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Business Combinations

Under the guidance of ASC Topic 805, companies must measure fair values of the following at their acquisition-date:

  • Identifiable assets acquired

  • Liabilities assumed

  • Any non-controlling interest in the acquiree

In addition, under US GAAP and tax regulations, acquired assets and assumed liabilities are not limited to those previously recognized by the acquiree. Certain assets and liabilities that were not previously recognized by an acquiree must be recognized by an acquirer as of the transaction closing. These typically include any intangible assets that were internally developed (not previously purchased) by the acquiree.

Assets and Liabilities

Business combinations involve all classes of tangible assets, intangible assets, and liabilities, including but not limited to the following:

Real Property

  • Land

  • Improvements

  • Buildings

  • Leasehold Interest

Personal Property

& Related Assets

  • Machinery & Equipment

  • Furniture and Fixtures

  • Computer Equipment

  • Vehicles

  • Construction in Progress

  • Leasehold Improvements

Intangible Assets

  • Trademarks

  • Technology (Patented and Unpatented)

  • Internally Developed Software

  • Customer Relationships

  • Favorable Supply Agreements

  • Non-Compete Agreements

  • Licensing Agreements



  • Deferred Revenue

  • Contingent Consideration

  • Contingent Liabilities

ASC 805 introduced significant changes over previous financial reporting standards, including changes in accounting for:

  • Transaction and restructuring costs

  • Contingent consideration

  • Contingent liabilities, including earn-outs

  • Negative goodwill (bargain purchases)

  • In-process research and development

Reporting Requirements
These variables include:

Business Combinations - FASB ASC Topic 805 / IFRS 3R

Fair Value Measurements - FASB ASC Topic 820 / IFRS 13

Impairment: Goodwill and Other - FASB ASC Topic 350

Impairment or Disposal of Long-Lived Assets - FASB ASC Topic 360

Stock Based Compensation - ASC Topic 718 – FAS 123(R)

Tax Consideration - Internal Revenue Code Section 1060

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