ASC 805 Quick Guide
This course provides a high-level overview of the accounting and reporting requirements for business combinations under ASC Topic 805. The guidance aims to enhance the relevance, reliability, and comparability of financial information related to business combinations and their impact on a reporting entity’s financial statements.
For a 4-hr course on this topic check out Mastering M&A Accounting: A Deep Dive Into ASC 805
Course Information
Course No. CAM026
Format: Online pdf (37 pages). Printed book available.
Instructional Delivery Method: QAS Self-Study
Prerequisites: None
Advance Preparation: None
Level: Overview
CPE Credit: 2 hrs.
Field of Study: Accounting
Course Author: Kelen F. Camehl, CPA, MBA
Course expiration: You have one year from date of purchase to complete the course.
Course Revision Date: January 2025
Objectives
Course Topics:
* Definition of a Business
* The Acquisition Method
* Step 1: Identifying the Acquirer
* Step 2: Determining the Acquisition Date
* Step 3: Recognizing/Measuring Identifiable Assets & Liabilities
* Step 4: Recognizing and Measuring Goodwill or Gain from Bargain Purchases
* Measurement Period
* Business Combination Achieved in Stages
* Subsequent Measurement
* Reverse Acquisitions
* Private and Not-For-Profit Accounting Alternatives
Learning Objectives:
Upon completion of this course, you will be able to:
- Identify the definition of a business as it relates to a business combinationtransaction
- Recognize steps involved in the acquisition method
- Recognize how assets and liabilities of a business combinationare recorded/measured
- Identify how to measure goodwilland gains from bargain purchases
- Identify the measurement period for business combinations
- Recognize the relief afforded to private and not-for-profit entities for business combinations
Introduction
Entities involved in business combinations frequently face complex financial reporting challenges, such as determining whether a transaction qualifies as a business combination or an asset acquisition, accounting for the consideration exchanged, and measuring and recognizing the fair value of acquired assets and assumed liabilities. Before addressing these issues, it is essential to begin with a foundational question: What constitutes a business combination?
The FASB ASC Master Glossary defines a business combination as “a transaction or event in which an acquirer obtains control of one or more businesses.” This definition includes examples like a “true merger” or a “merger of equals.” However, determining whether a transaction qualifies as a business combination requires a deeper understanding of the term “business.” It’s important to note that the accounting definition of a business may differ from its common usage. To properly evaluate whether a transaction meets the criteria for a business combination, we must first clarify what is meant by “business.”
