2. Amend paragraphs 805-10-25-13 and 805-10-25-17, with a link to transition paragraph 805-10-65-3, as follows:

805-10-25-14 During the measurement period, the acquirer also shall recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. However, the measurement period shall not exceed one year from the acquisition date.

805-10-25-15 The measurement period is the period after the acquisition date during which the acquirer may adjust the provisional amounts recognized for a business combination. The measurement period provides the acquirer with a reasonable time to obtain the information necessary to identify and measure any of the following as of the acquisition date in accordance with the requirements of this Topic:

805-10-25-16 The acquirer recognizes an increase (decrease) in the provisional amount recognized for an identifiable asset (liability) by means of a decrease (increase) in goodwill. However, new information obtained during the measurement period sometimes may result in an adjustment to the provisional amount of more than one asset or liability. For example, the acquirer might have assumed a liability to pay damages related to an accident in one of the acquiree’s facilities, part or all of which are covered by the acquiree’s liability insurance policy. If the acquirer obtains new information during the measurement period about the acquisition-date fair value of that liability, the adjustment to goodwill resulting from a change to the provisional amount recognized for the liability would be offset (in whole or in part) by a corresponding adjustment to goodwill resulting from a change to the provisional amount recognized for the claim receivable from the insurer.

805-10-25-17 During the measurement period, the acquirer shall recognize adjustments to the provisional amounts

as if the accounting for the business combination had been completed at the acquisition date

with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined. Thus, the acquirer shall

revise comparative information for prior periods presented in financial statements as needed, including making any change

adjust its financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income

effects recognized in completing the initial accounting

effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. Paragraph 805-10-55-16 and Example 1 (see paragraph 805-10-55-27) provide additional guidance.

3. Amend paragraphs 805-10-55-16 and 805-10-55-27 through 55-29, with a link to transition paragraph 805-10-65-3, as follows:

805-10-55-16 Paragraphs 805-10-25-14 through 25-19 and 805-10-30-2 through 30-3 discuss requirements related to the measurement period in a business combination. If the initial accounting for a business combination is incomplete at the end of the financial reporting period in which the combination occurs, paragraph 805-10-25-13 requires that the acquirer recognize in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the acquirer recognizes adjustments to the provisional amounts needed to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Paragraph 805-10-25-17 requires the acquirer to recognize such adjustments with a corresponding adjustment to goodwill

as if the accounting for the business combination had been completed at the acquisition date

in the reporting period the adjustments are determined.

Measurement period adjustments

The effects of adjustments to provisional amounts to periods after the acquisition date are

not

included in the earnings of the adjustment period.

805-10-55-17 Example 1 (see paragraph 805-10-55-27) illustrates measurement period guidance.

805-10-55-27 This Example illustrates the measurement period guidance in paragraph 805-10-55-16. Acquirer acquires Target on September 30, 20X7. Acquirer seeks an independent appraisal for an item of property, plant, and equipment acquired in the combination, and the appraisal was not complete by the time Acquirer issued its financial statements for the year ended December 31, 20X7. In its 20X7 annual financial statements, Acquirer recognized a provisional fair value for the asset of $30,000. At the acquisition date, the item of property, plant, and equipment had a remaining useful life of five years.

Five

Six months after the acquisition date, Acquirer received the independent appraisal, which estimated the asset’s acquisition-date fair value as $40,000.

805-10-55-28 In its interim financial statements for the

year

quarter ended

December 31

,March 31, 20X8, Acquirer

retrospectively

adjusts the provisional amounts recorded and the related effects on that period’s earnings

the 20X7 prior year information

as follows:

805-10-55-29 In accordance with paragraph 805-20-50-4A

805-10-50-6

, Acquirer discloses both of the following:

4. Add paragraph 805-10-65-3 and its related heading as follows:

805-10-65-3 The following represents the transition and effective date information related to  Accounting Standards Update No. 2015-16,  Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments:

5. Amend paragraph 805-20-50-4A, with a link to transition paragraph 805-10-65-3, as follows:

805-20-50-4A If the initial accounting for a business combination is incomplete (see paragraphs 805-10-25-13 through 25-14) for particular assets, liabilities, noncontrolling interests, or items of consideration and the amounts recognized in the financial statements for the business combination thus have been determined only provisionally, the acquirer shall disclose the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively to meet the objective in paragraph 805-10-50-5:

6. Amend paragraph 805-10-00-1, by adding the following items to the table, as follows:

805-10-00-1 The following table identifies the changes made to this Subtopic.

7. Amend paragraph 805-20-00-1, by adding the following item to the table, as follows:

805-20-00-1 The following table identifies the changes made to this Subtopic.

