombination carrying amounts of the legal acquiree's net assets even though the noncontrolling interests in other acquisitions are measured at their fair values at the acquisition date. #### Consolidated Financial Statements Following a Reverse Acquisition ##### [805-40-30-4](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:43.498Z to 2026-09-10T01:24:43.498Z Record version: sha256:6fa0b1cbbce829b7341910f625e713d69a9c2d1af4d51d4c32cf59ece37b6203 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-40-45-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-1) provides guidance on required adjustments to the accounting acquirer's legal capital to reflect the legal capital of the legal parent (accounting acquiree) in the consolidated financial statements following a reverse acquisition. Source downloaded (UTC): 2026-09-10T01:24:47.609Z to 2026-09-10T01:24:47.609Z Record version: sha256:14a7c44307582955058da130ecf8e380769677bc33c2992c0edcabac3b912d75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/805/40/#45-other-presentation-matters) SEC content: no #### Preparation and Presentation of Consolidated Financial Statements ##### [805-40-45-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:47.609Z to 2026-09-10T01:24:47.609Z Record version: sha256:97290714a24a86123bc560d8842ceb2af71a07627a522d99a2a9c866c1f9379c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consolidated financial statements prepared following a [reverse acquisition](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition.") are issued under the name of the legal parent (accounting acquiree) but described in the notes as a continuation of the financial statements of the legal subsidiary (accounting acquirer), with one adjustment, which is to retroactively adjust the accounting acquirer's legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent (the accounting acquiree). Comparative information presented in those consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent (accounting acquiree). ##### [805-40-45-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:47.609Z to 2026-09-10T01:24:47.609Z Record version: sha256:944c70d26975b635fef6c2dc948cd6ddc12b0068a119fb43dc409d8d418f4b84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the consolidated financial statements represent the continuation of the financial statements of the legal subsidiary except for its capital structure, the consolidated financial statements reflect all of the following: 1. a The assets and liabilities of the legal subsidiary (the accounting acquirer) recognized and measured at their precombination carrying amounts. 2. b The assets and liabilities of the legal parent (the accounting acquiree) recognized and measured in accordance with the guidance in this Topic applicable to [business combinations](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."). 3. c The retained earnings and other equity balances of the legal subsidiary (accounting acquirer) before the business combination. 4. d The amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary (the accounting acquirer) outstanding immediately before the business combination to the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the legal parent (accounting acquiree) determined in accordance with the guidance in this Topic applicable to business combinations. However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the legal parent (the accounting acquiree), including the equity interests the legal parent issued to effect the combination. Accordingly, the equity structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition. 5. e The [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.")'s proportionate share of the legal subsidiary's (accounting acquirer's) precombination carrying amounts of retained earnings and other equity interests as discussed in paragraphs [805-40-25-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-25-2) and [805-40-30-3](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-3) and illustrated in Example 1, Case B (see paragraph [805-40-55-18](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-18)). #### EPS ##### [805-40-45-3](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:47.609Z to 2026-09-10T01:24:47.609Z Record version: sha256:49e42d350bc12f4210449f3c72f07f22543920da0db5711a6b767d57f4798e01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in (d) in the preceding paragraph, the equity structure in the consolidated financial statements following a reverse acquisition reflects the equity structure of the legal acquirer (the accounting acquiree), including the equity interests issued by the legal acquirer to effect the business combination. ##### [805-40-45-4](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:47.609Z to 2026-09-10T01:24:47.609Z Record version: sha256:aa2329892f47178d4e24d309a79d533eb6361d2bea13de6dd893cfff015ed780 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In calculating the weighted-average number of common shares outstanding (the denominator of the earnings-per-share \[EPS\] calculation) during the period in which the reverse acquisition occurs: 1. a The number of common shares outstanding from the beginning of that period to the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement. 2. b The number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period. ##### [805-40-45-5](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:47.609Z to 2026-09-10T01:24:47.609Z Record version: sha256:3eedbe08c276f030b61920abd5bd24f5a38d91d214b8217fed27f3d818e94c97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing (a) by (b): 1. a The income of the legal acquiree attributable to common shareholders in each of those periods 2. b The legal acquiree's historical weighted-average number of common shares outstanding multiplied by the exchange ratio established in the acquisition agreement. Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:e52b9599c120a077008d893f442eb94f656cb82cf8822c972ce15d8a6b5c5ead Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-40-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/40/#55-implementation-guidance-and-illustrations) SEC content: no ##### [805-40-55-1](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:c2ccad24e521f7de1de80bead4426f23974c733317f2e0b55803955fd3ed564c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides illustrations that address the application of accounting requirements for [business combinations](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.") to [reverse acquisitions](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition."). #### Illustrations ##### [805-40-55-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:79a82aaa1ec900a4af079eed68b1e167911a9e555030ec1a3cd20c37263b4804 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the guidance in this Subtopic on accounting for a reverse acquisition: 1. a A reverse acquisition if all the shares of the legal subsidiary are exchanged (Case A) 2. b A reverse acquisition if not all of the shares of the legal subsidiary are exchanged and a [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.") results (Case B). ##### [805-40-55-3](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:7f7931aa577f53205638c7a8e38717a4ed407a7b5bffb0e7d43d5afc3948ddf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In these Cases, Entity B, the legal subsidiary, acquires Entity A, the entity issuing equity instruments and therefore the legal parent, on September 30, 20X6. These Cases ignore the accounting for any income tax effects. Cases A and B share all of the following information and assumptions. ##### [805-40-55-4](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:02fb0939cad87005275cc4b7ecf15c6f89a9dd8525bff5c3a3dc293fa554c2eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The statements of financial position of Entity A and Entity B immediately before the business combination are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-180BA039-4183-4B21-812C-139336DCE136-low.gif) "Entity A (Legal Parent, Accounting Acquiree) $" "Entity B (Legal Subsidiary, Accounting Acquirer) $" Current assets 500 700 Noncurrent assets " 1,300 " " 3,000 " Total assets " 1,800 " " 3,700 " Current liabilities 300 600 Noncurrent liabilities 400 " 1,100 " Total liabilities 700 " 1,700 " Shareholders' equity Retained earnings 800 " 1,400 " Issued equity 100 common shares 300 - 60 common shares - 600 Total shareholders' equity " 1,100 " " 2,000 " "Total liabilities and shareholders' equity" " 1,800 " " 3,700 " ##### [805-40-55-5](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:de3931dfffb107865467a295497cafe3fa7fdf1801c84f9a7fd09c56dd82ac42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On September 30, 20X6, Entity A issues 2.5 shares in exchange for each common share of Entity B. All of Entity B's shareholders exchange their shares in Entity B. Therefore, Entity A issues 150 common shares in exchange for all 60 common shares of Entity B. ##### [805-40-55-6](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:cd0c9c14da10cd7200441b8fe9960451691cf9b6f0567f35bc8163888ef1c6d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of each common share of Entity B at September 30, 20X6, is $40. The quoted market price of Entity A's common shares at that date is $16. ##### [805-40-55-7](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:8fa9ce1d4604aaa65b4cfbd721922852aa0973bee7a75b07a1050a78eccf9e4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fair values of Entity A's identifiable assets and liabilities at September 30, 20X6, are the same as their carrying amounts, except that the fair value of Entity A's noncurrent assets at September 30, 20X6, is $1,500. ##### [805-40-55-8](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:3fdcda02ad1c44812d47cafdc045c7c1d00d270741c10848df16c1a76dc45e82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the accounting for a reverse acquisition if all of the shares of the legal subsidiary, the accounting acquirer, are exchanged in a business combination. The accounting illustrated in this Case includes the calculation of the fair value of the consideration transferred, the measurement of [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.") and the calculation of earnings per share (EPS). ##### [805-40-55-9](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:7df7e2a9f4de868296ab81fd92c096de5775651f606d677a4cded177876b9cb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The calculation of the fair value of the consideration transferred follows. ##### [805-40-55-10](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:5887436a89aa80481d75236a286793d7f88bc180eaf00173c24d70e04bad9cb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a result of the issuance of 150 common shares by Entity A (legal parent, accounting acquiree), Entity B's shareholders own 60 percent of the issued shares of the combined entity, that is, 150 of 250 issued shares. The remaining 40 percent are owned by Entity A's shareholders. If the business combination had taken the form of Entity B issuing additional common shares to Entity A's shareholders in exchange for their common shares in Entity A, Entity B would have had to issue 40 shares for the ratio of ownership interest in the combined entity to be the same. Entity B's shareholders would then own 60 of the 100 issued shares of Entity B—60 percent of the combined entity. As a result, the fair value of the consideration effectively transferred by Entity B and the group's interest in Entity A is $1,600 (40 shares with a per-share fair value of $40). The fair value of the consideration effectively transferred should be based on the most reliable measure. In this Case, the quoted market price of Entity A's shares provides a more reliable basis for measuring the consideration effectively transferred than the estimated fair value of the shares in Entity B, and the consideration is measured using the market price of Entity A's shares―100 shares with a per-share fair value of $16. ##### [805-40-55-11](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:f14b996eee03fad18d00816b097547307aecb6498e0a50f5faad4f15377bcb92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Goodwill is measured as follows. ##### [805-40-55-12](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:03216bf2f3ed21e89603776924d003bdcc42677ddc4f3cdef4e1a88aeed9cc9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Goodwill is measured as the excess of the fair value of the consideration effectively transferred (the group's interest in Entity A) over the net amount of Entity A's recognized identifiable assets and liabilities, as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-4242E1F3-5446-4094-A968-3CE383748013-low.gif) $ $ Consideration effectively transferred " 1,600 " Net recognized values of Entity A's identifiable assets and liabilities Current assets 500 Noncurrent assets " 1,500 " Current liabilities (300) Noncurrent liabilities (400) " (1,300)" Goodwill 300 ##### [805-40-55-13](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:4d4b9fecf57630a1fb5e8a7cddc6890e4b8737484cc7c9693109e2c07baa027f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consolidated statement of financial position immediately after the business combination is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F3D97CC2-3FAB-4DF0-8FD0-7E5A8A27814B-low.gif) $ Current assets ($700 + $500) " 1,200 " "Noncurrent assets ($3,000 + $1,500)" " 4,500 " Goodwill 300 Total assets " 6,000 " Current liabilities ($600 + $300) 900 "Noncurrent liabilities ($1,100 + $400)" " 1,500 " Total liabilities " 2,400 " Shareholders' equity Retained earnings " 1,400 " Issued equity "250 common shares ($600 + $1,600)" " 2,200 " Total shareholders' equity " 3,600 " Total liabilities and shareholders' equity " 6,000 " ##### [805-40-55-14](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:a16478b60657e645a47946b2091b6d25df67f3d387f0362d34c4fb9f2cb7a9f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraph [805-40-45-2(c) through (d)](https://asc.understandingaccounting.org/asc/805/40/#805-40-45-2), the amount recognized as issued equity interests in the consolidated financial statements ($2,200) is determined by adding the issued equity of the legal subsidiary immediately before the business combination ($600) and the fair value of the consideration effectively transferred, measured in accordance with paragraph [805-40-30-2](https://asc.understandingaccounting.org/asc/805/40/#805-40-30-2) ($1,600). However, the equity structure appearing in the consolidated financial statements (that is, the number and type of equity interests issued) must reflect the equity structure of the legal parent, including the equity interests issued by the legal parent to effect the combination. ##### [805-40-55-15](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:9f036e7c74783aa8e7fde2dc735b97e5caa5568547c7cbf92ce69615dc4f25cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The calculation of EPS follows. ##### [805-40-55-16](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:28432ebaa8c1aab1dd3c39f0197483ebeba215258af2d7ca62ef2578c89442d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity B's earnings for the annual period ended December 31, 20X5, were $600, and the consolidated earnings for the annual period ended December 31, 20X6, are $800. There was no change in the number of common shares issued by Entity B during the annual period ended December 31, 20X5, and during the period from January 1, 20X6, to the date of the reverse acquisition on September 30, 20X6. EPS for the annual period ended December 31, 20X6, is calculated as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-79CA520B-A93D-463B-A679-381CEB317D82-low.gif) "Number of shares deemed to be outstanding for the period from January 1, 20X6, to the acquisition date (that is, the number of common shares issued by Entity A \[legal parent, accounting acquiree\] in the reverse acquisition)" 150 "Number of shares outstanding from the acquisition date to December 31, 20X6" 250 "Weighted-average number of common shares outstanding (\[150 × 9 ÷ 12\] + \[250 × 3 ÷ 12\])" 175 EPS (800 ÷ 175) $4.57 ##### [805-40-55-17](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:314d35b3fed2e084f524184876202b7b223594283bc41ce222782eaf1745d556 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Restated EPS for the annual period ending December 31, 20X5, is $4.00 (calculated as the earnings of Entity B of 600 divided by the 150 common shares Entity A issued in the reverse acquisition). ##### [805-40-55-18](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:763a5d64d06659aae3f61fbd5c461515d2fe891ea312bbb1eca4917b566215e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Case illustrates the accounting for a reverse acquisition if not all of the shares of the legal subsidiary, the accounting acquirer, are exchanged in a business combination and a noncontrolling interest results. ##### [805-40-55-19](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:9b96062c932a814c1854f63a4abcc80da9b397861fe070de18073eed91936f4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Case A except that only 56 of Entity B's 60 common shares are exchanged. Because Entity A issues 2.5 shares in exchange for each common share of Entity B, Entity A issues only 140 (rather than 150) shares. As a result, Entity B's shareholders own 58.3 percent of the issued shares of the combined entity (140 of 240 issued shares). The fair value of the consideration transferred for Entity A, the accounting acquiree, is calculated by assuming that the combination had been effected by Entity B's issuing additional common shares to the shareholders of Entity A in exchange for their common shares in Entity A. That is because Entity B is the accounting acquirer, and paragraphs [805-30-30-7 through 30-8](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-7) require the acquirer to measure the consideration exchanged for the accounting acquiree. ##### [805-40-55-20](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:21536bdb2f7764c51279eaffad35fcb834c3006f489b56bbc519e5edb9df93e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In calculating the number of shares that Entity B would have had to issue, the noncontrolling interest is ignored. The majority shareholders own 56 shares of Entity B. For that to represent a 58.3 percent equity interest, Entity B would have had to issue an additional 40 shares. The majority shareholders would then own 56 of the 96 issued shares of Entity B and, therefore, 58.3 percent of the combined entity. As a result, the fair value of the consideration transferred for Entity A, the accounting acquiree, is $1,600 (that is, 40 shares each with a fair value of $40). That is the same amount as when all 60 of Entity B's shareholders tender all 60 of its common shares for exchange. The recognized amount of the group's interest in Entity A, the accounting acquiree, does not change if some of Entity B's shareholders do not participate in the exchange. ##### [805-40-55-21](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:a8e35f61b300c57d5fe5bc0f1cc63bf8170e43a47e4b00d3c55e97caff4b663c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The noncontrolling interest is represented by the 4 shares of the total 60 shares of Entity B that are not exchanged for shares of Entity A. Therefore, the noncontrolling interest is 6.7 percent. The noncontrolling interest reflects the noncontrolling shareholders' proportionate interests in the precombination carrying amounts of the net assets of Entity B, the legal subsidiary. Therefore, the consolidated statement of financial position is adjusted to show a noncontrolling interest of 6.7 percent of the precombination carrying amounts of Entity B's net assets (that is, $134 or 6.7 percent of $2,000). ##### [805-40-55-22](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:cdcfd4aff78290e36ce99d98044a8f73ef99d3d2f03118262f5cdddcd42969a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consolidated statement of financial position at September 30, 20X6, reflecting the noncontrolling interest is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-85941C6C-8DD0-4747-9BAC-DA612B092E03-low.gif) $ Current assets ($700 + $500) " 1,200 " "Noncurrent assets ($3,000 + $1,500)" " 4,500 " Goodwill 300 Total assets " 6,000 " Current liabilities ($600 + $300) 900 "Noncurrent liabilities ($1,100 + $400)" " 1,500 " Total liabilities " 2,400 " Shareholders' equity "Retained earnings ($1,400 × 93.3%)" " 1,306 " Issued equity "240 common shares ($560 + $1,600)" " 2,160 " Noncontrolling interest 134 Total shareholders' equity " 3,600 " Total liabilities and shareholders' equity " 6,000 " ##### [805-40-55-23](https://asc.understandingaccounting.org/asc/805/40/#805-40-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:49.395Z to 2026-09-10T01:24:49.395Z Record version: sha256:5936230ce080407c563381f7786001f82d408060df4648901f46d7ab8da0cac9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The noncontrolling interest of $134 has 2 components. The first component is the reclassification of the noncontrolling interest's share of the accounting acquirer's retained earnings immediately before the acquisition ($1,400 × 6.7% or $93.80). The second component represents the reclassification of the noncontrolling interest's share of the accounting acquirer's issued equity ($600 × 6.7% or $40.20). Source downloaded (UTC): 2026-09-10T01:24:51.500Z to 2026-09-10T01:25:42.308Z Record version: sha256:c1356ead896804e896f5b2c4dfcff9317dc59f2dc0cf6bb82fd5ea23c6d48154 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50: Business Combinations — Related Issues ### Machine-generated study aids ```json { "summary": "ASC 805-50 collects the transactions that fall outside the acquisition method of Topic 805: asset acquisitions that are not businesses, transfers between entities under common control, formation of master limited partnerships, and pushdown accounting. Asset acquisitions are recorded at cost (including transaction costs) and allocated to the individual assets on a relative fair value basis with no goodwill; common-control transfers are recorded by the receiving entity at the transferor's (or parent's) carrying amounts with retrospective presentation for periods under common control. Pushdown accounting is an optional, irrevocable election by an acquiree to reflect the acquirer's new basis in its separate financial statements.", "key_points": [ "The Subtopic has its own discrete scope separate from 805-10-15 (805-50-15-1); asset acquisition guidance does not apply to a primary beneficiary's initial measurement of a non-business VIE (805-50-15-4) or to joint venture formations, which follow 805-60 (805-50-15-4A).", "In an asset acquisition, assets are recognized at their cost to the acquiring entity, which generally includes transaction costs, and no gain or loss is recognized unless the fair value of noncash assets given differs from their carrying amounts (805-50-30-1; 805-50-30-2).", "The cost of a group of assets acquired outside a business combination is allocated to the individual assets and liabilities based on their relative fair values and shall not give rise to goodwill (805-50-30-3).", "In a common-control transfer, the receiving entity initially recognizes the transferred assets and liabilities at the transfer date (805-50-25-2) and measures them at the transferring entity's carrying amounts—or the parent's historical cost if those differ (805-50-30-5).", "The receiving entity presents results as though the transfer occurred at the beginning of the period, eliminating intra-entity effects, and retrospectively adjusts prior-year comparatives, but only for periods during which the entities were under common control (805-50-45-2 through 45-5).", "No new basis of accounting is appropriate for master limited partnership rollups (with transaction costs expensed), specified dropdowns, rollouts, or reorganizations (805-50-30-7); units issued for services not carrying over are compensation (805-50-30-9).", "Pushdown accounting is an option an acquiree (and any of its subsidiaries, independently) may elect upon a change-in-control event, must be elected before the financial statements are issued or available to be issued, is applied as of the acquisition date, and is irrevocable (805-50-25-4 through 25-9); goodwill is recognized but any bargain purchase gain goes to additional paid-in capital, not income (805-50-30-11)." ], "categories": [ "Business combinations", "Initial measurement", "Presentation", "Consolidation" ], "audience_level": "intermediate", "student_note": "Exam favorite: the asset-acquisition vs. business-combination fork—transaction costs are capitalized (not expensed) and no goodwill arises in an asset acquisition, the opposite of the acquisition method. Also commonly missed: common-control comparatives are restated only for periods the entities were actually under common control, and pushdown bargain purchase gains hit APIC rather than earnings.", "related_topics": [ "805-10", "805-20", "805-30", "805-60", "810-10", "610-20" ], "key_concepts": [ "asset acquisition", "relative fair value allocation", "common control transaction", "carryover basis", "pushdown accounting", "change-in-control event", "master limited partnership", "bargain purchase gain to apic" ] } ``` Source downloaded (UTC): 2026-09-10T01:24:51.500Z to 2026-09-10T01:24:51.500Z Record version: sha256:a5503b1bce32bc3c257419e3324de9d4475066ba68bdf78e493b9660706905d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/50/#00-status) SEC content: no ##### [805-50-00-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:51.500Z to 2026-09-10T01:24:51.500Z Record version: sha256:e189ff4d806cdbb936d0ba21a4f00646b950979023076e18a00ffb06947fd688 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
AcquireeAmendedAccounting Standards Update No. 2010-0701/28/2010
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
Change in Accounting PrincipleAddedAccounting Standards Update No. 2014-1711/18/2014
Conduit Debt SecuritiesAddedAccounting Standards Update No. 2014-1711/18/2014
Control (3rd def.)AddedAccounting Standards Update No. 2014-1711/18/2014
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
DropdownAmendedAccounting Standards Update No. 2015-0604/30/2015
Equity InterestsAmendedAccounting Standards Update No. 2010-0701/28/2010
Financial Statements Are Available to Be IssuedAddedAccounting Standards Update No. 2014-1711/18/2014
Financial Statements Are IssuedAddedAccounting Standards Update No. 2014-1711/18/2014
GoodwillAmendedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAmendedAccounting Standards Update No. 2010-0701/28/2010
In Substance Nonfinancial AssetAddedAccounting Standards Update No. 2017-0502/22/2017
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Primary BeneficiaryAddedAccounting Standards Update No. 2025-0305/12/2025
Pushdown AccountingAmendedAccounting Standards Update No. 2014-1711/18/2014
Securities and Exchange Commission (SEC) FilerAddedAccounting Standards Update No. 2014-1711/18/2014
805-50-05-1SupersededAccounting Standards Update No. 2014-1711/18/2014
805-50-05-2AmendedAccounting Standards Update No. 2014-1711/18/2014
805-50-05-6AmendedAccounting Standards Update No. 2014-1711/18/2014
805-50-05-7AmendedAccounting Standards Update No. 2014-1711/18/2014
805-50-05-8SupersededAccounting Standards Update No. 2014-1711/18/2014
805-50-05-9AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-15-4AAddedAccounting Standards Update No. 2023-0508/23/2023
805-50-15-6AmendedAccounting Standards Update No. 2010-0701/28/2010
805-50-15-6BAddedAccounting Standards Update No. 2010-0701/28/2010
805-50-15-7AmendedAccounting Standards Update No. 2014-1711/18/2014
805-50-15-8SupersededAccounting Standards Update No. 2014-1711/18/2014
805-50-15-9SupersededAccounting Standards Update No. 2014-1711/18/2014
805-50-15-10AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-15-11AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-25-1AmendedMaintenance Update 2021-09 (PDF)08/20/2021
805-50-25-1AmendedAccounting Standards Update No. 2017-0502/22/2017
805-50-25-3SupersededAccounting Standards Update No. 2014-1711/18/2014
805-50-25-4 through 25-9
AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-25-5AmendedAccounting Standards Update No. 2025-0305/12/2025
805-50-30-1 through 30-3
AmendedAccounting Standards Update No. 2010-0802/02/2010
805-50-30-1AmendedAccounting Standards Update No. 2017-0502/22/2017
805-50-30-2AmendedAccounting Standards Update No. 2017-0502/22/2017
805-50-30-10 through 30-12
AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-35-2AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-50-5AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-50-6AddedAccounting Standards Update No. 2014-1711/18/2014
805-50-55-1AddedAccounting Standards Update No. 2010-0802/02/2010
805-50-65-1AddedAccounting Standards Update No. 2014-1711/18/2014
Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:3841992e2f6fb80522e9c12edf2b62a180a29868e587abed4ed1a87df58be9e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/50/#05-overview-and-background) SEC content: no ##### [805-50-05-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:0080fda9d49a92d0cf4c4ba5dd0c37a3181ac2174800e0c6e5eac0cf37e6fb2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-17](https://asc.understandingaccounting.org/updates/asu-2014-17/). ##### [805-50-05-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:4912364bb70129a63fee26a476bcfaf1d3d4ddeb431094d871c907af1322cf14 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic presents guidance in the following Subsections: 1. a General 2. b Acquisition of Assets Rather than a Business 3. c Transactions Between Entities Under Common Control 4. d Formation of a Master Limited Partnership 5. e Pushdown Accounting. ### Acquisition of Assets Rather than a Business ##### [805-50-05-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:30b4654866e0821836e44a185129d26f2b7cc75ddbd2b5097510e86389fb739f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Acquisition of Assets Rather than a Business Subsections address a transaction in which the assets acquired and liabilities assumed do not constitute 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 require such a transaction to be accounted for as an asset acquisition. However, these Subsections do not provide guidance for the primary beneficiary of a variable interest entity (VIE) if the VIE does not constitute a business. ### Transactions between Entities under Common Control ##### [805-50-05-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:931960019337d8f8e80da19e5fc87690a2caac5fad1ce62487a85973bb85ea35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in paragraph [805-10-15-4(c)](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-4), the guidance related to [business combinations](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.") does not apply to combinations between entities or [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.") under common control. ##### [805-50-05-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:d417bcea7eea758ebc4bd9d56899e511db49f0fd1a14f3d7401fb2a19ab9ce24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some transfers of net assets or exchanges of shares between entities under common control result in a change in the reporting entity. In practice, the method that many entities have used to account for those transactions is similar to the pooling-of-interests method. The Transactions Between Entities Under Common Control Subsections provide guidance on preparing financial statements and related disclosures for the entity that receives the net assets. ### Formation of a Master Limited Partnership ##### [805-50-05-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:9b2d9267aaf30a2a4b0e33f8ba60b1f0b61b3a5220ba65712e173e29f08a5eb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Formation of a Master Limited Partnership Subsections provide guidance on when a new basis of accounting may be recorded for the assets and liabilities of a master limited partnership. #### Master Limited Partnership Transactions ##### [805-50-05-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:e5dd24b0c99fecb4304ca66aa6d1acb9ef039ede2a481cfaf3c005f37d00acc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Master limited partnerships are partnerships in which interests are publicly traded. Most master limited partnerships are formed from assets in existing businesses. Typically, the general partner of the master limited partnership is affiliated with the existing [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.") (that is, the master limited partnership is usually operated as an extension of or complementary to the business of the general partner). The purposes for forming a master limited partnership vary. They can be formed to realize the value of undervalued assets, to pass income and tax-deductible losses directly through to owners, to raise capital, to combine several existing partnerships, or as a vehicle to enable entities to sell, spin off, or liquidate existing operations. A master limited partnership may be created in a variety of ways. Whether a particular transaction is 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.") that should be accounted for using the acquisition method or a transaction between entities under common control can be determined only after a careful analysis of all facts and circumstances. The Formation of a Master Limited Partnership Subsections identify specific transactions involving master limited partnerships and provide guidance on whether a new basis of accounting is appropriate. ##### [805-50-05-8](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:80b525fdf7e5aad002a0cb0dfb91da4a424d840a14cf98450e0166ac45d28522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-17](https://asc.understandingaccounting.org/updates/asu-2014-17/). ### Pushdown Accounting ##### [805-50-05-9](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:54.543Z to 2026-09-10T01:24:54.543Z Record version: sha256:6cf7faaf94ed03b65fe0d388bcf9a1fb08789daa775aa3c041f0a9303c9c6015 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Pushdown Accounting Subsections addresses whether and at what threshold an [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.") that is 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.") can apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") in its separate financial statements. Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:cb506faa8b1bcfbc0f0e271531c8885578bca1545a8e2ce2d1deafb6dd4f463e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/50/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-50-15-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:f9d87d2c25eb731f9d25d9869a36bfa3b0d2b18f5ada21404446e2e9412e9612 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic has its own discrete scope, which is separate and distinct from the pervasive scope for this Topic as outlined in Section 805-10-15. ### Acquisition of Assets Rather than a Business #### Entities ##### [805-50-15-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:b2987633d02466468ee82b9cf3679437f2136cdf79b65e069c09f0a9af2066ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Acquisition of Assets Rather than a Business Subsections applies to all entities. #### Transactions ##### [805-50-15-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:29b10eb1e495ceff3b6cece3218c5051f3de32dfb884ed4e9e17ceb974495423 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Acquisition of Assets Rather than a Business Subsections applies to a transaction or event in which assets acquired and liabilities assumed do not constitute 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."). ##### [805-50-15-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:c4597ab2c24d1f11baab4ecb4f8c7a90d3b53c0587a7f985a53c436501cc3f36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Acquisition of Assets Rather than a Business Subsections does not apply to the initial measurement and recognition by a primary beneficiary of the assets and liabilities of a variable interest entity (VIE) when the VIE does not constitute a business. Guidance for such a VIE is provided in Section 810-10-30. ##### [805-50-15-4A](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-4A) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:031853266b40bd7edf285a8436e2445c58c5462142f4c13d4906dc2ff70496af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Acquisition of Assets Rather than a Business Subsections does not apply to the initial measurement and recognition of assets and liabilities by a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") upon formation. Guidance for joint venture formations is provided in Subtopic 805-60. ### Transactions between Entities under Common Control #### Entities ##### [805-50-15-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:8ada56a08497e43c26dfe12f32af04e57986c895631c4aaa92741c859a9733d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Transactions between Entities under Common Control Subsections applies to all entities. #### Transactions ##### [805-50-15-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:66254042f13e66fbd2b858648f63add079decd67240b658b2f7115a305aa3b73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Transactions between Entities under Common Control Subsections applies to combinations between entities or [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.") under common control. The following are examples of those types of transactions: 1. a An entity charters a newly formed entity and then transfers some or all of its net assets to that newly chartered entity. 2. b A parent transfers the net assets of a wholly owned subsidiary into the parent and liquidates the subsidiary. That transaction is a change in legal organization but not a change in the reporting entity. 3. c A parent transfers its controlling interest in several partially owned subsidiaries to a new wholly owned subsidiary. That also is a change in legal organization but not in the reporting entity. 4. d A parent exchanges its ownership interests or the net assets of a wholly owned subsidiary for additional shares issued by the parent's less-than-wholly-owned subsidiary, thereby increasing the parent's percentage of ownership in the less-than-wholly-owned subsidiary but leaving all of the existing [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.") outstanding. 5. e A parent's less-than-wholly-owned subsidiary issues its shares in exchange for shares of another subsidiary previously owned by the same parent, and the noncontrolling shareholders are not party to the exchange. That is not 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.") from the perspective of the parent. 6. f A limited liability company is formed by combining entities under common control. 7. g Two or more [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) that are effectively controlled by the same board members transfer their net assets to a new entity, dissolve the former entities, and appoint the same board members to the newly combined entity. ##### [805-50-15-6A](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-6A) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:66662f7b39af560f92e320d010e307e0442beabc0d5295a84581e7b0e0dbe6d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Transactions between Entities under Common Control Subsections does not apply to the initial measurement by a primary beneficiary of the assets, liabilities, and noncontrolling interests of a VIE if the primary beneficiary of a VIE and the VIE are under common control. Guidance for such a VIE is provided in Section 810-10-30. ##### [805-50-15-6B](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-6B) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:af14f3450563151f2deba73b65ce56afe819b88adaa1facf5c32c80f41c969d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Mergers and acquisitions between or among two or more NFPs, all of which benefit a particular group of citizens, shall not be considered common control transactions solely because those entities benefit a particular group. The mission, operations, and historical sources of support of two or more NFPs may be closely linked to benefiting a particular group of citizens. However, that group neither owns nor controls the NFPs. ### Formation of a Master Limited Partnership #### Entities ##### [805-50-15-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:12c8a1a323567c7c1ce1f43b9ef9f33378d51b085e86fc564ddc7f979af7a669 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Formation of a Master Limited Partnership Subsections applies to a publicly traded master limited partnership formed from assets of existing [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."). Paragraph [805-50-05-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-05-7) explains that, typically, the general partner of the master limited partnership is affiliated with the existing business. ##### [805-50-15-8](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:5a7e3c7898a0ef3193626178f7a6197ac038f9cb3093f49486405e602c10b890 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-17](https://asc.understandingaccounting.org/updates/asu-2014-17/). ##### [805-50-15-9](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:38e978d04d991c76cfef85b716d372a3e7ff1665c9f759194f347dc8fcb08505 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-17](https://asc.understandingaccounting.org/updates/asu-2014-17/). ### Pushdown Accounting ##### [805-50-15-10](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:c1e69b80be6c02001813ab60ec6f68e42184e2f9e7143671d4cb7c535d05ab9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Pushdown Accounting Subsections applies to the separate financial statements of an [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.") and its subsidiaries. #### Transactions ##### [805-50-15-11](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:24:58.341Z to 2026-09-10T01:24:58.341Z Record version: sha256:2cb130dc6c02e92f738526d1e4607f6bca4f8d3b8b002e1587fa3a75fbf54e76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Pushdown Accounting Subsections does not apply to transactions in paragraph [805-10-15-4](https://asc.understandingaccounting.org/asc/805/10/#805-10-15-4). Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:02606db6789aaf36964e1b15d0f86a7710832b12d0d38f3fa2fc99c8977f92dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/50/#25-recognition) SEC content: no ### Acquisition of Assets Rather than a Business #### Acquisition Date Recognition of Consideration Exchanged ##### [805-50-25-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:cc24a04fa071efe3928191932f199493a67af4f2dd4646f0dff802dbf9d86294 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assets commonly are acquired in exchange transactions that trigger the initial recognition of the assets acquired and any liabilities assumed. If the consideration given in exchange for the assets (or net assets) acquired is in the form of assets surrendered (such as cash), the assets surrendered shall be derecognized at the date of acquisition. If the consideration given is in the form of liabilities incurred or [equity interests](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.") issued, the liabilities incurred and equity interests issued shall be initially recognized at the date of acquisition. However, if the assets surrendered are nonfinancial assets or [in substance nonfinancial assets](https://asc.understandingaccounting.org/glossary/i/#in-substance-nonfinancial-asset "Paragraphs 610-20-15-5610-20-15-6610-20-15-7610-20-15-8 define an in substance nonfinancial asset.") within the scope of Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, the assets surrendered shall be derecognized in accordance with the guidance in Subtopic 610-20 and the assets acquired shall be treated as noncash consideration in accordance with Subtopic 610-20. ### Transactions between Entities under Common Control #### Transfer Date Recognition ##### [805-50-25-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:53d6e1055dd3106fd15c7939c08c0e891e1e5ed44cf44a8dbe7b8c5061d3fc5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the [equity interests](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.") shall initially recognize the assets and liabilities transferred at the date of transfer. See the Transactions between Entities under Common Control Subsection of Section [805-50-45](https://asc.understandingaccounting.org/asc/805/50/#45-other-presentation-matters) for guidance on the presentation of financial statements for the period of transfer and comparative financial statements for prior years. ### New Basis of Accounting (Pushdown) ##### [805-50-25-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:47d27be4212a3c0f96d2c02c3771981fc09fc43e898deffd426f90479d52e19a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-17](https://asc.understandingaccounting.org/updates/asu-2014-17/). ### Pushdown Accounting ##### [805-50-25-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:744ba7a92554d336a3af59548149e1a29fb8cc8434ef949df1ddfdfa188f4072 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [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.") shall have the option to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") in its separate financial statements when 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.")—an entity or individual—obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of the acquiree. An acquirer might obtain control of an acquiree in a variety of ways, including any of the following: 1. a By transferring cash or other assets 2. b By incurring liabilities 3. c By issuing equity interests 4. d By providing more than one type of consideration 5. e Without transferring consideration, including by contract alone as discussed in paragraph [805-10-25-11](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-11). ##### [805-50-25-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:08b02abfea573a56f1f9c5a6309d4c337d34062e91c1139baa841c5b2dd47d48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the General Subsections of Subtopic 810-10 on consolidation, related to determining the existence of a controlling financial interest shall be used to identify the acquirer. If a business combination has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in identifying the acquirer. However, if the acquiree is a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE), the primary beneficiary of the acquiree always is the acquirer. The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying the guidance in the General Subsections of that Subtopic relating to a controlling financial interest or the guidance in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5)The guidance in the General Subsections of Subtopic 810-10 on consolidation, related to determining the existence of a controlling financial interest shall be used to identify the acquirer. If 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.") has occurred but applying that guidance does not clearly indicate which of the combining entities is the acquirer, the factors in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) shall be considered in identifying the acquirer. However, if the acquiree is a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE), the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of the acquiree is the acquirer unless the business combination is effected primarily by exchanging equity interests. The determination of which party, if any, is the primary beneficiary of a VIE shall be made in accordance with the guidance in the Variable Interest Entities Subsections of Subtopic 810-10, not by applying the guidance in the General Subsections of that Subtopic relating to a controlling financial interest or the guidance in paragraphs [805-10-55-11 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-11) . For a business combination that is effected primarily by exchanging equity interests in which a VIE is acquired, the factors in paragraphs [805-10-55-12 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) shall be considered in determining which entity is the accounting acquirer. ##### [805-50-25-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:f5037acbff96c10a23efc825328726f94840521e0c8d0d0d827a89664217a13d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The option to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") may be elected each time there is a change-in-control event in which 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.") obtains [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") 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."). An acquiree shall make an election to apply pushdown accounting before the [financial statements are issued](https://asc.understandingaccounting.org/glossary/f/#financial-statements-are-issued "Financial statements are considered issued when they are widely distributed to shareholders and other financial statement users for general use and reliance in a form and format that complies with GAAP. (U.S. Securities and Exchange Commission [SEC] registrants also are required to consider the guidance in paragraph 855-10-S99-2.)") (for a [Securities and Exchange Commission (SEC) filer](https://asc.understandingaccounting.org/glossary/s/#securities-and-exchange-commission-sec-filer "An entity that is required to file or furnish its financial statements with either of the following: The Securities and Exchange Commission (SEC) With respect to an entity subject to Section 12(i) of the Securities Exchange Act of 1934, as amended, the appropriate agency under that Section. Financial statements for other entities that are not otherwise SEC filers whose financial statements are included in a submission by another SEC filer are not included within this definition.") and a conduit bond obligor for [conduit debt securities](https://asc.understandingaccounting.org/glossary/c/#conduit-debt-securities "Certain limited-obligation revenue bonds, certificates of participation, or similar debt instruments issued by a state or local governmental entity for the express purpose of providing financing for a specific third party (the conduit bond obligor) that is not a part of the state or local government's financial reporting entity. Although conduit debt securities bear the name of the governmental entity that issues them, the governmental entity often has no obligation for such debt beyond the resources provided by a lease or loan agreement with the third party on whose behalf the securities are issued. Further, the conduit bond obligor is responsible for any future financial reporting requirements.") that are traded in a public market) or the [financial statements are available to be issued](https://asc.understandingaccounting.org/glossary/f/#financial-statements-are-available-to-be-issued "Financial statements are considered available to be issued when they are complete in a form and format that complies with GAAP and all approvals necessary for issuance have been obtained, for example, from management, the board of directors, and/or significant shareholders. The process involved in creating and distributing the financial statements will vary depending on an entity's management and corporate governance structure as well as statutory and regulatory requirements.") (for all other entities) for the reporting period in which the change-in-control event occurred. If the acquiree elects the option to apply pushdown accounting, it must apply the accounting as of the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."). ##### [805-50-25-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:9d48536592f4e30eacc498ee5b3d1754564a8dd71782a0f366e58cd566f0e27d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If 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.") does not elect to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") upon a change-in-control event, it can elect to apply pushdown accounting to its most recent change-in-control event in a subsequent reporting period as a [change in accounting principle](https://asc.understandingaccounting.org/glossary/c/#change-in-accounting-principle "A change from one generally accepted accounting principle to another generally accepted accounting principle when there are two or more generally accepted accounting principles that apply or when the accounting principle formerly used is no longer generally accepted. A change in the method of applying an accounting principle also is considered a change in accounting principle.") in accordance with Topic 250 on accounting changes and error corrections. Pushdown accounting shall be applied as of the acquisition date of the change-in-control event. ##### [805-50-25-8](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:bc7993174266b40d3e7b5e357b79ede2743fb72f4bdda9bc96544918632facf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any subsidiary of an [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.") also is eligible to make an election to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") to its separate financial statements in accordance with the guidance in paragraphs [805-50-25-4 through 25-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-4) irrespective of whether the acquiree elects to apply pushdown accounting. ##### [805-50-25-9](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:03.250Z to 2026-09-10T01:25:03.250Z Record version: sha256:350400e6940d799f893e76623734b613cfceaa11cb7558bf7313afeae9869e50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The decision to apply pushdown accounting to a specific change-in-control event if elected by an acquiree is irrevocable. Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:4f04af8a7047f45a95d107dc7c11cd0b4067c543e615fc978fac903b24cf8b0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/50/#30-initial-measurement) SEC content: no ### Acquisition of Assets Rather than a Business #### Determining Cost ##### [805-50-30-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:019e517bb3fd4f7b6d7dca76cfef9358af05eab7acbea5b64f04191184b60c86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-50-25-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-1) discusses exchange transactions that trigger the initial recognition of assets acquired and liabilities assumed. Assets are recognized based on their cost to the acquiring entity, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of noncash assets given as consideration differs from the assets' carrying amounts on the acquiring entity's books. For transactions involving nonmonetary consideration within the scope of Topic 845, an acquirer must first determine if any of the conditions in paragraph [845-10-30-3](https://asc.understandingaccounting.org/asc/845/10/#845-10-30-3) apply. If the consideration given is nonfinancial assets or [in substance nonfinancial assets](https://asc.understandingaccounting.org/glossary/i/#in-substance-nonfinancial-asset "Paragraphs 610-20-15-5610-20-15-6610-20-15-7610-20-15-8 define an in substance nonfinancial asset.") within the scope of Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, the assets acquired shall be treated as noncash consideration and any gain or loss shall be recognized in accordance with Subtopic 610-20. ##### [805-50-30-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:527ecec67db12ed6a6b8d277558a22232c10a55e438f690b782b26a728310281 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Asset acquisitions in which the consideration given is cash are measured by the amount of cash paid, which generally includes the transaction costs of the asset acquisition. However, if the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or [equity interests](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.") issued) and no other generally accepted accounting principles (GAAP) apply (for example, Topic 845 on nonmonetary transactions or Subtopic 610-20), measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. For transactions involving nonmonetary consideration within the scope of Topic 845, an acquirer must first determine if any of the conditions in paragraph [845-10-30-3](https://asc.understandingaccounting.org/asc/845/10/#845-10-30-3) apply. If the consideration given is nonfinancial assets or in substance nonfinancial assets within the scope of Subtopic 610-20, the assets acquired shall be treated as noncash consideration and any gain or loss shall be recognized in accordance with Subtopic 610-20. #### Allocating Cost ##### [805-50-30-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:26a7de2edf6d0d7bef7906c891b0df4fb62755e0e9962597e969e33172303ef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquiring assets in groups requires not only ascertaining the cost of the asset (or net asset) group but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The cost of such a group is determined using the concepts described in the preceding two paragraphs. The cost of a group of assets acquired in an asset acquisition shall be allocated to the individual assets acquired or liabilities assumed based on their relative fair values and shall not give rise to [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."). The allocated cost of an asset that the entity does not intend to use or intends to use in a way that is not its highest and best use, such as a brand name, shall be determined based on its relative fair value. See paragraph [805-50-55-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-55-1) for an illustration of the relative fair value method to assets acquired outside a business combination. ##### [805-50-30-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:dbfb4dbd1cb19bd6371c71079b95866c24d46c0a160c9ad27c376de1ba5b2759 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [740-10-25-49 through 25-55](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-49) for guidance on the accounting for acquired temporary differences in certain purchase transactions that are not accounted for as [business combinations](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."). ### Transactions between Entities under Common Control #### Transfer Date Measurement ##### [805-50-30-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:daf22fce3e86d021e3a5208ba6bb3490f65423b5527eb1e1a0d7cbf2787b3f62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the [equity interests](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.") shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer. If the carrying amounts of the assets and liabilities transferred differ from the historical cost of the parent of the entities under common control, for example, because [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") had not been applied, then the financial statements of the receiving entity shall reflect the transferred assets and liabilities at the historical cost of the parent of the entities under common control. ##### [805-50-30-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:b58a4597ea3b2aca7a1008efbec5f11c2add04dabe7f6c9f36a0386d537f1e29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some instances, the entity that receives the net assets or equity interests (the receiving entity) and the entity that transferred the net assets or equity interests (the transferring entity) may account for similar assets and liabilities using different accounting methods. In such circumstances, the carrying amounts of the assets and liabilities transferred may be adjusted to the basis of accounting used by the receiving entity if the change would be preferable. Any such change in accounting method shall be applied retrospectively, and financial statements presented for prior periods shall be adjusted unless it is impracticable to do so. Section 250-10-45 provides guidance if retrospective application is impracticable. ### Formation of a Master Limited Partnership ##### [805-50-30-7](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:32342da0c146dc1012dac84dd81c98c070287b8b5f297ebed7911452f64318ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of such factors as the consideration of common ownership and changes in control, a new basis of accounting is not appropriate for any of the following transactions that create a master limited partnership: 1. a A [rollup](https://asc.understandingaccounting.org/glossary/r/#rollup "A way to create a master limited partnership in which two or more legally separate limited partnerships are combined into one master limited partnership.") in which the general partner of the new master limited partnership was also the general partner in some or all of the predecessor limited partnerships and no cash is involved in the transaction. Transaction costs in a rollup shall be charged to expense. 2. b A [dropdown](https://asc.understandingaccounting.org/glossary/d/#dropdown "A transfer of certain net assets from a sponsor or general partner to a master limited partnership in exchange for consideration.") in which the sponsor receives 1 percent of the units in the master limited partnership as the general partner and 24 percent of the units as a limited partner, the remaining 75 percent of the units are sold to the public, and a two-thirds vote of the limited partners is required to replace the general partner. 3. c A [rollout](https://asc.understandingaccounting.org/glossary/r/#rollout "A way to create a master limited partnership in which certain assets of a sponsor are placed into a limited partnership and units are distributed to the shareholders."). 