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Codification Topic 805 Business Combinations Business Combinations SFAS No. 141R, Revised in December 2007 "Business Combinations" FSP FAS 141R-1, April 2009 "Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies" Acquisition Method Acquisition method is applied for business combinations Steps of acquisition method: 1. Acquirer 2. Acquisition date 3. Assets, liabilities, noncontrolling interest 4. Goodwill Acquirer One entity should be identified as the acuquirer Acquisition date The acquirer obtains control at the acquisition date Recognition principle The following are recognized at the acquisition date: 1. Assets 2. Liabilities 3. Noncontrolling interest 4. Goodwill Measurement principle The following are measured at the acquisition-date fair values: 1. Assets 2. Liabilities 3. Noncontrolling interest Exceptions to Recognition and Measurement Principles 1. Assets and liabilities arising from contingencies 2. Income taxes 3. Employee benefits 4. Indemnification assets Exceptions to the Measurement Principle 1. Reacquired assets 2. Share-based payment awards 3. Assets held for sale Goodwill or a gain from bargain purchase 1. Goodwill = Consideration transferred + FV of NCI - FV of Net Assets 2. Gain from bargain purchase = FV of Net Assets - Considerations transferred - FV of NCI FV: Fair Value NCI: Noncontrolling Interest Consideration transferred Consideration transferred is measured at fair value Contingent consideration is measured at the acquisition-date fair value Share-based payment awards exchanged for acquiree's employees Modification of share-based payment awards under SFAS 123R Business combinations   --> achieved in stages Previously held equity interest is remeasured at the acquisition-date fair value Changes in fair value are recognized in earnings as gains or losses Business combinations   --> achieved without the transfer of consideration --> achieved by contract alone Rules of acquisition method are applied --> even if all equity interests are allocated to NCI Acquisition-related costs --> recognized as expenses One exception for the issuance costs of debt or equity securities --> apply related GAAP International Financial Reporting Standards (IFRS)    IFRS 3: Business combinations

Codification Topic 805    Business Combinations

Subtopics of Codification Topic 805      805-10 Overall    805-20 Identifiable assets and liabilities, and any noncontrolling interest    805-30 Goodwill or gain from bargain purchase, including consideration transferred    805-40 Reverse acquisitions    805-50 Related issues

Accounting Terms of Codification Topic 805-10      Acquiree    Acquirer    Acquisition date    Business    Business combination    Contingent consideration    Control    Equity interests    Fair value    Goodwill    Identifiable    Intangible assets    Market participants    Mutual entity    Noncontrolling interest    Owners    Public entity    Related parties    Reverse acquisition    Variable interest entity

Accounting Terms of Codification Topic 805-20      Bargain purchase option    Bargain renewal option    Contingency    Defensive intangible asset    Estimated residual value    Gain contingency    Indirectly related to the leased property    Lease term    Loss contingency    Mineral rights    Noncancelable lease term    Penalty

Accounting Terms of Codification Topic 805-30      Requisite service period

Accounting Terms of Codification Topic 805-40

Accounting Terms of Codification Topic 805-50      Dropdown    Pushdown accounting    Reorganization    Rollout    Rollup

 

Other Topics at the Codification 800

Accounting Standards Codification, ASC, Overview

ASC Codification Topic 805: Business Combinations

ASC Codification Topic 808: Collaborative Arrangements

ASC Codification Topic 810: Consolidation

ASC Codification Topic 815: Derivatives and Hedging

ASC Codification Topic 820: Fair Value Measurements and Disclosures

ASC Codification Topic 825: Financial Instruments

ASC Codification Topic 830: Foreign Currency Matters

ASC Codification Topic 835: Interest

ASC Codification Topic 840: Leases

ASC Codification Topic 845: Nonmonetary Transactions

ASC Codification Topic 850: Related Party Disclosures

ASC Codification Topic 852: Reorganizations

ASC Codification Topic 855: Subsequent Events

ASC Codification Topic 860: Transfers and Servicing

U.S. GAAP Codification of Accounting Standards

Accounting Standards Codification, ASC, Overview

ASC Codification 200: Presentation

ASC Codification 300: Assets

ASC Codification 400: Liabilities

ASC Codification 500: Equity

ASC Codification 600: Revenue

ASC Codification 700: Expenses

ASC Codification 800: Broad Transactions

ASC Codification 900: Industry

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U.S. GAAP by Topic

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