EITF — FASB issues proposed ASU on pushdown accounting

Published on: 01 May 2014

On Monday, the FASB issued a proposed ASU in response to the consensus of the Emerging Issues Task Force on EITF Issue 12-F.1 The proposal would give an acquired entity (whether public or private) the option of applying pushdown accounting in its stand-alone financial statements when a change-in-control event has occurred.

An acquired entity that elects to apply pushdown accounting in its stand-alone financial statements would recognize “the new basis of accounting established by the acquirer for the individual assets and liabilities of the acquired entity by applying [ASC] 805.[1]” The acquired entity would be required to recognize any goodwill that arose from the change-in-control transaction but would be prohibited from recognizing any bargain purchase gain. In addition, an acquired entity that elects to apply pushdown accounting would be required to disclose the effect of pushdown accounting on its financial statements by providing the applicable disclosures required by ASC 805. Subsequently, the acquired entity would apply other applicable GAAP to account for the new basis of its assets and liabilities.

If finalized, the proposal would apply prospectively to change-in-control events occurring after the effective date; however, the EITF and FASB have yet to determine an effective date. Comments on the proposal are due by July 31, 2014.


1 EITF Issue No. 12-F, “Recognition of New Accounting Basis (Pushdown) in Certain Circumstances.”

2 FASB Accounting Standards Codification Topic 805, Business Combinations.

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