4. d A [reorganization](https://asc.understandingaccounting.org/glossary/r/#reorganization "A way to create a master limited partnership in which all of the assets of an entity are placed into a master limited partnership and that entity ceases to exist."). ##### [805-50-30-8](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:f560448a222f22238296269c2fdaf4683df9d49888269e15e53de7443748dc17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In other situations, it is possible that a new basis of accounting would be appropriate. ##### [805-50-30-9](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:f4d22cf4cbf16c4e2130069f728a7049e5b7e734481976153cee9abd8f768eca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The issuance of master limited partnership units to a general partner of a predecessor limited partnership who will not be the general partner of the new master limited partnership in settlement of management contracts or for other services that will not carry over to the new master limited partnership has characteristics of compensation rather than of equity and shall be accounted for accordingly by the new master limited partnership. ### Pushdown Accounting ##### [805-50-30-10](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:37a2fd8b570874b54fe28fa887749a952b8559a57229b2634913ebb6778f5f01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an [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.") elects the option in this Subtopic to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements."), the acquiree shall reflect in its separate financial statements the new basis of accounting established by 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.") for the individual assets and liabilities of the acquiree by applying the guidance in other Subtopics of Topic 805. If the acquirer did not establish a new basis of accounting for the individual assets and liabilities of the acquiree because it was not required to apply Topic 805 (for example, if the acquirer was an individual or an investment company—see Topic 946 on investment companies), the acquiree shall reflect in its separate financial statements the new basis of accounting that would have been established by the acquirer had the acquirer applied the guidance in other Subtopics of Topic 805. ##### [805-50-30-11](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:f30681b20cf3dcb751b6733f2a8c408e9bbf944db50cda04e70eafc4dc6f26d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquiree shall recognize goodwill that arises because of the application of pushdown accounting in its separate financial statements. However, bargain purchase gains recognized by the acquirer, if any, shall not be recognized in the acquiree's income statement. The acquiree shall recognize the bargain purchase gains recognized by the acquirer as an adjustment to additional paid-in capital (or net assets of a not-for-profit acquiree). ##### [805-50-30-12](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:07.314Z to 2026-09-10T01:25:07.314Z Record version: sha256:2972e54ec9cdaf51395b1c079c6d87ee04d09c83b7d2d196475d3875fdc9d658 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [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.") shall recognize in its separate financial statements any acquisition-related liability incurred by 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.") only if the liability represents an obligation of the acquiree in accordance with other applicable Topics. Source downloaded (UTC): 2026-09-10T01:25:10.742Z to 2026-09-10T01:25:10.742Z Record version: sha256:e5a57b40417906062548c2a1d6d151e774cece117a8707c190491bb032c130e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/50/#35-subsequent-measurement) SEC content: no ### Acquisition of Assets Rather than a Business #### Accounting After Acquisition ##### [805-50-35-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:10.742Z to 2026-09-10T01:25:10.742Z Record version: sha256:077810f191a84c37d37a1031e88f5f16558accab876b34176ebbe3b09bf32cdc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the acquisition, the acquiring entity accounts for the asset or liability in accordance with the appropriate generally accepted accounting principles (GAAP). The basis for measuring the asset acquired or liability assumed has no effect on the subsequent accounting for the asset or liability. ### Pushdown Accounting ##### [805-50-35-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:10.742Z to 2026-09-10T01:25:10.742Z Record version: sha256:a5e0300b1a8eb3200ca555e2e700db4c556063956ccf307f3651c97abe08d8d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [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.") shall follow the subsequent measurement guidance in other Subtopics of Topic 805 and other applicable Topics to subsequently measure and account for its assets, liabilities, and equity instruments, as applicable. Source downloaded (UTC): 2026-09-10T01:25:14.613Z to 2026-09-10T01:25:14.613Z Record version: sha256:f33435f1b2625317f0ac007652c9c25270948210ccb40ed736f9384dbc82d094 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/805/50/#45-other-presentation-matters) SEC content: no ### Transactions between Entities under Common Control ##### [805-50-45-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:14.613Z to 2026-09-10T01:25:14.613Z Record version: sha256:a9a0882539327fb2c7a75058653071477534801a3b52722d0548bce364e8da04 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-50-25-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-25-2) establishes that the assets and liabilities transferred between entities under common control are to be initially recognized by the receiving entity at the transfer date. This Subsection provides guidance on the presentation of financial statements for the period of transfer and comparative financial statements for prior years. #### Financial Statement Presentation in Period of Transfer ##### [805-50-45-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:14.613Z to 2026-09-10T01:25:14.613Z Record version: sha256:ad7928679388d031eff3daee2e35709178755ea9505b6b8adae7d44cc1fa7d88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial statements of the receiving entity shall report results of operations for the period in which the transfer occurs as though the transfer of net assets or exchange of [equity interests](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.") had occurred at the beginning of the period. Results of operations for that period will thus comprise those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. By eliminating the effects of intra-entity transactions in determining the results of operations for the period before the combination, those results will be on substantially the same basis as the results of operations for the period after the date of combination. The effects of intra-entity transactions on current assets, current liabilities, revenue, and cost of sales for periods presented and on retained earnings at the beginning of the periods presented shall be eliminated to the extent possible. ##### [805-50-45-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:14.613Z to 2026-09-10T01:25:14.613Z Record version: sha256:c1e981d5d67bd70cf4b2eba9ee769825d3e578168ca146db22bd23d2d01dd612 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nature of and effects on earnings per share (EPS) of nonrecurring intra-entity transactions involving long-term assets and liabilities need not be eliminated. However, paragraph [805-50-50-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-2) requires disclosure. ##### [805-50-45-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:14.613Z to 2026-09-10T01:25:14.613Z Record version: sha256:439c6ee42c4a10c37c36538c164665cf755bb05d19c616ff133d548794058aba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, the receiving entity shall present the statement of financial position and other financial information as of the beginning of the period as though the assets and liabilities had been transferred at that date. #### Comparative Financial Statement Presentation for Prior Years ##### [805-50-45-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:14.613Z to 2026-09-10T01:25:14.613Z Record version: sha256:546f1c57d647b32a7a484b9925fb937160743f49a204f65a815bfcc510a793a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Financial statements and financial information presented for prior years also shall be retrospectively adjusted to furnish comparative information. All adjusted financial statements and financial summaries shall indicate clearly that financial data of previously separate entities are combined. However, the comparative information in prior years shall only be adjusted for periods during which the entities were under common control. Source downloaded (UTC): 2026-09-10T01:25:17.775Z to 2026-09-10T01:25:17.775Z Record version: sha256:2434c013405d685f50ed7d50f8ecc401157dd0849e91c2549101f6dd8888e870 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/50/#50-disclosure) SEC content: no ### Transactions between Entities under Common Control ##### [805-50-50-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:17.775Z to 2026-09-10T01:25:17.775Z Record version: sha256:44fb7d21feedb0ec78f1674e912cbfde15014f6b8d62e355ab1b97a1c1ed159c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [805-50-45-1 through 45-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-45-1) provide guidance on financial statement presentation in the period of transfer and for periods before the transfer of assets and liabilities between entities under common control. This Subsection addresses incremental disclosures related to such a transaction. ##### [805-50-50-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:17.775Z to 2026-09-10T01:25:17.775Z Record version: sha256:ea25fc50b8465ce3edf828fe9dda57ce6a3547a8a088f7e49bd4cf9b7cc0f237 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nature of and effects on earnings per share (EPS) of nonrecurring intra-entity transactions involving long-term assets and liabilities is not required to be eliminated under the guidance in paragraph [805-50-45-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-45-3) but shall be disclosed. ##### [805-50-50-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:17.775Z to 2026-09-10T01:25:17.775Z Record version: sha256:a6387f040ac200a8b73a569441dbf093607801c35755eb8aa5477b6bdcfa149c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The notes to financial statements of the receiving entity shall disclose the following for the period in which the transfer of assets and liabilities or exchange of [equity interests](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.") occurred: 1. a The name and brief description of the entity included in the reporting entity as a result of the net asset transfer or exchange of equity interests 2. b The method of accounting for the transfer of net assets or exchange of equity interests. ##### [805-50-50-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:17.775Z to 2026-09-10T01:25:17.775Z Record version: sha256:edb1ed064baef77db1edfb6411bf71acdf7cfbbf90f41d75b75c455319505b87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The receiving entity also shall consider whether additional disclosures are required in accordance with Section 850-10-50, which provides guidance on related party transactions and certain common control relationships. ### Pushdown Accounting ##### [805-50-50-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:17.775Z to 2026-09-10T01:25:17.775Z Record version: sha256:10161a9647657f63f178c3a690a7b6dca249c39b1c5bd0382b8f4ebb87b5a0ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an [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.") elects the option to apply [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") in its separate financial statements, it shall disclose information in the period in which the pushdown accounting was applied (or in the current reporting period if the acquiree recognizes adjustments that relate to pushdown accounting) that enables users of financial statements to evaluate the effect of pushdown accounting. To meet this disclosure objective, the acquiree shall consider the disclosure requirements in other Subtopics of Topic 805. ##### [805-50-50-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:17.775Z to 2026-09-10T01:25:17.775Z Record version: sha256:98d99e9b0cf377d4442bae00bea4f69b069447d3bba3440dee50908d723df03a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Information to evaluate the effect of [pushdown accounting](https://asc.understandingaccounting.org/glossary/p/#pushdown-accounting "Use of the acquirer's basis in the preparation of the acquiree's separate financial statements.") may include the following: 1. a The name and a description of 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.") and a description of how the acquirer obtained [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") of the acquiree. 2. b The [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree."). 3. c The acquisition-date fair value of the total consideration transferred by the acquirer. 4. d The amounts recognized by the acquiree as of the acquisition date for each major class of assets and liabilities as a result of applying pushdown accounting. If the initial accounting for pushdown accounting is incomplete for any amounts recognized by the acquiree, the reasons why the initial accounting is incomplete. 5. e A qualitative description of the factors that make up the goodwill recognized, such as expected synergies from combining operations of the acquiree and the acquirer, or intangible assets that do not qualify for separate recognition, or other factors. In a bargain purchase (see paragraphs [805-30-25-2 through 25-4](https://asc.understandingaccounting.org/asc/805/30/#805-30-25-2) ), the amount of the bargain purchase recognized in additional paid-in capital (or net assets of a not-for-profit acquiree) and a description of the reasons why the transaction resulted in a gain. 6. f Information to evaluate the financial effects of adjustments recognized in the current reporting period that relate to pushdown accounting that occurred in the current or previous reporting periods (including those adjustments made as a result of the initial accounting for pushdown accounting being incomplete \[see paragraphs [805-10-25-13 through 25-14](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) \]). The information in this paragraph is not an exhaustive list of disclosure requirements. The acquiree shall disclose whatever additional information is necessary to meet the disclosure objective set out in paragraph [805-50-50-5](https://asc.understandingaccounting.org/asc/805/50/#805-50-50-5). Source downloaded (UTC): 2026-09-10T01:25:20.275Z to 2026-09-10T01:25:20.275Z Record version: sha256:dac9b6d57fda7dca3daf8d2237749196cdd05f8045fa3d96c9a559ffe5cb1656 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/50/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [805-50-55-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:20.275Z to 2026-09-10T01:25:20.275Z Record version: sha256:0862c32d2a3b3ba7c09989e2441d35a41459a25d2651f859a67e261ac5118e18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of the relative fair value method when assets are acquired in a group outside a business combination as discussed in paragraph [805-50-30-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-3). - On January 1, 20X9, Entity A purchased land, building, and equipment for $500,000 in cash. Transaction costs of $25,000 were incurred. - To allocate the cost, the fair value of the individual assets is determined based on the guidance in Topic 820. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B895154A-6A30-4326-A060-4EA6102C3427-low.gif) Asset Fair Value (Based on Measurement Guidance in Topic 820) Percent of Total Fair Value × Purchase Price + Transaction Costs = Allocated Cost of Assets Acquired + Transaction Costs Land " $350,000 " 61% (a) " $525,000 " " $319,565 " Building " 175,000 " 30% (b) " 525,000 " " 159,783 " Equipment " 50,000 " 9% (c) " 525,000 " " 45,652 " Total " $575,000 " 100% " $525,000 " (a) "$350,000/$575,000 = 61%" (b) "$175,000/$575,000 = 30%" (c) "$50,000/$575,000 = 9%" Source downloaded (UTC): 2026-09-10T01:25:22.231Z to 2026-09-10T01:25:22.231Z Record version: sha256:9d3350c544cdb6ea3b03cfc6031ab44d40a0bccc279cbcaae87535b8104654b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/805/50/#65-transition-and-open-effective-date-information) SEC content: no ##### [805-50-65-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:22.231Z to 2026-09-10T01:25:22.231Z Record version: sha256:0fb095f4b824a38130d43c36e4fa6863e2b808ba47295d8275893f50e3df2b30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/26/2015 after the end of the transition period stated in Accounting Standards Update No. 2014-17, _Business Combinations (Topic 805): Pushdown Accounting_. Source downloaded (UTC): 2026-09-10T01:25:27.638Z to 2026-09-10T01:25:27.638Z Record version: sha256:4ac3aacc5da73a4f905f48bce6a0a94ef622b83c99d8a09a34d9c66c02a0deda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/50/#sec-00-status) SEC content: yes ##### [805-50-S00-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:27.638Z to 2026-09-10T01:25:27.638Z Record version: sha256:d3ac8b21e247fa55dbae3d77a5efb2d4e05399ef32c089f09f6c8542e16a8b3e 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
805-50-S25-1SupersededAccounting Standards Update No. 2015-0805/08/2015
805-50-S30-1SupersededAccounting Standards Update No. 2015-0805/08/2015
805-50-S30-2SupersededAccounting Standards Update No. 2015-0805/08/2015
805-50-S50-1SupersededAccounting Standards Update No. 2015-0805/08/2015
805-50-S55-1SupersededAccounting Standards Update No. 2015-0805/08/2015
805-50-S99-1 through S99-3
SupersededAccounting Standards Update No. 2015-0805/08/2015
805-50-S99-1AmendedAccounting Standards Update No. 2012-0308/27/2012
805-50-S99-1AmendedAccounting Standards Update No. 2010-2208/19/2010
805-50-S99-2AmendedAccounting Standards Update No. 2010-0401/15/2010
Source downloaded (UTC): 2026-09-10T01:25:29.321Z to 2026-09-10T01:25:29.321Z Record version: sha256:1941b3c7e64051a85eedf2a345c635a3724bbd772567e3780ce10b2f2dc770b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/50/#sec-25-recognition) SEC content: yes ### New Basis of Accounting (Pushdown) ##### [805-50-S25-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:29.321Z to 2026-09-10T01:25:29.321Z Record version: sha256:c334c76810305be0d11242bad28218d5adca850b4cd92b5f9afbcebdf79057e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). Source downloaded (UTC): 2026-09-10T01:25:32.538Z to 2026-09-10T01:25:32.538Z Record version: sha256:3df072b74d712c650af631323840a5e01354363aa6702c98fef4200b59829451 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/50/#sec-30-initial-measurement) SEC content: yes ### Transactions between Entities under Common Control ##### [805-50-S30-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:32.538Z to 2026-09-10T01:25:32.538Z Record version: sha256:ca3d73341e83b53c0ea0ed2aa8070452ed3895e185b5d002f5df0fede04fdc18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). ##### [805-50-S30-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-S30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:32.538Z to 2026-09-10T01:25:32.538Z Record version: sha256:b84deb1a0c95f86e1bc43bdbd2c4af73a82bbc1ff08289eb1c30628dd02af9f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). #### Measurement of Certain Transfers Between Entities Under Common Control in the Separate Financial Statements of Each Entity ##### [805-50-S30-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-S30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:32.538Z to 2026-09-10T01:25:32.538Z Record version: sha256:519f2ba5a4440245fb8e0f74d92c628deeed0e13032a7b1d5ccac938c7b91470 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [805-50-S99-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-S99-4), SEC Observer Comment: Measurement of Certain Transfers Between Entities Under Common Control in the Separate Financial Statements of Each Entity for SEC Staff views on carrying over historical cost to record, in the separate financial statements of each entity, certain transfers between companies under common control or between a parent and its subsidiary. Source downloaded (UTC): 2026-09-10T01:25:36.085Z to 2026-09-10T01:25:36.085Z Record version: sha256:407b8bad80bb18c966f021a65c19cc7c3772b7e05c2e5c0acba3b0a29ea5c28b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/50/#sec-50-disclosure) SEC content: yes ##### [805-50-S50-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:36.085Z to 2026-09-10T01:25:36.085Z Record version: sha256:3aa2fcd4fb933d879a921866606ac141ab412b5cf7fe91035eea934037376360 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). Source downloaded (UTC): 2026-09-10T01:25:38.552Z to 2026-09-10T01:25:38.552Z Record version: sha256:de6a86612f2058c2839d92bc88d500cf04ff49c82935ec43751ec5297b5f63a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-S55: SEC 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/50/#sec-55-implementation-guidance-and-illustrations) SEC content: yes ##### [805-50-S55-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-S55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:38.552Z to 2026-09-10T01:25:38.552Z Record version: sha256:38203593e8fe849f7a8f5d365166d8508fe7ef3ca0da6ab6c9ed3e39e86a5ceb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). Source downloaded (UTC): 2026-09-10T01:25:42.308Z to 2026-09-10T01:25:42.308Z Record version: sha256:300f5b86d66dba329d24310be26eb38fc44c05fb0abec662ef9d30437167f997 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-50-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/805/50/#sec-99-sec-materials) SEC content: yes ### Transactions between Entities under Common Control #### SEC Staff Guidance ##### [805-50-S99-1](https://asc.understandingaccounting.org/asc/805/50/#805-50-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:42.308Z to 2026-09-10T01:25:42.308Z Record version: sha256:0647f70938d868e02382cbc3ddb16d5361487c6e885d878528042a86514d4770 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). ##### [805-50-S99-2](https://asc.understandingaccounting.org/asc/805/50/#805-50-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:42.308Z to 2026-09-10T01:25:42.308Z Record version: sha256:519b255100cb05295c93fbf59658240be2b79b0f6edccc4e20eb10b43925a99e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). ##### [805-50-S99-3](https://asc.understandingaccounting.org/asc/805/50/#805-50-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:42.308Z to 2026-09-10T01:25:42.308Z Record version: sha256:4ae13890f879df0f10f51d34b11aa3e088a8b819eba44336180137494022cb27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-08](https://asc.understandingaccounting.org/updates/asu-2015-08/). ##### [805-50-S99-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-S99-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:42.308Z to 2026-09-10T01:25:42.308Z Record version: sha256:2309d620ff396104df107eae047cfa8b122b3429c0f6192b797e9d97de23d433 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of the SEC Observer Comment: Measurement of Certain Transfers Between Entities Under Common Control in the Separate Financial Statements of Each Entity. - The SEC staff's views on carrying over historical cost to record, in the separate financial statements of each entity, transfers between companies under common control or between a parent and its subsidiary are focused on transfers of net assets (as in a business combination) or long-lived assets. Those views would not normally apply to recurring transactions for which valuation is not in question (such as routine transfers of inventory) in the separate financial statements of each entity that is a party to the transaction. Source downloaded (UTC): 2026-09-10T01:25:44.706Z to 2026-09-10T01:26:14.808Z Record version: sha256:c974381c23fb93a1ce10115f12c328ed5071366216357fd42abb05514b6b419e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60: Business Combinations — Joint Venture Formations ### Machine-generated study aids ```json { "summary": "ASC 805-60 governs how a newly formed joint venture (or corporate joint venture) accounts for its own formation in its separate financial statements. The joint venture must establish a new basis of accounting at the formation date, recognizing and measuring identifiable assets, liabilities, and any noncontrolling interest under Subtopic 805-20, but without identifying an acquirer. Goodwill, if any, is the excess of the formation-date fair value of the joint venture as a whole over the net of the identifiable assets and liabilities recognized; any excess of net assets over that fair value is credited to additional paid-in capital rather than recognized as a bargain purchase gain.", "key_points": [ "A joint venture applies a new basis of accounting upon formation, treating the transaction as a transfer of net assets to a new reporting entity whose history begins at formation, and does not identify an acquirer (805-60-05-2; 805-60-25-2).", "The formation date is the date the entity first meets the definition of a joint venture (not necessarily the legal formation date), and a single formation date serves as the measurement date for all contributions and for any multiple arrangements accounted for as one transaction (805-60-25-3 through 25-5).", "New basis accounting applies whether or not the contributed assets constitute a business, and identifiable assets, liabilities, and any NCI are recognized and measured under Subtopic 805-20 (805-60-25-10 through 25-11; 805-60-30-1).", "Goodwill equals the formation-date fair value of the joint venture as a whole (100% of equity immediately after formation, including NCI) less the net of the recognized identifiable assets and liabilities; more than insignificant goodwill is unusual if the contributed assets are not a business (805-60-25-13; 805-60-30-2).", "Any excess of identifiable net assets over the fair value of the joint venture as a whole is recorded as an adjustment to additional paid-in capital (or members' equity), not as a gain (805-60-30-3).", "Equity-classified instruments issued in the formation and the preformation-vesting portion of equity-classified replacement share-based payment awards are reallocations of additional paid-in capital and do not change total equity or goodwill; replacement awards are split between preformation vesting and postformation compensation cost under 805-30-30-9 through 30-13 (805-60-25-8; 805-60-30-4 through 30-5).", "The measurement period guidance in 805-10-25-13 through 25-19 may be applied if initial accounting is incomplete, with disclosures required by 805-60-50-3; period-of-formation disclosures include the formation date, purpose, fair value of the joint venture as a whole, major classes of assets and liabilities, and qualitative goodwill factors (805-60-25-14; 805-60-50-2)." ], "categories": [ "Business combinations", "Initial measurement", "Intangibles and goodwill", "Disclosure" ], "audience_level": "advanced", "student_note": "Added by ASU 2023-05, this Subtopic finally answers a long-unsettled question: a joint venture steps up all contributed net assets to fair value in its own financial statements even though no acquirer exists. The classic trap is applying the acquisition method mechanically — there is no acquirer, no bargain purchase gain (the excess goes to APIC), no settlement-of-preexisting-relationship or acquisition-cost analogies (805-60-25-7), and goodwill is derived from the fair value of the venture as a whole rather than consideration transferred.", "related_topics": [ "805-10", "805-20", "805-30", "805-50", "350-20", "718" ], "key_concepts": [ "joint venture formation", "new basis of accounting", "formation date", "fair value of the joint venture as a whole", "goodwill", "additional paid-in capital adjustment", "replacement share-based payment awards", "measurement period" ] } ``` Source downloaded (UTC): 2026-09-10T01:25:44.706Z to 2026-09-10T01:25:44.706Z Record version: sha256:d03c45f98c54bcdc56d3c846ca9baa201671db86171ccf36c8d4702f3d51ea87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/60/#00-status) SEC content: no ##### [805-60-00-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:44.706Z to 2026-09-10T01:25:44.706Z Record version: sha256:30ae0a2ff487cb144515509e93c04294213f688805232d118df1556b31b7f9b2 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. 2023-0508/23/2023
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
AcquirerAddedAccounting Standards Update No. 2023-0508/23/2023
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2023-0508/23/2023
Acquisition DateAddedAccounting Standards Update No. 2023-0508/23/2023
BusinessAddedAccounting Standards Update No. 2023-0508/23/2023
Business CombinationAddedAccounting Standards Update No. 2023-0508/23/2023
Control (3rd def.)AddedAccounting Standards Update No. 2023-0508/23/2023
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Equity InterestsAddedAccounting Standards Update No. 2023-0508/23/2023
Fair Value (2nd def.)AddedAccounting Standards Update No. 2023-0508/23/2023
Financial AssetAddedAccounting Standards Update No. 2023-0508/23/2023
Formation DateAddedAccounting Standards Update No. 2023-0508/23/2023
GoodwillAddedAccounting Standards Update No. 2023-0508/23/2023
IdentifiableAddedAccounting Standards Update No. 2023-0508/23/2023
Intangible AssetsAddedAccounting Standards Update No. 2023-0508/23/2023
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Legal EntityAddedAccounting Standards Update No. 2023-0508/23/2023
Market ParticipantsAddedAccounting Standards Update No. 2023-0508/23/2023
Noncontrolling InterestAddedAccounting Standards Update No. 2023-0508/23/2023
Nonprofit ActivityAddedAccounting Standards Update No. 2023-0508/23/2023
Not-for-Profit EntityAddedAccounting Standards Update No. 2023-0508/23/2023
Orderly TransactionAddedAccounting Standards Update No. 2023-0508/23/2023
OwnersAddedAccounting Standards Update No. 2023-0508/23/2023
Private CompanyAddedAccounting Standards Update No. 2023-0508/23/2023
Public Business EntityAddedAccounting Standards Update No. 2023-0508/23/2023
Related PartiesAddedAccounting Standards Update No. 2023-0508/23/2023
Security (2nd def.)AddedAccounting Standards Update No. 2023-0508/23/2023
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
Variable Interest EntityAddedAccounting Standards Update No. 2023-0508/23/2023
805-60-05-1AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-05-2AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-15-1 through 15-4
AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-25-1 through 25-15
AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-30-1 through 30-7
AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-35-1AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-35-2AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-45-1AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-50-1 through 50-3
AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-55-1 through 55-14
AddedAccounting Standards Update No. 2023-0508/23/2023
805-60-65-1AddedAccounting Standards Update No. 2023-0508/23/2023
