We have prepared a white paper, Changes to accounting for revenue contracts in a business combination, to summarize and illustrate application of the guidance in Financial Accounting Standards Board Accounting Standards Update (ASU) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. Upon adoption, this ASU may change the manner in which the buyer in a business combination recognizes and measures contract assets and contract liabilities related to acquired customer contracts. As a result, adoption of the ASU also may affect the amount of revenue recognized by the buyer after the acquisition date.
Our white paper provides the following information about ASU 2021-08:
- Summary and background
- Recognition and measurement of contract assets and contract liabilities in the accounting for a business combination
- Required disclosures
- Effective date and transition
Our white paper also includes several examples illustrating the application of ASU 2021-08 to various revenue contracts acquired in a business combination.
Additional information about accounting for business combinations is provided in our publication, A guide to accounting for business combinations.