BC7. The Board considered whether it should require an acquirer to prospectively account for any change in depreciation, amortization, or other income effects as a result of an adjustment to provisional amounts, rather than require the effect of the change, calculated as if the accounting had been completed at the acquisition date, to be recognized through the income statement in the period the adjustment to the provisional amount is determined. The Board determined that recognizing the full effect of the adjustment would be more effective in highlighting the effect that revisions to provisional amounts have on earnings in the period the adjustment is determined. Additionally, an entity would be required to disclose the nature and amount of measurement-period adjustments recognized in the current period, including the amount of adjustment to current-period income statement line items relating to the income effects that would have been recognized in previous periods if the adjustment to provisional amounts were recognized as of the acquisition date.

BC8. The Board considered in redeliberations whether an entity’s cost savings from recognizing adjustments to provisional amounts in the current period, rather than retrospectively, would be offset by the incremental disclosure requirements. The Board concluded that the amendments in this Update mainly achieve cost savings through the elimination of costs associated with retrospective application to specific and sometimes multiple interim periods; therefore, the incremental disclosures of the adjustment to prior periods will not eliminate that cost savings and also will provide useful information to users when assessing the trends in affected income statement line items.

BC9. Some Board members were concerned that reflecting all of the income statement effect of the change to the provisional amount on depreciation, amortization, or other income statement effects in the current reporting period would distort financial statement results, when some portion of that amount would have been reflected in a previous reporting period if the acquisition accounting had been complete as of the acquisition date. The Board considered whether it would be more beneficial to financial statement users to recognize the effect on the income statement of the change to the provisional amount that would have been recorded in a previous reporting period through an adjustment to retained earnings or to separately reflect on the face of the income statement the effects on line items of the amounts that would have been recorded in a previous reporting period. The Board concluded that recording the portion of the adjustment that would have been related to a prior period through retained earnings could increase complexity. However, the Board decided to require preparers to either disclose the information or present it separately on the face of the income statement.

BC10. The Board considered whether it would be useful to provide further clarification to the amendments in paragraph 805-10-25-17 related to when an adjustment to provisional amounts should be recognized. For example, one commenter questioned the application of the amendments when adjustments to provisional amounts are identified after the end of a reporting period but before the financial statements for that period are issued or are available to be issued. The Board concluded that the proposed amendments do not address this issue. The assessment in the above example would be made on the basis of current guidance indicating when those adjustments are recorded.

BC11. The Board considered the significance of the amendments in terms of comparability with the requirements under International Financial Reporting Standards (IFRS). While GAAP is aligned with IFRS requirements, the Board noted that because of differences in reporting requirements, that is, quarterly reporting requirements for U.S. publicly traded entities as opposed to semiannual reporting in certain other jurisdictions, the need to revise previously issued financial statements to retrospectively account for adjustments to provisional amounts during the measurement period likely is not as prevalent under IFRS. Consequently, the cost of complying with the converged guidance may be greater for GAAP preparers than others. Therefore, the Board concluded that the benefits of convergence do not justify the costs.

BC12. The Board concluded that the amendments in this Update should be applied prospectively to adjustments to provisional amounts that occur during the measurement period after the effective date of this Update because the benefits of a retrospective application would not justify its costs and would be inconsistent with the objective of these amendments.

BC13. The Board concluded that the only disclosure required at transition should be the nature of and reason for the change in accounting principle. An entity should disclose that information in the first annual period of adoption and in the interim periods within the first annual period if there is a measurement-period adjustment during the first annual period in which the changes are effective.

BC14. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017.

BC15. The Board decided to allow all entities to early adopt the amendments in this Update because the amendments represent an improvement to GAAP that should reduce costs and complexity for preparers that have recently completed a business combination. Public business entities may early apply the guidance in the amendments for reporting periods for which financial statements have not been issued. All other entities may early apply the guidance for reporting periods for which financial statements have not yet been made available for issuance.

BC16. The objective of financial reporting is to provide information that is useful to present and potential investors, creditors, donors, and other capital market participants in making rational investment, credit, and similar resource allocation decisions. However, the benefits of providing information for that purpose should justify the related costs. Present and potential investors, creditors, donors, and other users of financial information benefit from improvements in financial reporting, while the costs to implement new guidance are borne primarily by present investors. The Board’s assessment of the costs and benefits of issuing new guidance is unavoidably more qualitative than quantitative because there is no method to objectively measure the costs to implement new guidance or to quantify the value of improved information in financial statements.

BC17. The Board anticipates that the amendments in this Update will eliminate costs related to retrospectively adjusting financial information of prior periods for the effects of changes to provisional amounts determined during the measurement period. The Board does not expect the amendments to significantly reduce the relevance of the information provided for provisional amounts recognized in a business combination because the effects of changes to provisional amounts will be highlighted in the income statement or note disclosures.