Source downloaded (UTC): 2026-09-10T01:25:47.997Z to 2026-09-10T01:25:47.997Z Record version: sha256:13f1b1290dd6d7f908209665229c8002cdce2d146aa9a7d9ead76290b8786393 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/60/#05-overview-and-background) SEC content: no ##### [805-60-05-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:47.997Z to 2026-09-10T01:25:47.997Z Record version: sha256:ef4e943ae7c234eb852b6eaeaf289715e844510508bae89368addd8cf3eb26ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on the accounting and reporting for the formation of a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") or a [corporate joint venture](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.") (collectively, joint ventures) in a joint venture’s separate financial statements. ##### [805-60-05-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:47.997Z to 2026-09-10T01:25:47.997Z Record version: sha256:3fc0178ab11623aeb508e9bc4075f54777a91be937a4aebbad0f7a93aa61bf52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [805-60-25-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-2) requires that a joint venture account for its formation by applying a new basis of accounting. In accounting for the formation of a joint venture, none of the assets and/or [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.") contributed to the joint venture are viewed as having survived the combination as independent entities. Rather, the formation is viewed as the transfer of the net assets to a new entity that assumes [control](https://asc.understandingaccounting.org/glossary/c/#control "The same as the meaning of controlling financial interest in paragraph 810-10-15-8.") over them. The history of that new reporting entity begins with the joint venture formation. A joint venture establishes a new basis of accounting upon formation by applying aspects of the acquisition method for [business combinations](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."), with adaptations that are unique to joint ventures as described in this Subtopic. Accounting for a joint venture formation includes the following steps: 1. a Determining the [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction.") 2. b Recognizing and measuring 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, the liabilities, 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 net assets recognized by the joint venture 3. c Recognizing and measuring [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."), if any, using the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the joint venture as a whole immediately following formation. Source downloaded (UTC): 2026-09-10T01:25:51.338Z to 2026-09-10T01:25:51.338Z Record version: sha256:fd570149c321a5a133a93fd3883b10780dc5291b98c0550aa7c4fe0fadbefae0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/60/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-60-15-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:51.338Z to 2026-09-10T01:25:51.338Z Record version: sha256:7711055e141e2d3d5779e0024e5362d88d27bf2071024ed5c50a8d3d556e7a56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic has its own discrete scope, which is separate and distinct from the pervasive scope for this Topic as outlined in Section 805-10-15. #### Entities ##### [805-60-15-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:51.338Z to 2026-09-10T01:25:51.338Z Record version: sha256:1044350603d69e717a4f9fdad07d938730cd8a08907d19841a21550d6864cba9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to the financial statements of [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") and [corporate joint venture](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.") entities (collectively, joint ventures) as defined in Section 805-60-20. #### Transactions ##### [805-60-15-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:51.338Z to 2026-09-10T01:25:51.338Z Record version: sha256:cc9046711efdb0550f43d10b9994e55762333ada9d9145d63a9b0de30a32d843 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to the formation of joint ventures. ##### [805-60-15-4](https://asc.understandingaccounting.org/asc/805/60/#805-60-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:51.338Z to 2026-09-10T01:25:51.338Z Record version: sha256:032e999ddde2684713796a3eabe6046df9a2dcd00ee58347b1e3abf6690bbd95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to any of the following: 1. a Transactions between a joint venture and its [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") other than the formation of a joint venture 2. b Formations of entities determined to be [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.") in accordance with Topic 958 3. c Combinations between entities, businesses, 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.") under common control (see paragraph [805-50-15-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-15-6) for examples) 4. d Entities in the construction or extractive industries that may be proportionately consolidated by any of their investor-venturers in accordance with paragraph [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14) 5. e Collaborative arrangements within the scope of Topic 808, except for any part of the arrangement that is conducted in a separate legal entity that meets the definition of a joint venture. Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:3fdb79e2de79e4b44297a7452054fc9d156595d1b67a6e4e6c0970e1d0a2f464 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/60/#25-recognition) SEC content: no ##### [805-60-25-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:f34a6a162e109fecf37bb03b39e6b3417f69c0a06c87d974f9b9cbcaa9200219 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall determine whether a transaction or an event is a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") formation by applying the definition of joint venture (or [corporate joint venture](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.")) and the guidance in paragraph [805-60-25-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-3) on its [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction."). If the transaction or event is not a joint venture formation, the reporting entity shall account for the transaction or event in accordance with other generally accepted accounting principles (GAAP). ##### [805-60-25-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:4d98ebefa20655079bc74119b439038ecf5a233f663006374c60538debb8c065 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting for joint venture formations as described in this Subtopic requires that a joint venture establish upon formation a new basis of accounting for its assets and liabilities in accordance with Subtopic 805-20 on [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 and liabilities, 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."). A joint venture shall recognize [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."), if any, in accordance with paragraph [805-60-25-13](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-13). Unlike the acquisition method, accounting for the formation of a joint venture does not include the identification 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."). This Section includes the following requirements: 1. a Determining the formation date 2. b Determining whether multiple arrangements should be accounted for as a single formation transaction 3. c Determining what is part of the joint venture formation 4. d Accounting for the formation of a joint venture, as applicable: 1. 1 New basis of accounting 2. 2 Private company accounting alternatives 3. 3 Goodwill 4. 4 Measurement period 5. 5 Transfers of [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity."). #### Determining the Formation Date ##### [805-60-25-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:b944506ff2b474b879534d83cf8ebff55b694e735f1c87642c6ce7453531be82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The joint venture formation date is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the [legal entity](https://asc.understandingaccounting.org/glossary/l/#legal-entity "Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.") formation date. A joint venture’s formation date is the measurement date for the formation transaction. A joint venture shall determine a single formation date and account for its formation as of that date. A joint venture shall consider the pertinent facts and circumstances in identifying its formation date. All contributions received, or that are receivable, as of the formation date, including consideration of the guidance in paragraphs [805-60-25-4 through 25-5](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-4) on multiple arrangements that should be accounted for as a single formation transaction, constitute the joint venture formation transaction. #### Determining Whether Multiple Arrangements Should Be Accounted for as a Single Formation Transaction ##### [805-60-25-4](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:804d7821c5711ad901eeff7119d473eea33f7b1559c88f444b1087c9cbc72443 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Multiple arrangements may establish the formation of a joint venture and constitute the joint venture formation transaction. Circumstances sometimes indicate that the multiple arrangements should be accounted for as a single transaction. In determining whether to account for the multiple arrangements as a single transaction that establishes the formation, a joint venture shall consider the terms and conditions of the arrangements and their economic effects. Any of the following may indicate that the joint venture should account for the multiple arrangements as a single transaction that established the formation of the joint venture: 1. a The multiple arrangements are entered into at the same time or in contemplation of one another. 2. b The multiple arrangements form a single transaction designed to achieve an overall commercial effect. 3. c The occurrence of one arrangement is dependent on the occurrence of at least one other arrangement. 4. d One arrangement considered on its own is not economically justified, but the multiple arrangements are economically justified when considered together. ##### [805-60-25-5](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:876eec14f3bdab10c9ef63a9a344676089f40cefe2679b33c9b1bc143b1dfc0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If multiple arrangements are accounted for as a single transaction in accordance with paragraph [805-60-25-4](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-4), then the formation date shall be the measurement date for all arrangements that form part of the single formation transaction. A joint venture shall recognize identifiable assets and liabilities that are part of that single transaction when they satisfy the recognition criteria described in paragraph [805-60-25-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-2). #### Determining What Is Part of the Joint Venture Formation ##### [805-60-25-6](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:49813d444b67455848b2f345b595e47178531bb357e2ade70ae810b60c0e1c87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture and its [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") (the venturers) may enter into an arrangement upon formation that is separate from the formation of the joint venture. For example, a joint venture may enter into an arrangement with a venturer to compensate the venturer or others (such as employees of the venturers) for future services. A joint venture shall apply the guidance in paragraphs [805-10-55-24 through 55-26](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-24) when determining whether a transaction involving payments to be made by the joint venture to the venturers or others is separate from or part of a joint venture formation. A joint venture shall identify any amounts that are separate from the formation of the joint venture and shall recognize the identifiable assets and liabilities that are determined to be part of the joint venture formation. Separate transactions shall be accounted for in accordance with other relevant GAAP. ##### [805-60-25-7](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:7673115dd410c89c61b04a5ad1bd5580518915e3465ba312b07d197d1a0808b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall not apply by analogy the guidance in paragraphs [805-10-55-20 through 55-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-20) (for a transaction that in effect settles preexisting relationships between the acquirer and the acquiree) or paragraph [805-10-25-23](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-23) (for acquisition-related costs and transactions that reimburse the acquiree or its former owners for paying the acquirer’s acquisition-related costs). ##### [805-60-25-8](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:1cd682d5c684539ccbf559c010516f23887568e98e055403f75b571365200b8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, upon formation, a joint venture issues share-based payment awards to replace awards held by grantees of the contributed entities, then the joint venture shall apply the guidance in paragraphs [805-30-30-9 through 30-13](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-9) to allocate the fair-value-based measure of replacement share-based payment awards between preformation vesting and postformation compensation cost. Paragraphs [805-60-55-2 through 55-14](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-2) provide illustrations of the accounting for the issuance of replacement share-based payment awards in a joint venture formation. ##### [805-60-25-9](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:7561a1a3ba815ef3418172631241b1f6b53226d6cc71ba965d70e95112afc826 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the purposes of applying the business combinations guidance on arrangements that include contingent payments to employees or selling shareholders and replacement share-based payment awards referenced in paragraphs [805-60-25-6 through 25-8](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-6): 1. a The joint venture shall be viewed as analogous to the acquirer in a business combination. 2. b The venturers shall be viewed as analogous to the selling shareholders. 3. c The recognized businesses and/or assets shall be viewed as analogous to an acquiree. #### Accounting for the Formation of a Joint Venture ##### [805-60-25-10](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:90063c866591f0e3f369e02082e1e4e73868a074de0e9293e192fedfedd3acdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the formation date, a joint venture shall account for its formation by establishing a new basis of accounting for its identifiable assets and liabilities, and any noncontrolling interest, in accordance with Subtopic 805-20. ##### [805-60-25-11](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:bf8caa3e63fe97f76917a672d8aa4155ddbc6d495f64f86aa8c99014c486e427 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall account for its formation in accordance with this Subtopic regardless of whether the assets or group of assets recognized by the joint venture constitute 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.") in accordance with Subtopic 805-10. ##### [805-60-25-12](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:c710f38da915e94761b4d64a6a11519e2c8ce92e319dc71243f5796ee6716d6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture that is a [private company](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") may elect to apply the accounting alternative for the recognition of identifiable intangible assets described in paragraphs [805-20-25-30 through 25-33](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-30). In accordance with paragraph [805-20-15-4](https://asc.understandingaccounting.org/asc/805/20/#805-20-15-4), a joint venture that elects to apply this accounting alternative must adopt the accounting alternative for amortizing goodwill in the Accounting Alternatives Subsections of Subtopic 350-20. ##### [805-60-25-13](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:26201f9b669b53056d642be8a76fef8814668c7ef10075266e251e344c70202f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accounting for its formation, a joint venture shall recognize goodwill as of the formation date, when applicable. The presence of more than an insignificant amount of goodwill is expected to be unusual if, at formation, the assets or group of assets recognized by the joint venture do not constitute a business in accordance with Subtopic 805-10. Paragraph [805-60-30-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-2) describes how a joint venture should measure goodwill upon its formation. ##### [805-60-25-14](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:c3a31cef702501f4c24badea17c84fe8cb5f4051e671bdd9f6651817ba5c236e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the initial accounting for a joint venture formation is incomplete by the end of the reporting period in which the formation date occurs, the joint venture may apply the measurement period guidance in paragraphs [805-10-25-13 through 25-19](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-13) for the items for which the accounting is incomplete. Joint ventures that apply the measurement period guidance shall disclose the information described in paragraph [805-60-50-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-50-3). ##### [805-60-25-15](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:25:57.804Z to 2026-09-10T01:25:57.804Z Record version: sha256:bfd37ec3837c0c054aab4c4fd64cdfcb817d9af2651ed431c56c0ab44d1bd8a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a venturer transfers financial assets that are within the scope of Subtopic 860-10 to the joint venture upon formation, then the joint venture shall determine whether the transfer results in the recognition of the transferred financial assets by the joint venture by applying the guidance in Subtopic 860-10. Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:a3dc5c96bef398ce2b32450971d178d1cdd0e5e30ca5c5d1c2b12d03df58ddfc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/60/#30-initial-measurement) SEC content: no #### Identifiable Assets and Liabilities, and Any Noncontrolling Interest ##### [805-60-30-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:9c4266ea57c235f82dc35c5caf52990b02e75dd41b86b4e05a7bfde77177a546 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") shall measure its [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 and liabilities, 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."), recognized at the [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction.") in accordance with Subtopic 805-20. #### Goodwill ##### [805-60-30-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:827b48946840b12ad50152aa3aeaafff2541a970924abfc1c3d7a5760b2c7fe6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall apply the guidance in this paragraph to measure [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."), when applicable. A joint venture shall recognize goodwill, if any, upon formation, measured as the excess of (a) over (b): 1. a The formation-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the joint venture as a whole. The formation-date fair value of the joint venture as a whole shall equal the fair value of 100 percent of the joint venture’s equity (net assets) immediately following formation (including any noncontrolling interest in the net assets recognized by the joint venture). 2. b The net of the formation-date amounts of the identifiable assets and liabilities recognized by the joint venture and measured in accordance with Subtopic 805-20. ##### [805-60-30-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:7166452af16bf8370f3c6a98fe09c8f83eb02fa03128d03ecfeeb574c5316a51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Upon formation, a joint venture shall recognize the amount of its identifiable net assets recognized in excess of the fair value of the joint venture as a whole, if any, as an adjustment to additional paid-in capital (or other similar equity account, such as members’ equity). #### Instruments, Contracts, and Share-Based Payment Awards Classified as Equity ##### [805-60-30-4](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:b59b5b7346755907240dca19adf4845e49f07f3c783ffb0bceb4210d1339e2af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of any separately recognized equity-classified instruments or contracts issued by a joint venture as part of the formation transaction, other than equity-classified replacement share-based payment awards (see paragraph [805-60-30-5](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-5)), shall be accounted for as a reallocation of additional paid-in capital (or other similar equity account, such as members’ equity) and shall not affect the total amount of equity or goodwill recognized by the joint venture upon formation. ##### [805-60-30-5](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:9f4ac2269c5c26becfa6bcbac2570cf74073cace1873c1cb41bce11a035437da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall initially measure equity-classified replacement share-based payment awards at the fair-value-based measurement method described in Topic 718 on stock compensation. The fair-value-based amount allocated to preformation vesting (in accordance with paragraph [805-60-25-8](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-8)) of any replacement share-based payments classified as equity shall be recognized as a reallocation of additional paid-in capital (or other similar equity account, such as members’ equity) and shall not affect the total amount of equity or goodwill recognized by the joint venture upon formation. #### Liability-Classified and Asset-Classified Contingent Payments and Replacement Share-Based Payment Awards ##### [805-60-30-6](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:516c861e27e4fb72b87ff25d5768865ed81b0caa40db1194666eb5977b5dbb59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall initially measure any contingent payment arrangements between the joint venture and its venturers that are classified as liabilities (or assets), other than replacement share-based payment awards, in accordance with paragraph [805-60-30-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-1). A joint venture shall not account for those arrangements generated as a result of the joint venture formation as contingent consideration or as an assumed contingent consideration arrangement. ##### [805-60-30-7](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:01.305Z to 2026-09-10T01:26:01.305Z Record version: sha256:e776cc39a88095acaed616d5d878065c0ea189f118c199381e14d73627c8621c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture shall initially measure liability-classified replacement share-based payment awards using the fair-value-based measurement method described in Topic 718 on stock compensation (consistent with the requirements in paragraphs [805-60-25-8](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-8) and [805-60-30-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-1)). Source downloaded (UTC): 2026-09-10T01:26:03.723Z to 2026-09-10T01:26:03.723Z Record version: sha256:e442a9c339fc1d8b673d134f5c58d6a18b4a59de87b9c14442400649cf94e928 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/60/#35-subsequent-measurement) SEC content: no ##### [805-60-35-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:03.723Z to 2026-09-10T01:26:03.723Z Record version: sha256:5f23ef3f65d295dfc9bf29136c26dccb05e18e1037a2da3e7d3d7c4557050fbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") shall subsequently measure and account for the assets and liabilities recognized upon formation in accordance with the requirements for [acquirers](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.") 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.") in Sections 805-10-35, 805-20-35, and 805-30-35, and other generally accepted accounting principles (GAAP), as applicable. ##### [805-60-35-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:03.723Z to 2026-09-10T01:26:03.723Z Record version: sha256:20f482dcbf6acf43a54560a2b3e56e6d26515873f7d4611af331140a0475933e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A joint venture that is a [private company](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") may elect to apply the accounting alternatives for the subsequent measurement of [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.") described in paragraphs [350-20-35-62 through 35-82](https://asc.understandingaccounting.org/asc/350/20/#350-20-35-62). Source downloaded (UTC): 2026-09-10T01:26:07.446Z to 2026-09-10T01:26:07.446Z Record version: sha256:5cdc8a9644e87c2fd56dae0be9c7555e6637eb8738aa5a2e7176149693ad590e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/805/60/#45-other-presentation-matters) SEC content: no #### Disclosure of Formation Date Balance Sheet ##### [805-60-45-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:07.446Z to 2026-09-10T01:26:07.446Z Record version: sha256:d92f680a842d639b86ffbd4472f7b9e2fa5e942797b28f8ddece17e79183af15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To satisfy the requirements in paragraph [805-60-50-2(e)](https://asc.understandingaccounting.org/asc/805/60/#805-60-50-2), a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") may, in lieu of disclosure in the notes to financial statements, present a statement of financial position as of the [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction.") that reflects the amounts recognized by the joint venture for each major class of assets and liabilities as a result of its formation. Source downloaded (UTC): 2026-09-10T01:26:09.999Z to 2026-09-10T01:26:09.999Z Record version: sha256:2c8194be2f1ad79172fe7483462a605a011fb25a69a8f23b8ec6eb57e8db5516 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/60/#50-disclosure) SEC content: no ##### [805-60-50-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:09.999Z to 2026-09-10T01:26:09.999Z Record version: sha256:9e682beff782fcd52c8c56031a2a1175ce6b168faef125d22faf7d4fb30cb507 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") shall disclose information that enables users of its financial statements to understand the nature and financial effect of the joint venture formation in the period in which the [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction.") occurs. ##### [805-60-50-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:09.999Z to 2026-09-10T01:26:09.999Z Record version: sha256:88b09ac5a8d0654624a39e6ad622d3999a6a952d4bd08097f44d1c7ccb8e207c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the period of formation, a joint venture shall disclose the following: 1. a The formation date 2. b A description of the purpose for which the joint venture was formed (for example, to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities) 3. c The formation-date [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the joint venture as a whole 4. d A description of the assets and liabilities recognized by the joint venture at the formation date 5. e The amounts recognized by the joint venture for each major class of assets and liabilities as a result of accounting for its formation, either presented on the face of financial statements or disclosed in the notes to financial statements (see paragraph [805-60-45-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-45-1)) 6. f A qualitative description of the factors that make up any [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, such as expected synergies from combining operations of the contributed assets or [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."), [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. ##### [805-60-50-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:09.999Z to 2026-09-10T01:26:09.999Z Record version: sha256:5536bcebbdff1d7922b785c8dc2d96ef248eb55c8d185665a5d0c7e48af88a6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the initial accounting for a joint venture formation is incomplete (see paragraph [805-60-25-14](https://asc.understandingaccounting.org/asc/805/60/#805-60-25-14)) for particular assets, liabilities, noncontrolling interests, or the formation-date fair value of the joint venture as a whole and the amounts recognized in the financial statements for the joint venture formation thus have been determined only provisionally, the joint venture shall disclose the following information: 1. a The reasons why the initial accounting is incomplete 2. b The assets, liabilities, noncontrolling interests, or the formation-date fair value of the joint venture as a whole for which the initial accounting is incomplete 3. c The nature and amount of any measurement period adjustments recognized during the reporting period, including separately the amount of adjustment to current-period income statement line items relating to the income effects that would have been recognized in previous periods if the adjustment to provisional amounts was recognized as of the formation date. Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:0b6f6f4e70059897d5e132e3e6706ea3294312adeb353b162a8bc34f8e702fb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/60/#55-implementation-guidance-and-illustrations) SEC content: no ##### [805-60-55-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:2d7311851663d3c7994c6adcc32a12aa8a1b313cbe7444f12c0fc53cfbe367e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides illustrations that address the general application of accounting requirements for [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") formations. #### Illustrations ##### [805-60-55-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:f05106ec277e93526855858662f20ab7ebb7b2bd254b573fc0d86ec81f4b1735 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 1, 20X0, a newly formed corporation with no assets or liabilities, New Venture, receives contributions of a controlling financial interest in Business A (90 percent voting interest) from Venturer 1 and Business B (100 percent voting interest) from Venturer 2 and, in exchange, issues 50 common shares to each Venturer 1 and Venturer 2. Assume that New Venture has no other classes of equity or any other equity instruments outstanding before receiving the contributions. It is determined that New Venture first met the definition of a joint venture on January 1, 20X0. New Venture determines January 1, 20X0, to be its [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction."). ##### [805-60-55-3](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:93c98d7c088b97e693348a41ffb79a04172566931873207bf2d9b5968752860b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraph [805-60-30-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-2), but before consideration of any liabilities for share-based payments, New Venture determines that the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the joint venture as a whole is $100 million including a [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.") (10 percent voting interest) in Business A that is owned by an outside entity. It also determines, in accordance with paragraph [805-60-30-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-2), that the formation-date fair value of the identifiable assets is $120 million, the fair value of the liabilities is $40 million, and the fair value of the noncontrolling interest in Business A is $5 million. ##### [805-60-55-4](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:8677e214f797b24e101f45706ae3422b1ad5e16d18f6233927f8b6548dcad465 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Upon formation, New Venture exchanges replacement awards that require one year of postformation vesting for share-based payment awards of Business A for which employees had not yet rendered all of the required services as of the formation date. The fair-value-based measure of both awards (the original awards and the replacement awards) is $20 million at the formation date. When originally granted, the awards of the contributed business had a requisite service period of four years. As of the formation date, the contributed business’s employees had rendered two years’ service, and they would have been required to render two additional years of service after the formation date for their awards to vest. Accordingly, only a portion of the contributed business’s awards is attributable to preformation vesting. ##### [805-60-55-5](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:5745e6f9cc900a6dd5f91615c3d22d6c72507259e035884cfd10fe15e06b0544 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The replacement awards require only one year of postformation vesting. Because employees have already rendered two years of service, the total requisite service period is three years. For simplicity, assume that New Venture estimates that there will be no forfeitures of the replacement share-based payment awards. The portion attributable to preformation vesting equals the fair-value-based measure of the contributed business’s award ($20 million) multiplied by the ratio of the preformation vesting period (2 years) to the greater of the total service period (3 years) and the original service period of the contributed business’s award (4 years). Thus, $10 million ($20 million × 2 ÷ 4 years) is attributable to preformation vesting and, therefore, New Venture’s additional paid-in capital upon formation. The remaining $10 million is attributable to postformation vesting and therefore recognized as compensation cost in New Venture’s postformation financial statements in accordance with Topic 718 on stock compensation. ##### [805-60-55-6](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:a8ebeb29b79b38e93b5fce9345a0abeda0ea3be3f4b08384afa1f41bef471e30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New Venture applies the guidance in Topic 718 to determine whether the share-based payments should be classified as liabilities or equity. ##### [805-60-55-7](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:bb86eb3bb191b272c300ee74691cbf0ba62a5d116cbb532deced60f372710448 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If New Venture determines that the replacement share-based payment awards are classified as liabilities, then total liabilities will equal $50 million ($40 million + $10 million). For simplicity, when taking the share-based payment liabilities into account, the fair value of New Venture as a whole is $90 million ($100 million – $10 million). ##### [805-60-55-8](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:17831ea7ddb09cb7d55d8a794fe64d9de3e7f3211e1357168f2879d6b4150af3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New Venture calculates goodwill as follows (in millions), consistent with the guidance in paragraph [805-60-30-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-2). The formation-date fair value of the joint venture as a whole is equal to the fair value of 100 percent of the joint venture’s equity (net assets) immediately following formation (including any noncontrolling interest in the net assets recognized by the joint venture). - ![](https://asc.understandingaccounting.org/asc-img/GUID-DB4C79A8-947F-4078-A24A-9A09A9244147-low.gif) Fair value of New Venture as a whole (including $5 noncontrolling interest) $90 Less: Net fair value of identifiable assets and liabilities recognized ($120 assets − $50 liabilities) (70) Goodwill recognized by New Venture at formation date $20 ##### [805-60-55-9](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:11fbcfaeac4bff7c58c5f6c5e7c24f956ebf7d77c3c32d15a1ac87d37baa9e11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New Venture calculates additional paid-in capital as follows (in millions). - ![](https://asc.understandingaccounting.org/asc-img/GUID-49B0BB60-78D5-42DC-A472-29022B07E246-low.gif) "Net assets recognized by New Venture, excluding share-based payment liabilities ($120 identifiable assets – $40 liabilities + $20 goodwill)" $100 Less: The fair value of noncontrolling interest in business contributed to New Venture (5) Less: The fair value of preformation vesting replacement share-based payments classified as a liability (10) Additional paid-in capital recognized by New Venture at the formation date $85 ##### [805-60-55-10](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:3ec549d1887f533f95339126d34cd666c558cb59a477d75c19db98c810044695 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New Venture records the following entry at the formation date (in millions). - ![](https://asc.understandingaccounting.org/asc-img/GUID-209D267C-DA1F-4444-97DE-EB2538AE6637-low.gif) Identifiable assets recognized $120 Goodwill 20 Liabilities recognized $40 Noncontrolling interest 5 Share-based payment liability (preformation vesting) 10 Additional paid-in capital 85 ##### [805-60-55-11](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:3982dbe66bb545a4a8821a948656574ab8b4013657ea821b785dbce3f236ec31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If New Venture determines that the replacement share-based payment awards are classified as equity, then total liabilities will equal $40 million and the fair value of New Venture as a whole is $100 million. ##### [805-60-55-12](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:4e2d771837ba020c5d9297864762447c45116c5f58f86b3faf6ac7f5e8f6c71a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New Venture calculates goodwill as follows (in millions), consistent with the guidance in paragraph [805-60-30-2](https://asc.understandingaccounting.org/asc/805/60/#805-60-30-2). The formation-date fair value of the joint venture as a whole is equal to the fair value of 100 percent of the joint venture’s equity (net assets) immediately following formation (including any noncontrolling interest in the net assets recognized by the joint venture). - ![](https://asc.understandingaccounting.org/asc-img/GUID-7DA11843-71E1-49E5-A74F-55EEB145DFA8-low.gif) Fair value of New Venture as a whole (including $5 noncontrolling interest) $100 Less: Net fair value of identifiable assets and liabilities recognized ($120 assets − $40 liabilities) (80) Goodwill recognized by New Venture at formation date $20 ##### [805-60-55-13](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:d0b0a1905313c450557cf358dd9b0b36890380c60c0b272ef18535e447ea16f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New Venture calculates additional paid-in capital, excluding additional paid-in capital attributable to share-based payments, as follows (in millions). - ![](https://asc.understandingaccounting.org/asc-img/GUID-25C813EF-9ADF-4804-AB97-817F5B708C3C-low.gif) "Net assets recognized by New Venture, excluding share-based payment liabilities ($120 identifiable assets – $40 liabilities + $20 goodwill)" $100 Less: The fair value of noncontrolling interest in business contributed to New Venture (5) Less: The fair value of preformation vesting replacement share-based payments classified as equity (10) Additional paid-in capital recognized by New Venture at the formation date (excluding additional paid-in capital attributable to preformation vesting share-based payments) $85 ##### [805-60-55-14](https://asc.understandingaccounting.org/asc/805/60/#805-60-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:12.163Z to 2026-09-10T01:26:12.163Z Record version: sha256:db1338b1548858a4763818e2f1cffcbe13b344583eb8c1eaad9f7c62f21cae86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New Venture records the following entry at the formation date (in millions). - ![](https://asc.understandingaccounting.org/asc-img/GUID-2BC25624-18F1-4DAC-83DF-CEC68C0CCBF0-low.gif) Identifiable assets recognized $120 Goodwill 20 Liabilities recognized $40 Noncontrolling interest 5 Additional paid-in capital—share-based payments (preformation vesting) 10 Additional paid-in capital 85 Source downloaded (UTC): 2026-09-10T01:26:14.808Z to 2026-09-10T01:26:14.808Z Record version: sha256:c34172f946f8086ac41318a64786d9e563369bf7bc8e4ec3df7633311eff0873 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-60-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/805/60/#65-transition-and-open-effective-date-information) SEC content: no ##### [805-60-65-1](https://asc.understandingaccounting.org/asc/805/60/#805-60-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:14.808Z to 2026-09-10T01:26:14.808Z Record version: sha256:a86abcbff01bb5a52c0136511e93ffe822ea06f802832ddd8aee4b23774c682b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/02/2026 after the end of the transition period stated in Accounting Standards Update No. 2023-05, _Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement_. Source downloaded (UTC): 2026-09-10T01:26:18.388Z to 2026-09-10T01:26:26.818Z Record version: sha256:27d619dd46215492e37d422e3fc0fe359b1fb09c6be2616eb0f3231c38a430fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-930: Business Combinations — Extractive Activities—Mining ### Machine-generated study aids ```json { "summary": "This Subtopic gives industry-specific guidance on how a mining entity measures mineral rights and other mining assets in a business combination purchase price allocation. It requires that value beyond proven and probable reserves (VBPP) be included in the value allocated to mining assets to the extent a market participant would include it, and that anticipated future mineral price fluctuations be reflected consistently with marketplace participant expectations.", "key_points": [ "The Subtopic addresses valuation of mineral rights in a business combination (805-930-05-1) and uses the same scope as Section 930-10-15 (805-930-15-1).", "Value beyond proven and probable reserves must be included in the value allocated to mining assets in a purchase price allocation to the extent a market participant would include it in determining the asset's fair value (805-930-30-1).", "Anticipated fluctuations in future market prices of minerals must be reflected in the fair value of mining assets consistently with marketplace participant expectations (805-930-30-2).", "An entity generally should consider all available information — current prices, historical averages, and forward pricing curves — in estimating future mineral prices (805-930-30-2).", "Marketplace price assumptions typically should be consistent with the acquiring entity's operating plans for developing and producing the minerals (805-930-30-2).", "Using a single factor, such as current price or a historical average, as a surrogate for future prices without considering other market participant information is generally inappropriate (805-930-30-2)." ], "categories": [ "Business combinations", "Fair value", "Initial measurement", "Industry-specific" ], "audience_level": "advanced", "student_note": "Mining acquisitions often involve large amounts tied to resources that are not yet proven and probable reserves; the common mistake is assuming only proven and probable reserves can be valued, or defaulting to spot price or a historical average instead of the full mix of market participant pricing information.", "related_topics": [ "805-20", "805-30", "930-10", "820-10", "930-360", "350-30" ], "key_concepts": [ "mineral rights", "value beyond proven and probable reserves", "purchase price allocation", "mining assets", "market participant assumptions", "fair value measurement", "forward pricing curves", "future mineral prices" ] } ``` Source downloaded (UTC): 2026-09-10T01:26:18.388Z to 2026-09-10T01:26:18.388Z Record version: sha256:87be83a9b131080ff42c0b3129905754446d424313710d882dd6d01dc57b4764 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-930-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/930/#05-overview-and-background) SEC content: no ##### [805-930-05-1](https://asc.understandingaccounting.org/asc/805/930/#805-930-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:18.388Z to 2026-09-10T01:26:18.388Z Record version: sha256:4305108e0d5652005661174bc9426f0e6e2179a11511952e76d2871418784474 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses valuation of [mineral rights](https://asc.understandingaccounting.org/glossary/m/#mineral-rights "The legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits.") in a business combination. Source downloaded (UTC): 2026-09-10T01:26:21.487Z to 2026-09-10T01:26:21.487Z Record version: sha256:bf427936cd7be76689cb634067f0bdb017251a5e123b3178f9191e97ac14eb77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-930-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/930/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-930-15-1](https://asc.understandingaccounting.org/asc/805/930/#805-930-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:21.487Z to 2026-09-10T01:26:21.487Z Record version: sha256:2a4d347358c995b2ee5907ca5411757bf8827bf7e4e180b76b4befdf431566ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 930-10-15. Source downloaded (UTC): 2026-09-10T01:26:26.818Z to 2026-09-10T01:26:26.818Z Record version: sha256:0cb8ad4b4c00900d93394091761210243ac4d5896fd7d678661066dac1ef4a6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-930-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/930/#30-initial-measurement) SEC content: no #### Value Beyond Proven and Probable Reserves ##### [805-930-30-1](https://asc.understandingaccounting.org/asc/805/930/#805-930-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:26.818Z to 2026-09-10T01:26:26.818Z Record version: sha256:38746c87daa5413cbf0964da708643e35e1393666cb087810c86591f2926a3fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall include [value beyond proven and probable reserves](https://asc.understandingaccounting.org/glossary/v/#value-beyond-proven-and-probable-reserves "Value beyond proven and probable reserves is the economic value that exists in a mining asset beyond the value attributable to proven and probable reserves. The distinction between the categories of reserves relates to the level of geological evidence and, therefore, confidence in the reserve estimates.") in the value allocated to [mining assets](https://asc.understandingaccounting.org/glossary/m/#mining-assets "Mining assets include mineral properties and rights.") in a purchase price allocation to the extent that a market participant would include value beyond [proven](https://asc.understandingaccounting.org/glossary/p/#proven-reserves "Proven reserves are reserves for which both of the following conditions are met: Quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes; grade and/or quality are computed from the results of detailed sampling. The sites for inspection, sampling, and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well established.") and [probable reserves](https://asc.understandingaccounting.org/glossary/p/#probable-reserves "Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.") in determining the fair value of the asset. #### Anticipated Future Price Fluctuations ##### [805-930-30-2](https://asc.understandingaccounting.org/asc/805/930/#805-930-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:26.818Z to 2026-09-10T01:26:26.818Z Record version: sha256:4afec76aa413906a04892df3ed960640bad3b08c8f06d5a1fedcf696f2c0061b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall include the effects of anticipated fluctuations in the future market price of minerals in determining the fair value of mining assets in a purchase price allocation in a manner that is consistent with the expectations of marketplace participants. Generally, an entity should consider all available information including current prices, historical averages, and forward pricing curves. Those marketplace assumptions typically should be consistent with the acquiring entity's operating plans with respect to developing and producing minerals. It generally would be inappropriate for an entity to use a single factor, such as the current price or a historical average, as a surrogate for estimating future prices without considering other information that a market participant would consider. Source downloaded (UTC): 2026-09-10T01:26:30.833Z to 2026-09-10T01:26:37.562Z Record version: sha256:884ad957f1695f28679481241491cf509d94944aff81c5ab40492ac1cc649c2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-942: Business Combinations — Financial Services—Depository and Lending Source downloaded (UTC): 2026-09-10T01:26:30.833Z to 2026-09-10T01:26:30.833Z Record version: sha256:479aff4148ea6506e519eae747a18cb3165edf62527b99bd20d1e3276621b375 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-942-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/942/#sec-00-status) SEC content: yes ##### [805-942-S00-1](https://asc.understandingaccounting.org/asc/805/942/#805-942-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:30.833Z to 2026-09-10T01:26:30.833Z Record version: sha256:b60187a24e37f65bec1a957926394d9d935eda93583a35a981251fa51eeb29f9 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
942-805-S30-1SupersededAccounting Standards Update No. 2012-0308/27/2012
942-805-S55-1SupersededAccounting Standards Update No. 2012-0308/27/2012
942-805-S99-1SupersededAccounting Standards Update No. 2010-2208/19/2010
Source downloaded (UTC): 2026-09-10T01:26:32.817Z to 2026-09-10T01:26:32.817Z Record version: sha256:448e2525567204302a777832aa252bbd5cb9c1995849f0181e7b6f00d6c84a82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-942-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/942/#sec-30-initial-measurement) SEC content: yes ##### [805-942-S30-1](https://asc.understandingaccounting.org/asc/805/942/#805-942-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:32.817Z to 2026-09-10T01:26:32.817Z Record version: sha256:8c1781c684a31bf28e461b55453c6026f051a7e81365856fdeba41d1d0afbd13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T01:26:35.095Z to 2026-09-10T01:26:35.095Z Record version: sha256:a5a29c792f9a1bec8acc68b234323c1e62e205f50f07e877445a5c8d6d24eb40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-942-S55: SEC 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/942/#sec-55-implementation-guidance-and-illustrations) SEC content: yes ##### [805-942-S55-1](https://asc.understandingaccounting.org/asc/805/942/#805-942-S55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:35.095Z to 2026-09-10T01:26:35.095Z Record version: sha256:a1430951bb909c6b1abfeba34fdaf6faf7d9d02895d048e87909e24db83b91ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T01:26:37.562Z to 2026-09-10T01:26:37.562Z Record version: sha256:328e1ee18c3d2bfe88260cdf2ab275ee2e821df830034eb9e37a0e48a83fecd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-942-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/805/942/#sec-99-sec-materials) SEC content: yes ##### [805-942-S99-1](https://asc.understandingaccounting.org/asc/805/942/#805-942-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:37.562Z to 2026-09-10T01:26:37.562Z Record version: sha256:874ea18a19b2acc4520be499ad86276a3325c47dfb2ec1fd7fbf5a212db01927 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-22](https://asc.understandingaccounting.org/updates/asu-2010-22/). Source downloaded (UTC): 2026-09-10T01:26:39.788Z to 2026-09-10T01:27:09.747Z Record version: sha256:c32c113315b4edca86304199bd0baf24afd1f2ab529c3023bd537e5233f05803 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944: Business Combinations — Financial Services—Insurance ### Machine-generated study aids ```json { "summary": "ASC 805-944 tells insurance entities how to account for insurance and reinsurance contracts acquired in a business combination and how to account for demutualizations (or formation of a mutual insurance holding entity). Acquired insurance/reinsurance contracts are treated as new contracts, recognized at fair value but split into (a) amounts measured under the acquirer's own insurance accounting policies and (b) an intangible asset (or liability) for the residual, while the acquiree's classification as insurance versus deposit contract is carried forward. A demutualization is not itself a change in ownership requiring a new accounting basis; instead the entity computes a one-time actuarial calculation of maximum future closed-block earnings and records a policyholder dividend obligation whenever cumulative actual closed-block earnings exceed cumulative expected earnings.", "key_points": [ "Insurance and reinsurance contracts acquired in a business combination are considered new contracts for measurement and accounting purposes, but the acquiree's classification as an insurance/reinsurance contract versus a deposit contract is carried forward based on terms at contract inception or last substantive modification (944-805-25-1 through 25-2).", "Fair value of the acquired contractual rights and obligations is recognized in two components: assets and liabilities measured under the acquirer's own insurance accounting policies (excluding the acquiree's deferred acquisition costs and unearned premiums), and an intangible asset or other liability for the difference (944-805-30-1); that intangible is subsequently measured on a basis consistent with the related insurance liability (944-805-35-1 through 35-3).", "A demutualization or formation of a mutual insurance holding entity does not, by itself, constitute a change in ownership requiring a change in historical accounting bases or carrying amounts, and closed block assets continue to be accounted for as before (944-805-25-6 through 25-7).", "Maximum future stockholder earnings from the closed block equal the excess of closed block liabilities over closed block assets, adjusted to remove unrealized amounts in accumulated other comprehensive income, measured at the demutualization date (944-805-25-8 through 25-9).", "A best-estimate actuarial calculation (no provision for adverse deviation) made at the actuarial calculation date is used in all later periods and shall not be revised (944-805-30-3 through 30-4); cumulative actual closed block earnings exceeding cumulative expected earnings are recorded as a policyholder dividend obligation, which may never be negative (944-805-35-5 through 35-12).", "Distributions by a mutual insurance holding entity to its members are accounted for by substance—as policyholder dividends under Subtopic 944-50 unless there are substantive independent third-party stockholders and the three conditions in 944-805-25-13 are met.", "In a distribution-form demutualization all retained earnings are reclassified to capital stock and additional paid-in capital (with cash or policy credits charged directly to those capital accounts), while a subscription-form demutualization causes no such reclassification; direct and incremental demutualization costs are shown as a single line item within income from continuing operations (944-805-45-3 through 45-4)." ], "categories": [ "Business combinations", "Industry-specific", "Subsequent measurement", "Disclosure" ], "audience_level": "advanced", "student_note": "This is niche insurance-industry guidance, but it illustrates two exam-worthy ideas: acquired insurance contracts are remeasured at fair value yet split into a policy-basis component plus a residual intangible, and a demutualization is a reorganization—not a purchase—so no new basis arises. The most common misunderstanding is thinking the closed block is a separate legal or reporting entity; it is displayed line-by-line with the insurer's other assets and liabilities, and its assets remain subject to the insurer's general creditors.", "related_topics": [ "944-20", "944-30", "944-50", "944-60", "805-20", "350-30" ], "key_concepts": [ "acquired insurance and reinsurance contracts", "demutualization", "mutual insurance holding entity", "closed block", "policyholder dividend obligation", "actuarial calculation date", "maximum future earnings inuring to stockholders", "participating life insurance contracts" ] } ``` Source downloaded (UTC): 2026-09-10T01:26:39.788Z to 2026-09-10T01:26:39.788Z Record version: sha256:2f115e357422fad966b041cc174982b61a393f7f822cd05eb8a1256a1720a9c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/944/#00-status) SEC content: no ##### [805-944-00-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:39.788Z to 2026-09-10T01:26:39.788Z Record version: sha256:76dd12bab745ee6201222c475c86d15ac243008adb294d91ebc3ac398e823e9e 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
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
Involuntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
Participating InsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
Participating Insurance ContractsSupersededAccounting Standards Update No. 2016-1912/14/2016
Reinsurance RecoverableAddedAccounting Standards Update No. 2016-1912/14/2016
TerminationAmendedAccounting Standards Update No. 2014-0603/14/2014
Voluntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
944-805-05-10AmendedAccounting Standards Update No. 2016-1912/14/2016
944-805-30-1AmendedAccounting Standards Update No. 2016-1912/14/2016
944-805-35-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-805-45-3AmendedAccounting Standards Update No. 2015-0101/09/2015
944-805-50-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-805-55-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-805-55-6 through 55-11
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-805-55-9AmendedMaintenance Update 2016-11 (PDF)06/27/2016
944-805-55-12SupersededAccounting Standards Update No. 2018-1208/15/2018
944-805-55-13SupersededAccounting Standards Update No. 2018-1208/15/2018
Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:7ea40fd3740af08ccb98dcaca3197c3757a97c632fdecd67425d01253700d11e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/944/#05-overview-and-background) SEC content: no ##### [805-944-05-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:f77b8e6ab5d67f831a5d0d9b54241afc4127194d1570cf7ffe3ddd841a790899 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of business combinations. The guidance in this Subtopic is presented in the following two Subsections: 1. a General 2. b Demutualizations. ##### [805-944-05-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:fb52a303bfc30db6302310d98ba9ec34560421fad9f5f38fc10796be9a893738 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of insurance and [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts acquired in a business combination. ### Demutualizations ##### [805-944-05-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:6bfc6051dc7313c64cf544f99e5dab2108f92fcd2cf30482bf3491365a6dde87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Demutualizations Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of [demutualizations](https://asc.understandingaccounting.org/glossary/d/#demutualization "The conversion of a mutual insurance entity to a stock insurance entity."). ##### [805-944-05-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:19c337f85f94e70e7a5f47262a7e14aeaeb0bf3855ee5e211ab95853b3e30ce3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection is organized as follows: 1. a The demutualization process 2. b Formation of a mutual insurance holding entity 3. c Closed blocks for certain participating life insurance contracts 4. d Alternative mechanisms to closed blocks. #### The Demutualization Process ##### [805-944-05-5](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:0e5f3723efdaf65b551de5c4054b820f0a619a99680fd4c939d97d1321ea4ebb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Mutual insurance entities differ from stock insurance entities in that they do not have stockholders. A mutual insurance entity is considered to be owned by policyholders whose insurance contracts embody their rights as insureds and as members of the mutual insurance entity. ##### [805-944-05-6](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:e950dd7ed4967a47547e900c157162299d9182314c06b2929a64bde24b0fd62f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The process of demutualization or formation of a mutual insurance holding entity is subject to scrutiny and approval by state insurance regulatory authorities. Most states have some form of demutualization statute. A range of demutualization statutes and regulations exist for insurance entities. Typically, those laws contemplate a direct and full reorganization of the mutual insurer to a stock form. In accordance with some demutualization statutes, eligible policyholders receive stock, [policy credits](https://asc.understandingaccounting.org/glossary/p/#policy-credits "Additional values applied to a policy through dividends, increases in fund values, accumulation values or accumulation account values or extensions of coverages."), policyholder benefits, cash, or subscription rights as consideration for their membership interest. ##### [805-944-05-7](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:b4e5d52141fef3818e3d222702469d09080aa577e488ab49d6816e8825ef7d24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The process for allocating the aggregate consideration among eligible policyholders varies based on individual entity circumstances and applicable regulatory statutes. The allocation process generally consists of a fixed and a variable component. ##### [805-944-05-8](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:c36353abc0fc598f97bb04c794772156906515a28b63c45b6f5fd96e6a1ce74e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fixed component represents consideration for eligible policyholders' membership interest in the mutual insurer and consists of a given number of shares per policyholder (or sometimes, per policy). ##### [805-944-05-9](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:ff8ba80fc898943fe9d203faed8e98303290ee3c832c68670fb1f01bba73533a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The variable component represents consideration for eligible policyholders' contribution to the value of the insurer. The variable component of the aggregate compensation is allocated to policyholders in proportion to the actuarial contributions of their eligible policies, if positive. A policy's actuarial contribution consists of its historical equity share (the policy's past contribution to entity equity) and, in most cases, the prospective equity share; that is, the present value of the policy's expected future contributions to entity equity. #### Formation of a Mutual Insurance Holding Entity ##### [805-944-05-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:e88641bbcc9a48c9fc2179de696b687d057e62f081fc032e44d18e45e96539af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An alternative to demutualization, in the jurisdictions where it is permitted, is for a mutual insurance entity to form a mutual insurance holding entity. The mutual insurer is converted to a stock insurance entity and becomes a stockholder-owned entity that operates as a subsidiary of the newly formed mutual insurance holding entity. All the initial stock of the reorganized entity is issued to the mutual insurance holding entity. Governance of the mutual insurance holding entity is established by the former mutual insurance entity's board of directors. The converted stock insurer may generate additional capital through an initial or subsequent public offering; however, most statutes specify that the mutual insurance holding entity must own greater than 50 percent of the voting rights of the converted insurer to ensure that the mutual insurance holding entity maintains effective control. The policyholders of