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ASC 805 — Business Combinations


The full text of ASC 805, Business Combinations can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

ASC 805 comprises six Subtopics (Overall; Identifiable Assets and Liabilities, and Any Noncontrolling Interest; Goodwill or Gain from Bargain Purchase, Including Consideration Transferred; Reverse Acquisitions; Related Issues; Income Taxes). Below is an overview of each Subtopic.


805-10 Overall

ASC 805-10 provides guidance on the acquisition method, specifically addressing the following:


  1. Whether a particular transaction or event is a business combination
  2. The identification of the acquirer and the acquisition date
  3. The period of time that an acquirer has to adjust provisional amounts, referred to as the measurement period
  4. The determination of what is part of a business combination transaction.

805-20 Identifiable Assets and Liabilities, and Any Noncontrolling Interest

ASC 805-20 provides further guidance on the acquisition method, specifically discussing the recognition and measurement of the following:


  1. Identifiable assets acquired
  2. Liabilities assumed
  3. Noncontrolling interests, if any, in the acquiree.

805-30 Goodwill or Gain from Bargain Purchase, Including Consideration Transferred

ASC 805-30 provides guidance on the acquisition method, specifically related to the "recognition and measurement of either goodwill or a gain from a bargain purchase."


805-40 Reverse Acquisitions

ASC 805-40 provides additional guidance on the "application of the acquisition method to a business combination that is a reverse acquisition."


805-50 Related Issues

ASC 805-50 notes that it "provides guidance on the accounting and reporting for two transactions that have certain characteristics that are similar to business combinations but do not meet the requirements to be accounted for as business combinations [acquisition of assets rather than a business and transactions between entities under common control], and on another issue that arises after a business combination [new basis of accounting (pushdown)]."


805-740 Income Taxes

ASC 805-740 notes the following:


This Subtopic provides incremental guidance on accounting for income taxes related to business combinations and to acquisitions by not-for-profit entities. This Subtopic requires recognition of deferred tax liabilities and deferred tax assets (and related valuation allowances, if necessary) for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination or in an acquisition by a not-for-profit entity.

The recognition and measurement requirements related to accounting for income taxes in this Subtopic are exceptions to the recognition and measurement principles that are otherwise required for business combinations and acquisitions by not-for-profit entities, as established in Sections 805-20-25 and 805-20-30.

Content from the FASB Accounting Standards Codification® included at is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

    The following ASUs amended the guidance in this Topic:

    Proposed FASB Accounting Standards Updates

    The following are proposed amendments to ASC 805:

    Related resources

    See our comprehensive collection of news and publications related to business combinations.

    International guidance

    For the IASB's guidance on this topic, see IFRS 3, Business Combinations.

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.