White paper

Changes to accounting for revenue contracts in a business combination

May 25, 2022
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Audit Financial reporting Business combinations Revenue recognition

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
  • Scope
  • 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.

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