the converted insurer become members of the mutual insurance holding entity through the transfer of their mutual membership interests to the mutual insurance holding entity, retaining the same voting rights they had previously. Policyholders with [participating insurance](https://asc.understandingaccounting.org/glossary/p/#participating-insurance "Insurance in which the policyholder is entitled to participate in the earnings or surplus of the insurance entity. The participation occurs through the distribution of dividends to policyholders.") contracts retain their participating contract in the converted stock insurer, but unlike in a demutualization, there is no distribution of equity or subscription rights to policyholders. ##### [805-944-05-11](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:aa506335d84b21e2352b0e9a38678542bcffa071f54d91d8ac8d65242454b52c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Most of the past demutualizations and at least one of the past mutual insurance holding entity conversions have been accompanied or followed by an initial public offering of the stock of a demutualized insurance entity or an intermediate holding entity of the mutual insurance holding entity. #### Closed Blocks for Certain Participating Life Insurance Contracts ##### [805-944-05-12](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:68422b68ee0fe9961b9e48f464c19c9d518831a839229d6c8634a9291a89fc6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In connection with a demutualization or the formation of a mutual insurance holding entity, some state insurance departments require that a [closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.") or alternative mechanism be established for certain participating life insurance contracts to protect the adjustable policy features and dividend expectations of participating life insurance policyholders from the competing interests of stockholders. Typically, the [plan of demutualization](https://asc.understandingaccounting.org/glossary/p/#plan-of-demutualization "The plan of reorganization, including all exhibits and schedules thereto, as it may be amended from time to time, that is adopted by the board of directors of the demutualizing entity, pursuant to which the entity demutualizes.") describes how the closed block will operate. ##### [805-944-05-13](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:8884f7a5e61456660f910bec50b3cf2f4e4e9b03649fb9ecdab9ec8f8298b37d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The closed block assets and cash flows provided by those assets (see paragraph [944-805-05-15](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-15)) will not inure to the stockholders of the demutualized entity; instead, all cash flows from those assets will be used to benefit the closed block policyholders (absent regulatory approval to the contrary or insolvency of the insurer). Because the insurance entity remains obligated to provide for minimum guarantees under the participating policy, it is consequently possible under certain circumstances that funds from outside the closed block will have to be used to meet the contractual benefits of the closed block policyholders. The assets designated to the closed block are subject to the same liabilities, with the same priority in the case of insolvency or in liquidation, as assets outside the closed block. In many situations, commissions and other expenses (including management expenses) of operating and administering the closed block will not be charged to the closed block. Unless the state insurance department consents to an earlier [termination](https://asc.understandingaccounting.org/glossary/t/#termination "In general, the failure to renew an insurance contract. Involuntary terminations include death, expirations, and maturities of contracts. Voluntary terminations of life insurance contracts include lapses with or without cash surrender value and contract modifications that reduce paid-up whole-life benefits or term-life benefits."), the closed block will continue in effect until the date on which none of the policies in the closed block remains [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date."). ##### [805-944-05-14](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:6576eddb169dd2b601d867d322e6e7d9ba4375e8c4ef7be66410c41fa8ffc179 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The process of formation of the closed block is negotiated between the insurance entity and the applicable state insurance regulators. Estimated future cash flows are considered in determining the nature and amount of assets designated to the closed block. The assets that are designated to the closed block are expected to produce cash flows sufficient to satisfy the obligations of the closed block, as well as the continuation of policyholder [dividend scales](https://asc.understandingaccounting.org/glossary/d/#dividend-scales "The actuarial formulas used by life insurance entities to determine amounts payable as dividends on participating policies based on experience factors relating, among other things, to investment results, mortality, lapse rates, expenses, premium taxes, and policy loan interest.") and policy credits before the demutualization, if the underlying experience continues. Actual policy dividends paid may be increased or decreased based on the effect of future events, such as investment experience, [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") gains or losses, and [persistency](https://asc.understandingaccounting.org/glossary/p/#persistency "The complement of the termination rate, persistency is the renewal quality of insurance contracts, that is, the number of insureds that keep their insurance in force during a period. Persistency varies by plan of insurance, age at issue, year of issue, frequency of premium payment, and other factors.") of the closed block policies. ##### [805-944-05-15](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:5b14a3d2105fb8d576c38ec4aaa841e2b9f863f83a24c2d012a76c3ab04e46e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The specific policyholder contracts designated for inclusion in the closed block are part of the negotiation process with the insurance regulators. ##### [805-944-05-16](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:8e65653e08fe4bb04b547225076db25af18424ab2fd61c2937045470d609b3f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If cash flows from the closed block assets and experience of the closed block are, in the aggregate, more or less favorable than assumed in the funding of the closed block, total dividends paid to closed block policyholders could differ from the original dividend assumptions. Net favorable deviations in closed block performance, unless reversed by subsequent unfavorable experience, will be available for distribution over time only to closed block policyholders and will not be available to the insurance entity or its stockholders. Net unfavorable deviations could result in reduced dividends to closed block policyholders, unless reversed by future favorable experience or ultimately funded from assets outside of the closed block. ##### [805-944-05-17](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:3f7cce2c47c285d1cd1ba5accd5471d2866a2c16d424fcbf6adceda8f746cf08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of the closed block's performance, the insurance entity is obligated to pay guaranteed benefits under the policies in accordance with their terms. If the cash flows from the assets allocated to the closed block and the policies included in the closed block prove to be insufficient to pay the benefits guaranteed under the policies included in the closed block, the insurance entity will be required to make those payments from assets outside of the closed block. #### Alternative Mechanisms to Closed Blocks ##### [805-944-05-18](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:43.337Z to 2026-09-10T01:26:43.337Z Record version: sha256:8ff07d2b3ecd98312bce103cc6558425eef14c526440b920a0828c7809fae6e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Alternatives to the closed block have arisen in practice encompassing, for a number of types of contracts, various mechanisms believed by the insurance entities and state insurance regulators to be appropriate in the specific circumstances. Closed block alternative mechanisms have been used in lieu of closed blocks for certain participating life insurance contracts to commit to the insurance regulator that the insurance entity will continue to follow its established dividend practices. Closed block alternative mechanisms also have been used to protect nonguaranteed elements of participating and [nonparticipating insurance contracts](https://asc.understandingaccounting.org/glossary/n/#nonparticipating-insurance-contract "Insurance contracts that are not entitled to dividends. Usually issued by a stock life insurance entity at premium rates that are usually lower than those charged if dividends are payable. Mutual entities may issue nonparticipating contracts.") such as interest credits on deferred annuities and adjustable premiums on adjustable premium term business. In some instances, the methodology and limitations defined in the agreements with the state insurance regulators have considered only specific profit components, such as mortality experience on a block of term insurance or investment spreads on a block of annuities, and in other instances have considered virtually all components of product profitability. If there is a limitation on the profits that may inure to the stockholders, there is an agreement between the insurance entity and the insurance regulators that defines all of the following: 1. a The contracts covered by the limitation 2. b The profit limitation calculation 3. c The timing and manner (for example, as policy dividends, reduced premiums, or additional benefits) in which amounts that may not be distributed to stockholders are to be distributed to policyholders. Source downloaded (UTC): 2026-09-10T01:26:46.496Z to 2026-09-10T01:26:46.496Z Record version: sha256:870b820fa7fc09997b350bd7b9987db30cb9aea7e3ef5431306d0af835fbf820 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/944/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-944-15-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:46.496Z to 2026-09-10T01:26:46.496Z Record version: sha256:42b7760981dcc5e052a2386a36048649cc008ef3850d2d3b71c2175340ceedfc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15. ### Demutualizations ##### [805-944-15-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:46.496Z to 2026-09-10T01:26:46.496Z Record version: sha256:1f628854c54e81fe6b963cde616d78c888076b774717b34c30f6afd2c559b1b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Demutualizations Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/805/944/#15-scope-and-scope-exceptions) of this Section, with specific transaction exceptions and qualifications and other considerations noted below. #### Transactions ##### [805-944-15-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:46.496Z to 2026-09-10T01:26:46.496Z Record version: sha256:cfaf8b17f81b64a14216580ac596bfad3793982a9a0f27c79adf32190c79317f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Demutualizations Subsections of this Subtopic applies to all formal closed blocks and to [closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.") alternative mechanisms to the extent the concepts are applicable to them, all of which are referred to as closed blocks in the Demutualizations Subsections of this Subtopic. #### Other Considerations ##### [805-944-15-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:46.496Z to 2026-09-10T01:26:46.496Z Record version: sha256:5809c43c183e322e87efe31909fe1b05843e3f516953bbd6aac03245c61ae789 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Demutualizations Subsections of this Subtopic does not address what constitutes a change in ownership or reporting entity that would require a change in basis for the reported assets and liabilities. ##### [805-944-15-5](https://asc.understandingaccounting.org/asc/805/944/#805-944-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:46.496Z to 2026-09-10T01:26:46.496Z Record version: sha256:a559cee70d7f3ebabe7c2116635328e04b5d8eb7aa95d5870458f08a5f1123f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting guidance in Subtopic 944-20 is the appropriate accounting method for participating life insurance contracts that meet the conditions of paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3) and, therefore, an insurance entity shall continue to apply that guidance to demutualized insurance entities' participating life insurance contracts issued before the [date of demutualization](https://asc.understandingaccounting.org/glossary/d/#date-of-demutualization "The date the plan of reorganization becomes effective.") or formation of a mutual insurance holding entity. However, the segregation of undistributed accumulated earnings on participating contracts is meaningful in a stock [life insurance entity](https://asc.understandingaccounting.org/glossary/l/#life-insurance-entity "An entity that can issue annuity, endowment, and accident and health insurance contracts as well as life insurance contracts. Life insurance entities may be either stock or mutual entities.") because the objective of such presentation is to identify amounts that are not distributable to stockholders. Therefore, after the date of demutualization or formation of a mutual insurance holding entity, the provisions of paragraphs [944-50-25-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-2) and [944-50-30-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-30-2) relating to dividends on participating life insurance contracts shall apply to those contracts sold before the date of demutualization or formation of a mutual insurance holding entity. Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:9766fdde0032a3e2c8cefaa0e6b4cc82b2bbb3ca4930d427bdc0971ba77172a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/944/#25-recognition) SEC content: no #### Insurance and Reinsurance Contracts Acquired ##### [805-944-25-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:1cedc6734ec4f5ebc81e3d741f27e1ce7a3b30159b5e86286765797a36072a95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall consider insurance and [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts acquired in a business combination to be new contracts for measurement and accounting purposes. ##### [805-944-25-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:4094bb0ae019f8cd7bf6702af22b2f18e3ed55c370bd66f140b6f4d4988eaa0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall carry forward the acquiree's classification of an acquired contract as an insurance or reinsurance contract or a deposit contract based on an understanding of the contractual terms of the acquired contract and any related contracts or agreements at the inception of the contract or, if the terms of those contracts or agreements were later modified in a manner that would change the classification, at the date of that modification (which may be the acquisition date). ##### [805-944-25-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:de0b3e4a0d1a13e03e6a6531fb595124d74be6f3f8af8a75f5d8bb907f170ad8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall recognize the assets and liabilities arising from the rights and obligations of the insurance and reinsurance contracts acquired in the business combination. ##### [805-944-25-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:75e2bc11809fcab8d92a272247ba1efe947418bf46304dcbc36f219057bbb08c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other related contracts that are not insurance or reinsurance contracts shall be recognized at the date of acquisition in accordance with Topic 805. For instance, a contingent commission arrangement is a contingency that the acquirer shall account for in accordance with paragraphs [805-20-25-18A through 25-20B](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-18A) and [805-20-30-9](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-9). ##### [805-944-25-5](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:59ee3ed2a548007166327634d42eb116a148dc739256689ffa0679355a46640d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An example of an indemnification agreement that may be in the form of a reinsurance contract is a guarantee by the seller of the adequacy of acquired claims and claims expense liabilities at the date of acquisition. The acquirer shall recognize any indemnification asset resulting from such an agreement in accordance with paragraphs [805-20-25-27 through 25-28](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-27) and [805-20-30-18 through 30-19](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-18) . ### Demutualizations #### Overall ##### [805-944-25-6](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:1967ec449e10f0971d941ccd3f7aed6a126d2a1f332e695d151770bc84ecea92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [demutualization](https://asc.understandingaccounting.org/glossary/d/#demutualization "The conversion of a mutual insurance entity to a stock insurance entity.") or formation of a mutual insurance holding entity in and of itself does not constitute a change in ownership that requires a change in the historical accounting bases or carrying amounts of assets and liabilities. ##### [805-944-25-7](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:b6fbaac328085942232cca146ed3949ffedc2784bb44424cabc4a1ee51db5c6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets designated to the [closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.") continue to be accounted for as they were before the [date of demutualization](https://asc.understandingaccounting.org/glossary/d/#date-of-demutualization "The date the plan of reorganization becomes effective."). #### Emergence of Earnings and Policyholder Dividend Obligation ##### [805-944-25-8](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:91b94e024cd8a097bdb2b378c524e0b038cc32ba41faa707bdb7853eceb43bc2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amounts to be included in net income relative to assets and liabilities included in a closed block shall be limited, based on a calculation prepared as of the date of demutualization or formation of a mutual insurance holding entity. As of the [actuarial calculation date](https://asc.understandingaccounting.org/glossary/a/#actuarial-calculation-date "The date as of which the actuarial calculation is performed, which is as of the date of demutualization or formation of a mutual insurance holding entity."), the [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "The amount of an item as displayed in the financial statements.") of closed block liabilities will typically exceed the carrying amount of closed block assets. Certain of those assets, such as debt securities classified as available-for-sale under Subtopic 320-10, will be carried at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") with unrealized holding gains and losses included in other comprehensive income until realized. A demutualization or formation of a mutual insurance holding entity does not, in and of itself, constitute a change in ownership that results in the realization of those unrealized gains and losses. Instead, those unrealized gains and losses will be realized over the period the closed block policies remain [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date."), as are all other transactions relating to the closed block assets and liabilities. ##### [805-944-25-9](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:b152ddfcb333984d8d5a29142da944d2e99f715d4afeca29071f61a67d6fcf99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a result, the carrying amounts of the closed block assets shall be adjusted to remove those unrealized amounts to determine the maximum future earnings (before items that may not have been considered in the funding of the closed block, such as commissions and maintenance expenses; see paragraph [944-805-05-18](https://asc.understandingaccounting.org/asc/805/944/#805-944-05-18)) that would be recognized in income over the period the policies in the closed block remain in force. ##### [805-944-25-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:9d615f9b30917d394dd529392cbb7ac1b0221afaf4ae7b76f43ebb8e7d0852b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The changes in the [net closed block liability](https://asc.understandingaccounting.org/glossary/n/#net-closed-block-liability "The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets each adjusted to eliminate the effect of related amounts in accumulated other comprehensive income at the actuarial calculation date. Deferred acquisition costs are not assets of the closed block.") over time represent the expected closed block contribution to the earnings of the insurer that inure to the benefit of the stockholders. #### Dividends Payable to Stockholders ##### [805-944-25-11](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:8397d726b67947abe1749ce976792614c83af74ec0500031fafa951c37967a1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A dividend payable to stockholders, whether declared by a stock insurer or its holding entity, is a common corporate capital transaction. Cash dividends shall be recognized as a liability on the declaration date. #### Distributions to Members ##### [805-944-25-12](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:df1f98ad84bfd6d37fbec5f737927f09c7c16d80236db94dcbb20d257af2e6cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the members of a mutual insurance holding entity are also policyholders of the stock insurance subsidiary, a distribution by a mutual insurance holding entity to its members shall be accounted for according to the substance of the transaction. Unless there are substantive independent third-party stockholders of the demutualized insurance entity or intermediate holding entity of the mutual insurance holding entity, the distribution shall be accounted for as a policyholder dividend in accordance with Subtopic 944-50. ##### [805-944-25-13](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:c3b22cddd7006a3d5acdb55b0c12ff67f686d436c0f191f844c82ffa99305b5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there are substantive independent third-party stockholders and all of the following conditions also are satisfied, the distribution is presumed to be appropriately accounted for as an equity dividend: 1. a There is a mechanism to ensure that policyholder dividends are not a component of the mutual insurance holding entity distribution. 2. b All mutual insurance holding entity members are eligible to receive the mutual insurance holding entity distribution and the allocation of the mutual insurance holding entity distribution is consistent with the concept of mutual insurance holding entity membership. Depending on the jurisdiction, the distribution may be based on equity share or equally distributed to each mutual insurance holding entity member. 3. c The distribution is legally characterized as a membership distribution rather than a policyholder distribution. ##### [805-944-25-14](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:a55b19945d56c94ae44f185299f9584db43edae93057b5e6a5ea886a631a43f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a distribution by the mutual insurance holding entity is determined to be a policyholder dividend expense, the insurance subsidiary shall recognize the policyholder dividend in its separate financial statements as an expense with recognition of a corresponding capital contribution from the mutual insurance holding entity. ##### [805-944-25-15](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:51.439Z to 2026-09-10T01:26:51.439Z Record version: sha256:9fbee38a1713533adfc0f100ba0277f2333e7696f4e45db3785d615d47ea8b28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The mutual insurance holding entity shall reflect the amount of the distribution as a capital contribution to the insurance subsidiary in its separate financial statements. In consolidated financial statements, the expense shall be reported and the capital contribution shall be eliminated. Source downloaded (UTC): 2026-09-10T01:26:53.577Z to 2026-09-10T01:26:53.577Z Record version: sha256:e4192c61988aa1c6e320a1c8ae9710f18e7315211f35a44481ecaf819b147c62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/805/944/#30-initial-measurement) SEC content: no #### Insurance and Reinsurance Contracts Acquired ##### [805-944-30-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:53.577Z to 2026-09-10T01:26:53.577Z Record version: sha256:daa0c4f0dd96faaa86d6487ce05891e97173b5f3ea29f03da3307b4d88faeed7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The acquirer shall measure at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") the assets and liabilities recognized under paragraph [944-805-25-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-3). However, the acquirer shall recognize that fair value in components as follows: 1. a Assets and liabilities measured in accordance with the acquirer's accounting policies for insurance and [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts that it issues or holds. For example, the contractual assets acquired could include a [reinsurance recoverable](https://asc.understandingaccounting.org/glossary/r/#reinsurance-recoverable "All amounts recoverable from reinsurers for paid and unpaid claims and claim settlement expenses, including estimated amounts receivable for unsettled claims, claims incurred but not reported, or policy benefits.") and the liabilities assumed could include a liability to pay future contract claims and claims expenses on the unexpired portion of the acquired contracts and a liability to pay incurred contract claims and claims expenses. However, those assets acquired and liabilities assumed would not include the acquiree's deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") and unearned premiums that do not represent future cash flows. 2. b An intangible asset (or occasionally another liability), representing the difference between the following: 1. 1 The fair value of the contractual insurance and reinsurance assets acquired and liabilities assumed 2. 2 The amount described in (a). ##### [805-944-30-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:53.577Z to 2026-09-10T01:26:53.577Z Record version: sha256:3e83496a738e24fdce26896ca81529ab8c83f5a3f09b63fdeb4adaa8903910ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other related contracts that are not insurance or reinsurance contracts shall be measured at the date of acquisition in accordance with Topic 805. ### Demutualizations #### Emergence of Earnings and Policyholder Dividend Obligation ##### [805-944-30-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:53.577Z to 2026-09-10T01:26:53.577Z Record version: sha256:afc375f737db5096ac2f56aba952b9c6365088c4ed7a3b4dbfd93d2170bf8405 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of the [actuarial calculation date](https://asc.understandingaccounting.org/glossary/a/#actuarial-calculation-date "The date as of which the actuarial calculation is performed, which is as of the date of demutualization or formation of a mutual insurance holding entity."), a calculation shall be developed that represents the cash flows expected to be generated from the assets and liabilities included in the [closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules."). Based on that [actuarial calculation](https://asc.understandingaccounting.org/glossary/a/#actuarial-calculation "The periodic expected changes in the net closed block liability (on the basis of generally accepted accounting principles [GAAP]), which is after the elimination of the effect of applicable items of other comprehensive income. The amortization of deferred acquisition costs is not a component of the actuarial calculation because deferred acquisition costs are not a closed block asset."), the periodic expected changes in the [net closed block liability](https://asc.understandingaccounting.org/glossary/n/#net-closed-block-liability "The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets each adjusted to eliminate the effect of related amounts in accumulated other comprehensive income at the actuarial calculation date. Deferred acquisition costs are not assets of the closed block.") (on the basis of generally accepted accounting principles \[GAAP\]), which is after the elimination of the effect of the applicable items of other comprehensive income shall be derived. The actuarial calculation shall be based on a best estimate (with no provision for adverse deviation) of the future performance of the closed block assets and liabilities as of the actuarial calculation date. ##### [805-944-30-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:53.577Z to 2026-09-10T01:26:53.577Z Record version: sha256:b63f686299f3facfdcf764ce1f339a9fcf472b6cb257a5ac1bcbd6604e4bb06b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The actuarial calculation described in the preceding paragraph shall continue to be used in subsequent accounting periods to determine the change in the policyholder dividend obligation. The actuarial calculation shall not be revised in future accounting periods. Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:f2d1fd53795cf6b026cbc83c2a6cedeec5608d211f73b7a7de1acacd5e8c722a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/944/#35-subsequent-measurement) SEC content: no #### Insurance and Reinsurance Contracts Acquired ##### [805-944-35-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:6c1592b0fce4b40a50a89c03aeb64d9f677a0dfbe063c59f04aa49ded51b77a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the business combination, the acquirer shall measure the intangible asset (or other liability) on a basis consistent with the related insurance or [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") liability. ##### [805-944-35-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:1ce9cc477173fe188e1318d6a5d78f10145faa94b7da88635e2398faed0b639d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, for most short-duration contracts such as many property and liability insurance contracts, [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") liabilities are not discounted under generally accepted accounting principles (GAAP), so amortizing the intangible asset like a discount using an [interest method](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period.") could be an appropriate method. ##### [805-944-35-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:889ec66a42198c325a0a57937183020dcf0bda102b079a4b06ada04dcc461ab2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For certain long-duration contracts such as traditional life insurance contracts, using a basis consistent with the measurement of the liability would be similar to the guidance provided in paragraph [944-30-35-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3), which requires that deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") be amortized using methods that include assumptions consistent with those used in estimating the [liability for future policy benefits](https://asc.understandingaccounting.org/glossary/l/#liability-for-future-policy-benefits "An accrued obligation to policyholders that relates to insured events, such as death or disability.")including subsequent revisions to those assumptions. Also, paragraph [944-30-35-63](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-63) specifies that the present value of future profits is subject to premium deficiency testing in accordance with the provisions of Subtopic 944-60. ### Demutualizations #### Policyholder Liabilities ##### [805-944-35-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:7d735a8175c29a1c9f823c7ada6ca8be90915929bdc24ad9dd25eda1e1aa557e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The policyholder liabilities for [closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.") participating life insurance contracts shall continue to be calculated under the provisions of Subtopic 944-20 as well as the Demutualizations Subsections of this Subtopic. #### Emergence of Earnings and Policyholder Dividend Obligation ##### [805-944-35-5](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:3e6b9ba4548cb2e6f759bb11cb9517e4e7119c68cd501c0bb0ff45beaf79c032 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-805-25-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-10) states that the changes in the [net closed block liability](https://asc.understandingaccounting.org/glossary/n/#net-closed-block-liability "The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets each adjusted to eliminate the effect of related amounts in accumulated other comprehensive income at the actuarial calculation date. Deferred acquisition costs are not assets of the closed block.") over time represent the expected closed block contribution to the earnings of the insurer that inure to the benefit of the stockholders. Cumulative actual closed block earnings in excess of the cumulative expected periodic amounts reflected in the [actuarial calculation](https://asc.understandingaccounting.org/glossary/a/#actuarial-calculation "The periodic expected changes in the net closed block liability (on the basis of generally accepted accounting principles [GAAP]), which is after the elimination of the effect of applicable items of other comprehensive income. The amortization of deferred acquisition costs is not a component of the actuarial calculation because deferred acquisition costs are not a closed block asset.") (see paragraph [944-805-30-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-30-3)) do not inure to the stockholders and shall be recorded as an additional liability to closed block policyholders (referred to as a policyholder dividend obligation). Those amounts will result in additional future dividends to closed block policyholders unless otherwise offset by less-favorable-than-expected future performance of the closed block. ##### [805-944-35-6](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:53f3157be29dfb432dfc8a524bd3f335add478c0bfa5303a3e3b1ca92b4f68cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-805-30-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-30-4) states that the actuarial calculation required in paragraph [944-805-30-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-30-3) shall continue to be used in subsequent accounting periods to determine the change in the policyholder dividend obligation. That paragraph states that the actuarial calculation shall not be revised in future accounting periods. ##### [805-944-35-7](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:4e604ece9a88756a1a21e96db170367a0abe8a787c1fe1c4d0ac49823dba763e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of the policyholder dividend obligation shall be determined by comparing cumulative actual earnings of the closed block from the [actuarial calculation date](https://asc.understandingaccounting.org/glossary/a/#actuarial-calculation-date "The date as of which the actuarial calculation is performed, which is as of the date of demutualization or formation of a mutual insurance holding entity.") to the date of measurement with the amount of cumulative expected earnings based on the actuarial calculation for the same period. ##### [805-944-35-8](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:f337420da560a8b9389cb5fefbf28fae02aa00f31ce67d669d1bbbfc19b23858 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cumulative actual earnings in excess of cumulative expected earnings based on the actuarial calculation shall be recorded as a policyholder dividend obligation. ##### [805-944-35-9](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:3f7181275c2746d0ed9ebb45a2e18219d3bbe41e2e21bb18a178a4b9dc9d1dc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unrealized investment gains and losses and other amounts related to the closed block normally reported in accumulated other comprehensive income that have arisen after the actuarial calculation date shall be included in the determination of the amount of the policyholder dividend obligation limited, in the case of losses, to the extent that the policyholder dividend obligation is otherwise positive. ##### [805-944-35-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:c03acb374bf0343e9deb0109cd7618f64582beeaf08820a7c44220d75e6dd2b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unrealized investment gains and losses and other items related to the closed block normally reported in accumulated other comprehensive income that have arisen at or after the actuarial calculation date shall continue to be reported in accumulated other comprehensive income. ##### [805-944-35-11](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:26e4a8197793631bc362a71d2a3f4e90d0eaad89471db815a1291d46132a40ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts related to the closed block that have arisen after the actuarial calculation date shall enter into the determination of the policyholder dividend obligation with an offsetting amount reported in accumulated other comprehensive income. The amount charged to policyholder dividend obligation for losses shall be limited to the extent that the policyholder dividend obligation is otherwise positive. Those amounts shall be reported in the income statement and the amounts previously reported in other comprehensive income shall be reversed when investment gains and losses and other items of other comprehensive income are realized. ##### [805-944-35-12](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:61fb908ed023602619512e55ac13fb63a1a3564e0af9877cb0d81daee5d2905e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unrealized investment losses and other loss items related to the closed block that would result in a negative policyholder dividend obligation shall be recognized in other comprehensive income applicable to stockholders—the policyholder dividend obligation account may not have a negative balance. ##### [805-944-35-13](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:c095507750f90fe1739f396921e453e90c8e375c9429d7092490e6a21a241bc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The policyholder dividend obligation will decrease if experience is less favorable than expected and the dividend scale is not commensurately reduced. ##### [805-944-35-14](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:f64d62610e0febe1e79f600c84264530df4b117f6fe722ffd5d2bea223fc7058 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If dividends paid are higher than originally expected in the dividend scale, the policyholder dividend obligation will decrease. #### Other Considerations ##### [805-944-35-15](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:56.608Z to 2026-09-10T01:26:56.608Z Record version: sha256:03431c2a668f60a2be000dbc3d7263f82bfbdcc974bac19c6b21ba67a2575524 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting guidance in Subtopic 944-20 shall be applied to demutualized insurance entity participating life insurance contracts within its scope that are issued after the [date of demutualization](https://asc.understandingaccounting.org/glossary/d/#date-of-demutualization "The date the plan of reorganization becomes effective.") or formation of a mutual insurance holding entity. The segregation of undistributed accumulated earnings on participating life insurance contracts in excess of amounts that inure to stockholders is meaningful in a stock life insurance entity because the objective of such presentation is to identify amounts that are not distributable to stockholders. Therefore, the guidance in paragraphs [944-50-25-1 through 25-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-1) and [944-50-30-1 through 30-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-30-1) relating to dividends on participating life insurance contracts applies to contracts that are sold after the date of demutualization or formation of a mutual insurance holding entity within the scope of Subtopic 944-20. The guidance in those paragraphs shall also be applied by stock insurance entities with respect to participating life insurance contracts for which limitations exist on the amount of net income that may be distributed to stockholders. If there is a limitation on the amount of income from participating life insurance contracts issued after the date of demutualization or formation of a mutual insurance holding entity that may be distributed to stockholders, the policyholders' share of income on those contracts that may not be distributed to stockholders shall be charged to operations with a corresponding credit to a liability. Dividends paid to participating policyholders reduce that liability. Source downloaded (UTC): 2026-09-10T01:26:58.447Z to 2026-09-10T01:26:58.447Z Record version: sha256:bd00de540ff3c559a01dc63f4012a265c1dc749e140edfe2e8fbcd142cb6f2fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/805/944/#45-other-presentation-matters) SEC content: no ### Demutualizations #### Closed Block ##### [805-944-45-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:58.447Z to 2026-09-10T01:26:58.447Z Record version: sha256:e99163a39dcb02d0ef446b450132a5ed27d2f562d2890daeaeeb87ae5f8cfedc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.") assets, liabilities, revenues, and expenses shall be displayed together with all other assets, liabilities, revenues, and expenses of the insurance entity based on the nature of the particular item, with appropriate disclosures relating to the closed block. See the [Demutualizations Subsection](https://asc.understandingaccounting.org/updates/page-2147479835/) of Section 944-805-50. #### Emergence of Earnings and Policyholder Dividend Obligation ##### [805-944-45-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:58.447Z to 2026-09-10T01:26:58.447Z Record version: sha256:26a66ece2046162f488bbbc11cc21371e2c12999abd27bd95321c02c981fc417 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unrealized investment gains and losses, other items of accumulated other comprehensive income, and the amount of offsetting policyholder dividend obligation shall not be netted in the presentation of other comprehensive income. #### Expenses of Demutualization or Holding Entity Formation ##### [805-944-45-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:58.447Z to 2026-09-10T01:26:58.447Z Record version: sha256:b21cda789c853c5b3bca7de3dc19043e936730463c5479bada412a0b81711596 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In connection with a [demutualization](https://asc.understandingaccounting.org/glossary/d/#demutualization "The conversion of a mutual insurance entity to a stock insurance entity.") or formation of a mutual insurance holding entity, an insurance entity will incur expenses, including those for legal services, actuarial services, printing, and postage. Direct and incremental costs related to a demutualization or formation of a mutual insurance holding entity shall be classified as a single line item within income from continuing operations. #### Date of Demutualization or Holding Entity Formation ##### [805-944-45-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:58.447Z to 2026-09-10T01:26:58.447Z Record version: sha256:b842dad1e3e630669de52c74c65b4cc2a3553eb78878505c6fda1d0413ca29b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Depending on the form of demutualization, a reclassification of retained earnings at the [date of demutualization](https://asc.understandingaccounting.org/glossary/d/#date-of-demutualization "The date the plan of reorganization becomes effective.") may be appropriate. An insurance entity that demutualizes in a [distribution-form demutualization](https://asc.understandingaccounting.org/glossary/d/#distribution-form-demutualization "A situation in which eligible policyholders receive stock, policy credits, additional policyholder benefits, cash, or rights to purchase stock at favorable terms.") shall reclassify all its retained earnings as of the [date of demutualization](https://asc.understandingaccounting.org/glossary/d/#date-of-demutualization "The date the plan of reorganization becomes effective.") to capital stock and additional paid-in capital accounts (the capital accounts). If the entity distributes cash or [policy credits](https://asc.understandingaccounting.org/glossary/p/#policy-credits "Additional values applied to a policy through dividends, increases in fund values, accumulation values or accumulation account values or extensions of coverages.") to policyholders in lieu of capital stock, as part of the demutualization, the distribution shall be recorded as a direct reduction to the appropriate capital accounts. A [subscription-form demutualization](https://asc.understandingaccounting.org/glossary/s/#subscription-form-demutualization "A situation in which eligible policyholders receive only the right to purchase stock in the insurance entity or its parent at terms essentially equivalent to the terms offered to independent third parties.") does not, by itself, result in reclassification of retained earnings. ##### [805-944-45-5](https://asc.understandingaccounting.org/asc/805/944/#805-944-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:26:58.447Z to 2026-09-10T01:26:58.447Z Record version: sha256:a4096535d1ecc8979d17c55eb875c3230fae4ec65e61efe78943ee8691cdf0a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The equity accounts of a mutual insurance holding entity at the formation date shall be determined using the principles for transactions of entities under common control, with the amount of retained earnings of the demutualized insurance entity, before reclassification to the capital accounts, being reported as retained earnings of the mutual insurance holding entity. Because the accounting bases and carrying amounts of assets and liabilities are not changed as a consequence of demutualization or formation of a mutual insurance holding entity, the amounts in accumulated other comprehensive income also shall not be changed as a consequence of demutualization or formation of a mutual insurance holding entity. Source downloaded (UTC): 2026-09-10T01:27:01.511Z to 2026-09-10T01:27:01.511Z Record version: sha256:ed5059e36febbd6cf5275d0caae486a1eb0bdc48dc8bfb1cc989f859d8e01166 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/944/#50-disclosure) SEC content: no ##### [805-944-50-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:01.511Z to 2026-09-10T01:27:01.511Z Record version: sha256:10695687b35c2ca307c7c62ccc14838591336dc424cff714f726118d2c5c07c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosures in paragraphs [350-30-50-1 through 50-3](https://asc.understandingaccounting.org/asc/350/30/#350-30-50-1) apply to the intangible assets recognized pursuant to paragraph [944-805-25-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-3). ### Demutualizations ##### [805-944-50-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:01.511Z to 2026-09-10T01:27:01.511Z Record version: sha256:8d93e610952c1f74a763dc362c0e53b095dd6eb66d272aee0daeb19476f295f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose all of the following: 1. a The nature and terms of a [demutualization](https://asc.understandingaccounting.org/glossary/d/#demutualization "The conversion of a mutual insurance entity to a stock insurance entity.") or formation of a mutual insurance holding entity 2. b The basis of presentation and terms of operation of the [closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.") 3. c A general description of all of the following: 1. 1 The method of emergence of earnings from the closed block 2. 2 Presentation of assets and liabilities of the closed block 3. 3 The policyholder dividend obligation. ##### [805-944-50-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:01.511Z to 2026-09-10T01:27:01.511Z Record version: sha256:11c4f778c3106a529b683261a235692cf8aea3211047cc813ccdfcf9dd0636de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity that has formed a closed block shall disclose both of the following: 1. a A general description of the closed block, including all of the following: 1. 1 The purpose of the closed block 2. 2 The types of insurance policies included 3. 3 The nature of the cash flows that increase and decrease the amount of closed block assets and liabilities 4. 4 An indication of the continuing responsibility of the insurance entity to support the payment of contractual benefits, including the results of premium sufficiency or deficiency determined in accordance with paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) 5. 5 The nature of expenses charged to the closed block operations. 2. b Summarized financial data of the closed block as of, or for periods ending on the date of, the financial statements presented, which shall include, at a minimum, all of the following: 1. 1 The carrying amounts for the major types of invested assets of the closed block 2. 2 Future policy benefits and policyholders' account balances 3. 3 Policyholder dividend obligation 4. 4 Premiums 5. 5 Net investment income 6. 6 Realized investment gains and losses 7. 7 Policyholder benefits 8. 8 Policyholder dividends 9. 9 The amount of maximum future earnings remaining to inure to the benefit of stockholders from the assets and liabilities of the closed block 10. 10 An analysis of the changes in the policyholder dividend obligation. Example 2 (see paragraph [944-805-55-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-3)) illustrates the application of these disclosure requirements. ##### [805-944-50-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:01.511Z to 2026-09-10T01:27:01.511Z Record version: sha256:7f7a86e9e31649e52a422b50817de02ead8640e63d1794577bac720db5da1e3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosures that typically would be required by the preceding paragraph for the various specific elements included in the closed block need not be made separately for the closed block if the nature of the information for the closed block would not differ significantly from that already included for the reporting entity as a whole. For example, it is not necessary to show a separate schedule of contractual maturities of closed block fixed maturity securities if the relative composition of contractual maturities is similar to those of the reporting entity taken as a whole. However, if the relative maturities of the closed block fixed maturities securities differ from those of the reporting entity taken as a whole, separate disclosures shall be made. Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:c647d6b4f4c33055e86f4f0a3366b9e78df988da4578ad0a418ba947965672a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/805/944/#55-implementation-guidance-and-illustrations) SEC content: no ### Demutualizations #### Implementation Guidance ##### [805-944-55-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:6f0a0e79f4e3a968ce0166f956737c167f9c45da140f9f4165777d82e673a5a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A stock dividend declared by the stock insurer shall be accounted for in accordance with the guidance in Subtopic 505-20. Under existing laws or regulations, a mutual insurance holding entity is required to own a controlling voting interest in the stock insurance subsidiary and, therefore, shall reflect the stock insurer or intermediate holding entity on a consolidated basis. As a result, intra-entity dividends would be eliminated in the consolidated accounts of the mutual insurance holding entity. #### Illustrations ##### [805-944-55-2](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:a663cc9866bd552d88f00f52617f288bf912283658670408c5512100952e5b0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates emergence of earnings as discussed beginning in paragraph [944-805-25-8](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-8). As part of the negotiations surrounding the [closed block](https://asc.understandingaccounting.org/glossary/c/#closed-block "A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.") and [demutualization](https://asc.understandingaccounting.org/glossary/d/#demutualization "The conversion of a mutual insurance entity to a stock insurance entity.") process, the insurance entity may agree with the insurance regulator to designate participating policies with a [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "The amount of an item as displayed in the financial statements.") (liability) of $2,500,000,000 for the closed block. Fixed maturity available-for-sale investments with a carrying value and [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of $2,300,000,000 and an amortized cost of $2,240,000,000 are designated as the closed block assets. If there are no other assets or liabilities included in the closed block, the maximum future earnings from the closed block that would be recognized in income over the period in which the closed block remains [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") is $260,000,000. ##### [805-944-55-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:eb041e12054528670efc2947cc2c7f662344e57ffc59c83dde1ab36669b4746e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates one application of the disclosure requirements of the [Demutualizations Subsection](https://asc.understandingaccounting.org/updates/page-2147479835/) of Section 944-805-50 for a single hypothetical insurance entity, referred to as ABC Life Insurance Entity. ABC Life Insurance Entity would make the following disclosures. - At the effective date (January XX, 20X1) of the Plan of Demutualization, eligible policyholders received, in the aggregate, approximately $XX million of cash, $XX million of policy credits, and XX million shares of common stock of ABC Holding Entity in exchange for their membership interests in ABC Life Insurance Entity. The demutualization was accounted for as a reorganization. Accordingly, ABC Life Insurance Entity's retained earnings at the Plan Effective Date (net of the aforementioned cash payments and policy credits, which were charged directly to retained earnings) were reclassified to common stock and capital in excess of par. - As of January XX, 20X1, ABC Life Insurance Entity established a closed block for the benefit of certain classes of individual participating policies for which ABC Life Insurance Entity had a dividend scale payable in 20X0 and that were in force on January XX, 20X1. Assets were allocated to the closed block in an amount that, together with anticipated revenues from policies included in the closed block, was reasonably expected to be sufficient to support such business, including provision for payment of benefits, certain expenses, and taxes, and for continuation of dividend scales payable in 20X0, assuming experience underlying such scales continues. Assets allocated to the closed block inure solely to the benefit of the holders of the policies included in the closed block and will not revert to the benefit of stockholders of ABC Life Insurance Entity. No reallocation, transfer, borrowing, or lending of assets can be made between the closed block and other portions of ABC Life Insurance Entity's general account, any of its separate accounts, or any affiliate of ABC Life Insurance Entity without the approval of the Z State Insurance Department. - If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will be increased. If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced. - The assets and liabilities allocated to the closed block are recognized in ABC Life Insurance Entity's financial statements on the same basis as other similar assets and liabilities. The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date of demutualization (adjusted to eliminate the effect of related amounts in accumulated other comprehensive income) represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income over the period the policies in the closed block remain in force. ABC Life Insurance Entity has developed an actuarial calculation of the timing of such maximum future stockholder earnings, and this is the basis of the policyholder dividend obligation. - If actual cumulative earnings are greater than expected cumulative earnings, only expected earnings will be recognized in income. Actual cumulative earnings in excess of expected cumulative earnings represents undistributed accumulated earnings attributable to policyholders, which are recognized as a policyholder dividend obligation because the excess will be paid to closed block policyholders as an additional policyholder dividend unless otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, only actual earnings will be recognized in income. - The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholders' benefits, policyholder dividends, premium taxes, and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions and net investment income, and realized investment gains and losses of investment assets outside the closed block that support the closed block business. The amounts shown in the following tables for assets, liabilities, revenues, and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders. ##### [805-944-55-4](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:510718d634a4fcd959d108146aa27504f16c3468216231a910b99604dd0a3069 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC Life Insurance Entity may present summarized financial information for the closed block in a table as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-BF693EFC-EF81-4256-89D3-FE4F8B91D84A-low.gif) "December 31, 20X2" 20X2 Activity (a) "December 31, 20X1" Closed block liabilities: Future policy benefits and policyholder account balances " $8,903 " $(8) B " $8,911 " Policyholder dividends payable 88 88 Policyholder dividend obligation 163 93 E 80 (10) C Other closed block liabilities 12 12 Total closed block liabilities " 9,166 " 75 " 9,091 " Assets designated to the closed block: Fixed maturities: "Held to maturity, at amortized cost (estimated fair value, 20X2, $275; 20X1, $319)" 289 289 "Available for sale, at estimated fair value (amortized cost, 20X2, $3,809; 20X1, $3,502)" " 4,001 " " 307 93 " " D E " " 3,601 " "Equity securities, at estimated fair value" 202 202 Mortgage loans on real estate " 1,273 " (307) D " 1,580 " Policy loans " 1,766 " " 1,766 " Real estate 105 105 Short-term investments 62 62 Cash and cash equivalents 119 82 A 37 Other closed block assets 76 76 Total closed block assets " 7,893 " 175 " 7,718 " Excess of reported closed block liabilities over assets designated to the closed block " 1,273 " (100) " 1,373 " Portion of above representing other comprehensive income -increase in unrealized appreciation 192 93 99 -increase in policyholder dividend obligation (93) (93) Total 99 - 99 Maximum future earnings to be recognized from closed block assets and liabilities " $1,372 " $(100) " $1,472 " Change in Policyholder Dividend Obligation: "December 31, 20X2" "December 31, 20X1" Balance at beginning of year $80 $- Impact on net income before income taxes (10) 5 Unrealized investment gains (losses) 93 75 Balance at end of year $163 $80 Change in Other Comprehensive Income: "December 31, 20X2" Change for 20X2 "December 31, 20X1" Fixed maturities available for sale: Fair value " $4,001 " $400 " $3,601 " Amortized cost " 3,809 " 307 D " 3,502 " Unrealized appreciation $192 $93 E $99 (a) "Assumed 20X2 activity for assets and liabilities (similarly identified in statement of operations as applicable): A items are assumed settled in cash, with net impact reflected in "Cash and cash equivalents." B and C are given effect in their respective balance sheet accounts. D represents the assumed sale of mortgage loans at book value and reinvestment of the proceeds in available-for-sale fixed maturities. E represents the increase in unrealized appreciation on available-for-sale securities held at both December 31, 20X1 and December 31, 20X2. It is assumed that there are no related taxes and that the available-for-sale fixed maturities sold (see above) had fair value equal to book value both at December 31, 20X1, and when sold. It is further assumed that the unrealized appreciation at December 31, 20X1, is equal to that at the date of demutualization. Unrealized appreciation that arises since the date of demutualization is to be included in the determination of the policyholder dividend obligation." ##### [805-944-55-5](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:8f6dd568c58821a23d871b1aa0225003fe6303ebdb208426b766f7eced48ff59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC Life Insurance Entity may present additional summarized financial information for the closed block in a table as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-007EA11C-044A-4487-BA20-E613F05CCA17-low.gif) 20X2(a) 20X1 Closed Block Operations: Closed block revenues: Premiums $303 A $318 Net investment income 205 A 215 Realized investment gains (losses) (2) A 10 Other closed block revenues 5 A 5 Total closed block revenues 511 548 Closed block benefits and expenses: Policyholder benefits 402 A 376 Change in policyholder benefits and interest credited to policyholder account balances (8) B 17 Dividends to policyholders 8 A 8 Change in policyholder dividend obligation (10) C 5 Other closed block expenses 10 A 10 Total closed block benefits and expenses 402 416 "Closed block revenues, net of closed block benefits and expenses, before income taxes" 109 132 Income taxes 9 A 10 "Closed block revenues, net of closed block benefits and expenses and income taxes" $100 $122 Maximum future earnings from closed block assets and liabilities: Beginning of year " $1,472 " " $1,594 " End of year " 1,372 " " 1,472 " Change during the year $(100) $(122) (a) "Assumed 20X2 activity for assets and liabilities (similarly identified in statement of operations as applicable): A items are assumed settled in cash, with net impact reflected in "Cash and cash equivalents." B and C are given effect in their respective balance sheet accounts." ##### [805-944-55-6](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:c9682e00e9f6e8bef02d8b998363ab69594c1670a83f7a7339440a204eb07ffc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the accounting under the Demutualizations Subsections of this Subtopic for closed block business (meaning those assets and liabilities both inside and outside of the closed block that relate to or support the closed block policies) after the demutualization date. This Example illustrates