United States

Business combinations: In motion


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RSM US LLP’s (RSM) A guide to accounting for business combinations was developed and designed to help assist middle market companies in their application of Topic 805, Business Combinations, of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC). The third edition of the guide is currently available and its content is based on information existing at June 1, 2016.

Given the continuing evolution of U.S. generally accepted accounting principles (GAAP) (including ASC 805), we have created this summary to highlight those standard-setting activities of the FASB that affect, or could affect, the content in the guide.

Topics on which new accounting standards have been issued since the last edition of the guide include the following:

  • Scope exception for not-for-profit entities
  • Accounting for replacement share-based payment awards
  • Investments in equity securities when the investor loses significant influence
  • Classification of contingent consideration payments in the cash flow statement
  • Definition of a business
  • Accounting for sales of nonfinancial and in-substance nonfinancial assets
  • Accounting for leases
  • Measurement of nonemployee replacement awards
  • Credit losses on financial instruments
  • Subsequent accounting for goodwill
  • Accounting for long-duration insurance contracts

The FASB also has several projects in process which could impact the accounting for business combinations:

  • Private company accounting alternatives on certain identifiable intangible assets
  • Recognition and measurement for an assumed liability in a revenue contract   
  • Identifiable intangible assets and subsequent accounting for goodwill
  • Improving the accounting for asset acquisitions and business combinations

In our white paper, Business combinations: in motion, we provide (a) a description of the significant standard-setting activities that have taken place thus far and where related information can be found in the guide, (b) links to additional information about those activities and (c) the status of those activities or the effective date of any final Accounting Standards Update (ASU) resulting from those activities.


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