A guide to accounting for business combinations

July 2023

Audit Business combinations Financial reporting Technical accounting

A guide to accounting for business combinations assists middle market companies in accounting for business combinations under Topic 805, Business Combinations, of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification. Applying the accounting model in Topic 805 is no small undertaking given some of the complexities embedded in that model. To help alleviate this complexity, our guide explains the accounting for a business combination in plain English and illustrates many aspects of this accounting with detailed examples and illustrations.

The list of topics explored in the guide spans the entire spectrum, from determining whether a business combination occurred to the accounting for certain acquired items on and after the acquisition date to calculating the amount of goodwill or gain on a bargain purchase that should be recognized to providing the necessary disclosures for a business combination. In addition, the guide provides detailed discussion and examples on topics closely related to business combinations, such as accounting for combinations or transfers between entities under common control, accounting for asset acquisitions, accounting for increases or decreases in the buyer’s ownership interest in the target after the business combination and applying pushdown accounting.

The July 2023 edition of the guide has been substantially updated to incorporate recent FASB guidance and address various issues encountered in practice. A summary of the significant changes made in this edition can be found in Appendix F of the guide.

Technical accounting guides

We have prepared in-depth guides on several particularly complex and challenging accounting topics, with comprehensive discussion of the applicable U.S. GAAP and many examples.

Subscribe to Financial Reporting Insights

Stay informed with our biweekly resource for recent financial reporting developments, including AICPA, SEC, PCAOB matters and other finance and accounting compliance considerations.