NFPO Combinations – NFP Advisory Committee

Date recorded:

At its meeting on July 21, 2020, the Not-for-Profit Advisory Committee discussed stakeholder feedback on the Exposure Draft and advised the AcSB to:

  1. add a reference to Section 1582, Business Combinations, to account for a for-profit enterprise contributed to a NFPO and to clarify if goodwill is recorded;
  2. provide an exception from the acquisition method when NFPOs under common control combine; and
  3. require measurement of deferred contributions and deferred capital contributions at fair value for an acquired NFPO.

The Committee also recommended the AcSB revise the criteria to distinguish a merger from an acquisition and the related illustrative examples by amending: criterion (b) to include that all parties have meaningful participation in negotiations; criterion (e) to reflect that if all parties have a significant decline or planned significant decline in client communities served, the combination can still be accounted for as a merger; Illustrative Example 2 to demonstrate that internal communications are relevant in assessing if either party to a combination is characterized as the acquirer or acquiree; and Illustrative Example 3 to demonstrate how consideration can flow to a third party. The AcSB will consider the Committee’s comments at the Board meeting on September 9, 2020.

Review the summary of discussions on the AcSB's Web site.

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