On October 30th, the Financial Accounting Standards Board (FASB) released a proposed Accounting Standards Update (ASU) designed to enhance the requirements for identifying the accounting acquirer in FASB Accounting Standards Codification Topic 805, Business Combinations. The proposed ASU is based on a recommendation of the Emerging Issues Task Force (EITF).
In a business combination, the determination of the accounting acquirer can substantially impact the carrying amounts of the combined entity’s assets and liabilities, which may affect the combined entity’s post-transaction net income.
The proposed ASU is intended to:
- create consistent requirements for determining the accounting acquirer when a business is acquired in a transaction achieved by exchanging equity interests
- align more closely the requirements for determining the accounting acquirer in the acquisition of a variable interest entity (VIE) with the current requirements that apply to transactions that do not involve a VIE
- improve financial statement comparability by providing consistent requirements for economically similar transactions
The proposed ASU is available at fasb.org. Stakeholders are encouraged to review the proposed ASU and submit comments to the FASB via email to xbrled@fasb.org through December 16, 2024.
Source:
FASB Seeks Public Comment on Proposal to Clarify Guidance for Identifying the Accounting Acquirer in a Business Combination (fasb.org)
Emerging Issues Task Force (fasb.org)
