At its meeting on March 6-7, 2019, the AcSB continued its discussion on the initial measurement of a combination between organizations within the scope of Part III of the Handbook. The Board discussed the criteria to determine whether a transaction would be considered an acquisition or a merger and provided feedback to the staff. The AcSB tentatively agreed with the staff recommendations, subject to further deliberation:

1. the accounting requirements will not include a default position on how to account for the combination transaction;
2. the accounting requirements for transactions that will meet the criteria to be treated as a merger, including: (a) recognizing the assets, liabilities and funds of the combining organizations, as if they have always been part of the same organization from the effective date of the merger; (b) requiring disclosures of the consolidated comparative information; (c) recording the respective entities’ assets, liabilities, and funds at their carrying values, with changes only permitted to achieve uniform accounting policies; and (d) disclosing information on the transaction that will be helpful to users of the consolidated financial statements;
3. goodwill will not be recognized when the transaction is considered an acquisition as part of the initial measurement of the combination; and
4. require prospective application for the proposed guidance.

The staff will provide the AcSB with draft guidance at its May 2019 meeting to refine the criteria for transactions to be treated as mergers, revisit whether a default position is needed and determine the timeline for issuance of the exposure draft for public comment.

Review the Executive Summary on the AcSB's Web site.