the computations involved in the following: 1. a Determining the amount of the policyholder dividend obligation 2. b [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [805-944-55-7](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:9e7efb00990664900cb2fc9d12dd8060350e15f051ab3c4bbfcd353724b1a23d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For simplicity, this Example assumes the closed block has not been funded for income taxes. In practice, the closed block may or may not be funded for income taxes. If the closed block is funded for income taxes, the actuarial calculation would be constructed on a post-tax basis. However, for the purpose of determining the policyholder dividend obligation, pretax amounts should be used. Generally, this would be accomplished by converting post-tax actuarial calculation values to corresponding pretax values for purposes of determining the policyholder dividend obligation. If the closed block is funded for income taxes, a change in income tax rates would result in an experience gain or loss that would affect closed block cash flows. ##### [805-944-55-8](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:56904d1143628254fbf70a84228bb1ae0f160cd8db4d3132be86213d8a16c281 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The closed block business is assumed to be written in Year 1, with demutualization occurring at the end of Year 5. Present values are assumed at a discount rate of 8.5 percent. ##### [805-944-55-9](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:2d980591a41d4b62dc359ea1cc94af2ba952b6d88adcc6af7a498587b59a2ce8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As discussed beginning in paragraph [944-805-25-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-25-10), the table in paragraph [944-805-55-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-10) is based on the actuarial calculation for the closed block developed at the demutualization date and represents the expected changes in the [net closed block liability](https://asc.understandingaccounting.org/glossary/n/#net-closed-block-liability "The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets each adjusted to eliminate the effect of related amounts in accumulated other comprehensive income at the actuarial calculation date. Deferred acquisition costs are not assets of the closed block.") (closed block deficit) over the life of the closed block. The data in that table would be compared to actual results throughout the life of the closed block to determine the need for a policyholder dividend obligation. That table assumes an increase in interest rates in Year 6 from 8.5 percent to 9.5 percent, which results in the board of directors increasing dividends in Years 7 through 10. The table assumes demutualization begins in Year 6. For purposes of the Example, all other assumptions are held constant and expenses are assumed to be excluded from the closed block. ##### [805-944-55-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:497c0f8837767e01b573da2d5abecd7e87e1aa0dbade384a0c9c9e1cf4f03f42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Components of the illustrative closed block follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-96750B8C-37FC-48CE-98A0-ED519B7937ED-low.gif) Year Premium Interest on Closed Block Assets Interest on Current Activity Death Benefits Incurred Surrender Benefits Incurred (Increase) Decrease in Net Level Premium Reserve Dividend Incurred (Increase) Decrease in Policyholder Dividend Obligation (a) (b) (c) (d) (e) (f) (g) (h) 1 " $210,000 " $- " $17,850 " " $(9,000)" $- " $(126,103)" " $(18,857)" $- 2 " 184,611 " " 7,231 " " 15,692 " " (10,549)" - " (109,116)" " (21,399)" - 3 " 169,621 " " 7,846 " " 14,418 " " (13,731)" " (7,148)" " (93,669)" " (24,230)" - 4 " 155,763 " " 8,512 " " 13,240 " " (14,835)" " (14,984)" " (79,754)" " (26,574)" - 5 " 142,990 " " 9,236 " " 12,154 " " (15,661)" " (21,760)" " (67,117)" " (28,509)" - 6 " 131,222 " " 11,200 " " 12,466 " " (15,622)" " (17,237)" " (73,236)" " (30,043)" " (2,491)" 7 " 124,333 " " 17,839 " " 10,568 " " (16,578)" " (20,989)" " (66,499)" " (33,061)" 549 8 " 117,768 " " 24,819 " " 10,010 " " (16,824)" " (24,427)" " (60,005)" " (35,127)" 595 9 " 111,526 " " 31,298 " " 9,480 " " (17,526)" " (27,566)" " (53,706)" " (36,990)" 646 10 " 105,582 " " 37,266 " " 8,974 " " (18,603)" " (30,406)" " (47,485)" " (38,675)" 701 11-20 " 779,517 " " 585,648 " " 66,259 " " (311,112)" " (398,831)" " (162,077)" " (424,092)" - 21-55 " 589,392 " " 1,103,633 " " 50,099 " " (1,187,632)" " (686,079)" " 938,767 " " (669,668)" - Total " $2,822,325 " " $1,844,528 " " $241,210 " " $(1,647,673)" " $(1,249,427)" $- " $(1,387,225)" $- Notes: (a) Gross premiums. (b) Interest at 8.5 percent on the liability for future policy benefits at the end of the previous year. (c) "Interest at 8.5 percent on current-year cash flow. This illustration assumes that premiums are received and all expenses are incurred at the start of the year. This illustration assumes that death benefits, surrender benefits, and dividends are all at the end of the year." (d) Death benefits not reduced by related liability for future policy benefits. (e) Surrender benefits not reduced by related liability for future policy benefits. (f) Represents the cumulative (increase) decrease in the liability for future policy benefits. (g) Policyholder dividends for the year. (h) Policyholder dividend obligation as of end of last year minus policyholder dividend obligation as of end of current year. ##### [805-944-55-11](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:a06deaf3787760c0791f2ff0d98c9cd6a8af04db73bb57c30a898af5b4a63d74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of the table in paragraph [944-805-55-10](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-10), the product of the closed block policyholder dividend obligation calculation follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-162A2E03-9916-4063-8215-49C4B1ACF713-low.gif) Actual as of Measurement Date " $18,750 " - Initial Actuarial Calculation " $16,259 " = Policyholder Dividend Obligation at Measurement Date " $2,491 " ##### [805-944-55-12](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:3e88d7393f813a2ff78d9f9e0f09beaf074e074d207825f547d6c9d4c2e34434 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [805-944-55-13](https://asc.understandingaccounting.org/asc/805/944/#805-944-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:03.516Z to 2026-09-10T01:27:03.516Z Record version: sha256:7a3c829bb0d5aa7d97eb9ad69d2ba691620a8bbc14da188f1da3cc218fca4ed9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). Source downloaded (UTC): 2026-09-10T01:27:07.338Z to 2026-09-10T01:27:07.338Z Record version: sha256:c9dcd436c823725cd5cfd71b927e4f611894983fc420102312f7c58ab7615e4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/944/#sec-25-recognition) SEC content: yes #### Accounting by the Purchaser for a Seller's Guarantee of the Adequacy of Liabilities for Losses and Loss Adjustment Expenses Acquired in a Purchase Business Combination ##### [805-944-S25-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:07.338Z to 2026-09-10T01:27:07.338Z Record version: sha256:220dde556a609d1b59efc0adb91ad394098a2e13d0364269a3f2d1c436671d3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-805-S99-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-S99-1), SEC Observer Comment: Accounting by the Purchaser for a Seller's Guarantee of the Adequacy of Liabilities for Losses and Loss Adjustment Expenses Acquired in a Purchase Business Combination, for related SEC Staff views. Source downloaded (UTC): 2026-09-10T01:27:09.747Z to 2026-09-10T01:27:09.747Z Record version: sha256:b287d2d12447c6a347fb03080bb03a294f1e45defe48d70ea007609a579eb175 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-944-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/805/944/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [805-944-S99-1](https://asc.understandingaccounting.org/asc/805/944/#805-944-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:09.747Z to 2026-09-10T01:27:09.747Z Record version: sha256:ae33580f8608eeda3335f1776cc4f3045e424ab768db1adf1bc4b684768b162e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Observer Comment: Accounting by the Purchaser for a Seller's Guarantee of the Adequacy of Liabilities for Losses and Loss Adjustment Expenses Acquired in a Purchase Business Combination. - The SEC staff believes it is preferable to present the effects of the loss guarantee on a gross rather than net basis. Any receivable from the seller should not be netted against the related liability in the balance sheet or in supporting information such as footnotes or SEC Industry Guide 6 disclosures. The SEC staff also expressed a preference that (1) any expense associated with increased reserves be reported as a component of other claim losses and loss adjustment expenses and (2) other claim losses and loss adjustment expenses not be reduced by the effect of the reserve guarantee. - The SEC staff would not object to claim losses and loss adjustment expenses being reported net of the effect of the reserve guarantee in the income statement. A net presentation is appropriate only if the effects of the reserve guarantee are disclosed separately in the notes to the financial statements, in the SEC Industry Guide 6 disclosures including the reconciliation of claims reserves, and in the loss ratio information. Source downloaded (UTC): 2026-09-10T01:27:13.331Z to 2026-09-10T01:27:35.856Z Record version: sha256:7ab989ee08f3cf02d53281454e31e268b81464128bb99f2a882ff83868974e2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954: Business Combinations — Health Care Entities ### Machine-generated study aids ```json { "summary": "ASC 805-954 supplements Subtopic 958-805 for not-for-profit, business-oriented health care entities that combine with other NFPs, businesses, or nonprofit activities in a transaction meeting the definition of a merger of not-for-profit entities or an acquisition by a not-for-profit entity. Its incremental rules address classification of acquired debt securities, and—most importantly—whether particular acquisition-related amounts (contingent consideration remeasurements, the separate charge, inherent contributions, step-acquisition gains or losses) are reported within or outside the performance indicator. It also prescribes pro forma performance indicator disclosures for public health care entities.", "key_points": [ "The Subtopic applies only to not-for-profit, business-oriented health care entities and only to transactions meeting the definition of a merger of not-for-profit entities or an acquisition by a not-for-profit entity (805-954-15-2 through 15-3).", "Excluded are joint venture formations, acquisitions of assets that are not a business or nonprofit activity, common-control combinations (see Subtopic 805-50), and situations in which the NFP obtains control but does not consolidate under Section 958-810-25 (805-954-15-4).", "When applying paragraph 805-20-25-6, the acquirer classifies particular acquired investments in debt securities as trading or other than trading securities (805-954-25-1).", "Changes in the fair value of contingent consideration recognized under 958-805-35-3 are reported within the performance indicator unless the arrangement is a hedging instrument for which Subtopic 954-815 requires recognition outside the performance indicator (805-954-35-1).", "A separate charge recognized under 958-805-25-29 is presented within the performance indicator, while an inherent contribution received under 958-805-25-31 is within the performance indicator if without donor restrictions and outside it if with donor restrictions (805-954-45-1 through 45-2).", "In an acquisition achieved in stages, the gain or loss from remeasuring the previously held equity interest is included in the performance indicator, and amounts previously recognized outside the performance indicator are reclassified into that gain or loss at the acquisition date (805-954-45-3).", "Public not-for-profit, business-oriented health care entities must disclose supplemental pro forma performance indicator information for mergers and acquisitions, including acquiree performance indicator since the acquisition date, prior-comparative-period pro forma amounts, and material nonrecurring pro forma adjustments; if impracticable (as defined in 250-10-45-9), that fact and the reason must be disclosed (805-954-50-1 through 50-3)." ], "categories": [ "Business combinations", "Not-for-profit", "Presentation", "Disclosure" ], "audience_level": "advanced", "student_note": "The whole point of this Subtopic is display: the recognition and measurement rules come from 958-805, and 805-954 only tells a health care NFP whether an item lands inside or outside the performance indicator. A common mistake is assuming all inherent contributions are within the performance indicator—donor-restricted inherent contributions are presented outside it.", "related_topics": [ "958-805", "954-805", "805-50", "958-810", "954-815", "805-20" ], "key_concepts": [ "performance indicator", "merger of not-for-profit entities", "acquisition by a not-for-profit entity", "inherent contribution", "contingent consideration", "acquisition achieved in stages", "supplemental pro forma information", "donor restrictions" ] } ``` Source downloaded (UTC): 2026-09-10T01:27:13.331Z to 2026-09-10T01:27:13.331Z Record version: sha256:713ca6d8cf0697a529a9df8bbf14024dd6a2cbeb51a5e0382d12b3bc69a03106 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/805/954/#00-status) SEC content: no ##### [805-954-00-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:13.331Z to 2026-09-10T01:27:13.331Z Record version: sha256:d335b4fba4f2c9b92f493e1618ea06e58025806f620da8de9f993a04eed98ac3 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
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
Conduit Debt SecurityAddedMaintenance Update 2014-20 (PDF)09/29/2014
Control of a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Inherent ContributionAddedAccounting 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
Nonprofit ActivityAddedAccounting Standards Update No. 2010-0701/28/2010
Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Performance IndicatorAddedAccounting Standards Update No. 2010-0701/28/2010
Public EntityAmendedMaintenance Update 2014-20 (PDF)09/29/2014
Public EntityAddedAccounting Standards Update No. 2010-0701/28/2010
Trading SecuritiesAddedAccounting Standards Update No. 2010-0701/28/2010
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
954-805-05-1AddedAccounting Standards Update No. 2010-0701/28/2010
954-805-10-1AddedAccounting Standards Update No. 2010-0701/28/2010
954-805-15-1 through 15-4
AddedAccounting Standards Update No. 2010-0701/28/2010
954-805-25-1AmendedAccounting Standards Update No. 2016-0101/05/2016
954-805-25-1AddedAccounting Standards Update No. 2010-0701/28/2010
954-805-35-1AddedAccounting Standards Update No. 2010-0701/28/2010
954-805-45-1 through 45-3
AddedAccounting Standards Update No. 2010-0701/28/2010
954-805-45-2AmendedAccounting Standards Update No. 2016-1408/18/2016
954-805-50-1 through 50-3
AmendedAccounting Standards Update No. 2025-1112/08/2025
954-805-50-1 through 50-3
AddedAccounting Standards Update No. 2010-0701/28/2010
954-805-50-2AmendedAccounting Standards Update No. 2012-0410/01/2012
Source downloaded (UTC): 2026-09-10T01:27:16.595Z to 2026-09-10T01:27:16.595Z Record version: sha256:e022e9ce16b33e9c8bcab8e46e5f5ec1e7315e6fd99e1aec07c3a7c693491373 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/805/954/#05-overview-and-background) SEC content: no ##### [805-954-05-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:16.595Z to 2026-09-10T01:27:16.595Z Record version: sha256:72308cf36f219fb0a2cd54ed0665e39302c6d72bc217495773f29440cc2ae7b8 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, business-oriented health care entity (see Section 954-10-05) that is the reporting entity combines with one or more other [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](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."). Source downloaded (UTC): 2026-09-10T01:27:20.255Z to 2026-09-10T01:27:20.255Z Record version: sha256:3e1a563c2ab3f745a4e27a81048eac09b6bfe6aed1f9f3ec86fa8f46dd56c522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/805/954/#10-objectives) SEC content: no ##### [805-954-10-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:20.255Z to 2026-09-10T01:27:20.255Z Record version: sha256:70a20c3d96488791ddeda175457f7151bc51707e8fb916442692f096819c94bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of this Subtopic, in combination with the guidance in Subtopic 958-805, is to improve the relevance, representational faithfulness, and comparability of the information that a not-for-profit, business-oriented health care entity provides in its financial reports about a combination with one or more other [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. Source downloaded (UTC): 2026-09-10T01:27:23.603Z to 2026-09-10T01:27:23.603Z Record version: sha256:35a52758ab6a36d24ce150a085615309faffd43ff8177c5fbfa45e8e2eb4ad22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/805/954/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [805-954-15-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:23.603Z to 2026-09-10T01:27:23.603Z Record version: sha256:f30683c11d7cc096a94457e4b0506c0d72a65bebf086c1fec75d76ea7201e9a4 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 954-10-15, with the following exceptions noted below. #### Entities ##### [805-954-15-2](https://asc.understandingaccounting.org/asc/805/954/#805-954-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:23.603Z to 2026-09-10T01:27:23.603Z Record version: sha256:621a46549564451412d48a7556e32bb323dba32e86e407bcb96d99d4eb6299c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies only to not-for-profit, business-oriented health care entities (see Section 954-10-05). #### Transactions ##### [805-954-15-3](https://asc.understandingaccounting.org/asc/805/954/#805-954-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:23.603Z to 2026-09-10T01:27:23.603Z Record version: sha256:a210b34747e48f25f5633a9a6934b46ee36c64a9f4bd7c4cf07cb367850f467a 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."). ##### [805-954-15-4](https://asc.understandingaccounting.org/asc/805/954/#805-954-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:23.603Z to 2026-09-10T01:27:23.603Z Record version: sha256:c1f7766be0201d4562c878b027244eac3134f7b1fa61c2921379fc83affe8393 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not apply to any 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 a 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. Source downloaded (UTC): 2026-09-10T01:27:28.147Z to 2026-09-10T01:27:28.147Z Record version: sha256:994f179e1d68e25ee7c876ab7a3e2d1a4d124a9b6adb98eca02b6cebfdf75edd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/805/954/#25-recognition) SEC content: no ##### [805-954-25-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:28.147Z to 2026-09-10T01:27:28.147Z Record version: sha256:9d050f8f7e75331d1d6718eefebc78993b37c325a5298d84c98d4079b5d05f7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When applying the guidance in paragraph [805-20-25-6](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-6), 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.") that is a not-for-profit, business-oriented health care entity shall classify particular investments in debt securities as [trading securities](https://asc.understandingaccounting.org/glossary/t/#trading-securities "Securities that are bought and held principally for the purpose of selling them in the near term and therefore held for only a short period of time. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price.") or other than trading securities. Source downloaded (UTC): 2026-09-10T01:27:30.356Z to 2026-09-10T01:27:30.356Z Record version: sha256:d166540d770174c1caa0125efde370147818e815c2acef4a8cf4dc0a7de20183 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/805/954/#35-subsequent-measurement) SEC content: no ##### [805-954-35-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:30.356Z to 2026-09-10T01:27:30.356Z Record version: sha256:88e6040ad66df74c1e3ce46a69fd7c19f152c9f7c37c69aed2874dcb7d83cd81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") that is a not-for-profit, business-oriented health care entity shall report the changes in the fair value of contingent consideration recognized in accordance with paragraph [958-805-35-3](https://asc.understandingaccounting.org/asc/805/958/#805-958-35-3) within the [performance indicator](https://asc.understandingaccounting.org/glossary/p/#performance-indicator "A performance indicator reports results of operations. A performance indicator and the income from continuing operations reported by for-profit health care entities generally are consistent, except for transactions that clearly are not applicable to one kind of entity (for example, for-profit health care entities typically would not receive contributions, and not-for-profit health care entities would not award stock compensation). That is, a performance indicator is analogous to income from continuing operations of a for-profit entity.") unless the arrangement is a hedging instrument for which Subtopic 954-815 requires the entity to recognize the changes outside the performance indicator. Source downloaded (UTC): 2026-09-10T01:27:33.224Z to 2026-09-10T01:27:33.224Z Record version: sha256:c3eaf7fc24e338a0dd68a1accddc43b5bb51691dfcce21567901ec969068673a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/805/954/#45-other-presentation-matters) SEC content: no ##### [805-954-45-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:33.224Z to 2026-09-10T01:27:33.224Z Record version: sha256:224bf818a9ba73e3ffa25cbff51cc85721d5a303244ec76b048599507b5574c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If 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.") is a not-for-profit, business-oriented health care entity and a separate charge is recognized in accordance with paragraph [958-805-25-29](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-29), it shall be presented within the [performance indicator](https://asc.understandingaccounting.org/glossary/p/#performance-indicator "A performance indicator reports results of operations. A performance indicator and the income from continuing operations reported by for-profit health care entities generally are consistent, except for transactions that clearly are not applicable to one kind of entity (for example, for-profit health care entities typically would not receive contributions, and not-for-profit health care entities would not award stock compensation). That is, a performance indicator is analogous to income from continuing operations of a for-profit entity."). ##### [805-954-45-2](https://asc.understandingaccounting.org/asc/805/954/#805-954-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:33.224Z to 2026-09-10T01:27:33.224Z Record version: sha256:155ebe1d0e07a83636f8259d8698895bb486106578299cdd0a521c6cf0bfab4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an acquirer is a not-for-profit, business-oriented health care entity, whether 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.") received recognized in accordance with paragraph [958-805-25-31](https://asc.understandingaccounting.org/asc/805/958/#805-958-25-31) is presented within or outside of the performance indicator depends on whether the contribution is without donor restrictions or with donor restrictions. A contribution without donor restrictions shall be presented within the performance indicator. A contribution with donor restrictions shall be presented outside of the performance indicator. ##### [805-954-45-3](https://asc.understandingaccounting.org/asc/805/954/#805-954-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:27:33.224Z to 2026-09-10T01:27:33.224Z Record version: sha256:5e96c069fa212de69c9d14fcbbf8e1480c37ad0adaaa4076d917bec60b16fcd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In an acquisition achieved in stages (see paragraphs [805-10-25-9 through 25-10](https://asc.understandingaccounting.org/asc/805/10/#805-10-25-9) ), an acquirer that is a not-for-profit, business-oriented health care entity shall include in its performance indicator the gain or loss resulting from remeasuring its previously held equity interest in the acquiree. In prior reporting periods, that acquirer may have recognized changes in the value of its equity interest in the acquiree outside the performance indicator (for example, because the investment was classified as other than trading). If so, the amount that was recognized outside the performance indicator shall be reclassified and included in the calculation of gain or loss on the previously held equity interest as of the acquisition date. Source downloaded (UTC): 2026-09-10T01:27:35.856Z to 2026-09-10T01:27:35.856Z Record version: sha256:0df75cfb3d5dae1cad7d2f5ceb6ec1e419126c3d9300b181c4913302139308b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 805-954-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/805/954/#50-disclosure) SEC content: no ##### [805-954-50-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:27:35.856Z to 2026-09-10T01:27:35.856Z Record version: sha256:476b5f191e61d19db204733856eb0be56c09219ca8832cf18eaebcbbeb52ede9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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."), a new entity that is both a not-for-profit, business-oriented health care entity and 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 [performance indicator](https://asc.understandingaccounting.org/glossary/p/#performance-indicator "A performance indicator reports results of operations. A performance indicator and the income from continuing operations reported by for-profit health care entities generally are consistent, except for transactions that clearly are not applicable to one kind of entity (for example, for-profit health care entities typically would not receive contributions, and not-for-profit health care entities would not award stock compensation). That is, a performance indicator is analogous to income from continuing operations of a for-profit entity.") for the current reporting period as though the [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective.") had been the beginning of the annual reporting period (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)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."), a new entity that is both a not-for-profit, business-oriented health care entity and 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 [performance indicator](https://asc.understandingaccounting.org/glossary/p/#performance-indicator "A performance indicator reports results of operations. A performance indicator and the income from continuing operations reported by for-profit health care entities generally are consistent, except for transactions that clearly are not applicable to one kind of entity (for example, for-profit health care entities typically would not receive contributions, and not-for-profit health care entities would not award stock compensation). That is, a performance indicator is analogous to income from continuing operations of a for-profit entity.") for the current reporting period as though the [merger date](https://asc.understandingaccounting.org/glossary/m/#merger-date "The date on which the merger becomes effective.") had been the beginning of the annual reporting period (supplemental pro forma information). ##### [805-954-50-2](https://asc.understandingaccounting.org/asc/805/954/#805-954-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:27:35.856Z to 2026-09-10T01:27:35.856Z Record version: sha256:b21b0d6295da6a6100ed89328d6213c31282b35ebf91f56919ca0366d9c3fbb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For 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."), a not-for-profit, business-oriented health care entity that is a public entity shall disclose all of the following: 1. a The performance indicator 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 is included in the statement of activities for the reporting period. 2. b The performance indicator as though the acquisition date for all acquisitions that occurred during the current year had occurred the beginning of the annual reporting period (supplemental pro forma information). 3. c If the acquirer presents comparative financial statements, the performance indicator as though the acquisition date for all acquisitions that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period (supplemental pro forma information). For example, for a calendar year-end entity, disclosures would be provided for an acquisition by a not-for-profit entity 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). 4. d The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the acquisition(s) included in the reported pro forma performance indicator (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)For 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."), a not-for-profit, business-oriented health care entity that is a public entity shall disclose all of the following in interim and annual reporting periods: 1. a The performance indicator 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 is included in the statement of activities for the reporting period. 2. b The performance indicator as though the acquisition date for all acquisitions that occurred during the current year had occurred the beginning of the annual reporting period (supplemental pro forma information). 3. c If the acquirer presents comparative financial statements, the performance indicator as though the acquisition date for all acquisitions that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period (supplemental pro forma information). For example, for a calendar year-end entity, disclosures would be provided for an acquisition by a not-for-profit entity 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). 4. d The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the acquisition(s) included in the reported pro forma performance indicator (supplemental pro forma information). ##### [805-954-50-3](https://asc.understandingaccounting.org/asc/805/954/#805-954-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:27:35.856Z to 2026-09-10T01:27:35.856Z Record version: sha256:0d9f4b0c29591cf2e25b8804ff845b2e5fff7d923ab3332b3d481f4c2af86c33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the disclosure of any of the information required by paragraph [954-805-50-2](https://asc.understandingaccounting.org/asc/805/954/#805-954-50-2) or paragraph [954-805-50-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-50-1) is impracticable, a not-for-profit, business-oriented health care entity 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 paragraph [954-805-50-2](https://asc.understandingaccounting.org/asc/805/954/#805-954-50-2) or paragraph [954-805-50-1](https://asc.understandingaccounting.org/asc/805/954/#805-954-50-1) is impracticable, a not-for-profit, business-oriented health care entity 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). 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_.