Mastering M&A Accounting – A Deep Dive Into ASC 805
This course provides an in-depth overview of the accounting and reporting requirements with respect to business combinations prescribed by ASC Topic 805. The overall objective of the guidance included within ASC 805 is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects.
Course Information
Course No. CAM025
Format: Online pdf (66 pages). Printed book available.
Instructional Delivery Method: QAS Self-Study
Prerequisites: None
Advance Preparation: None
Level: Overview
CPE Credit: 4 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
* Illustrative Examples – Business or Not?
* Example #1 Acquisition of Real Estate
* Example #2 Acquisition of a Drug Candidate
* Example #3 Acquisition of a Television Station
* 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 a Bargain Purchase
* Measurement Period
* Business Combination Achieved in Stages
* Subsequent Measurement
* Financial Statement Disclosures
* 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 combination transaction
- List the steps involved in the acquisition method
- Identify the acquisition datefor a business combination
- Recognize how assets and liabilities of a business combination are recorded/measured
- Differentiate between the various categories of intangible assets
- Recognize how to measure goodwilland gains from bargain purchases
- Identify the measurement period for business combinations
- Recognize financial statement disclosures related to business combinations
- Identify the relief afforded to private and not-for-profit entities for business combinations
Introduction
Entities that engage in business combinations are often confronted with various financial reporting issues including, but not limited to, determining whether a transaction represents a business combination (or an asset acquisition), accounting for the consideration transferred in the transaction, as well as measuring and recognizing the fair value of assets acquired and liabilities assumed. However, let’s first start at the most fundamental question with respect to this course – what is a business combination?
The FASB ASC Master Glossary defines as business combination as “a transaction or event in which an acquirer obtains control of one or more businesses.” The Glossary goes onto add that an example of a business combination could be a “true merger” or a “merger of equals”. However, before determining if a transaction is in fact a business combination, we have to look more closely at the business combination definition. Within the definition, it’s noted that the transaction relates to one or more “businesses”. At the risk of stating the obvious, the business definition is not always necessarily the same definition of a business in layman’s terms. As such, before diving into an assessment of whether a transaction is considered a business combination, we have to first define what is meant by the term business.
