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FASB issues a proposed ASU to simplify the accounting for measurement-period adjustments

  • FASB document Image

May 21, 2015

The FASB has issued a proposed Accounting Standards Update (ASU), “Simplifying the Accounting for Measurement-Period Adjustments,” as part of its simplification initiative (i.e., the Board’s effort to reduce the cost and complexity of certain aspects of U.S. GAAP).

ASC 805-10-25-13 states that “[i]f the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete.” Under the proposal, during the measurement period, the acquirer is no longer required to retrospectively adjust the provisional amounts recognized as of the acquisition date. Instead, the acquirer would need to “record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.”

Comments on the proposed ASU are due by July 6, 2015. For more information, see the proposed ASU on the FASB’s Web site.

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