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About the Business combinations guide & Full guide PDF
Publication date: 31 May 2024
us Business combinations guide
A PDF version of this publication is attached here: Business combinations and noncontrolling interests guide (PDF 5.19mb)
PwC is pleased to offer our updated accounting and financial reporting guide, Business combinations and noncontrolling interests.
This guide summarizes the applicable accounting literature, including relevant references to and excerpts from the FASB’s Accounting Standards Codification (the Codification). It also provides our insights and perspectives, interpretative and application guidance, illustrative examples, and discussion on emerging practice issues.
This guide should be used in combination with a thorough analysis of the relevant facts and circumstances, review of the authoritative accounting literature, and appropriate professional and technical advice.
References to US GAAP
Definitions, full paragraphs, and excerpts from the FASB’s Accounting Standards Codification are clearly labelled. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content.
References to other PwC guidance
This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific section number. The other PwC guides referred to in this guide, including their abbreviations, are:
- Bankruptcies and liquidations (BLG)
- Carve-out financial statements (CO)
- Consolidation (CG)
- Crypto assets (CA)
- Derivatives and hedging (DH)
- Equity method investments and joint ventures (EM)
- Fair value measurements (FV)
- Financial statement presentation (FSP)
- Financing transactions (FG)
- Foreign currency (FX)
- Income taxes (TX)
- Insurance contracts (IG)
- Leases (LG)
- Loans and investments (LI)
- Not-for-profit entities (NP)
- Property, plant, equipment and other assets (PPE)
- Revenue from contracts with customers (RR)
- Stock-based compensation (SC)
Summary of significant changes
The following is a summary of recent noteworthy revisions to the guide. Additional updates may be made to future versions to keep pace with significant developments.
Revisions made in May 2024
Chapter 2: Acquisition method
- A standard setting note was removed from BCG 2.5, and content in BCG 2.5.11, BCG 2.5.15, BCG 2.5.16.3, BCG 2.5.16.3A, and BCG 2.5.17 was updated for ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements.
- As ASC 326 is effective for all entities, BCG 2.5.2A was removed.
- BCG 2.6.3 was updated to address the determination of the fair value of equity securities issued by the acquirer as part of the consideration transferred when there are restrictions associated with those securities.
- BCG 2.7.1.4 was updated to clarify the accounting by the acquirer for the acquiree’s acquisition-related costs that remain unpaid at the acquisition date.
- BCG 2.9 was enhanced to address the accounting for a measurement period adjustment that is identified in the period after the balance sheet date but before the financial statements are issued or available to be issued
Chapter 9: Accounting for goodwill post acquisition
- ASU 2017-04 is effective for all entities. The chapter has been updated to remove all guidance regarding step two of the goodwill impairment test, which was superseded. The qualitative assessment remains unchanged, but all references to “step one” and “step two” of the goodwill impairment test have been changed to the “quantitative” assessment. Accordingly, certain questions, examples, and figures have been renumbered to conform with these updates.
- BCG 9.4.7 was removed. The related guidance on litigation that arises between the acquirer and the former owners of the acquiree related to the business combination was moved to BCG 2.7.
- Example BCG 9-23 in BCG 9.10.4 was updated to clarify the guidance on the accounting for impairment testing of goodwill allocated to a disposal group classified as held-for-sale but that has not yet been sold.
- BCG 9.11.1.8 was removed. Presentation and disclosure guidance related to goodwill accounting alternatives for private companies is included in FSP 8.10.2 and FSP 8.10.3.
Revisions made in February 2024
Chapter 1: Overview of accounting for business combinations
- BCG 1.1.2 was updated to refer to the accounting by a joint venture, upon formation, in the joint venture’s separate financial statements after adoption of ASU 2023-05, which is addressed in Chapter 6 of PwC’s Equity method investments and joint ventures guide.
Chapter 8: Accounting for indefinite-lived intangible assets
- BCG 8.4 was updated to add a summary of the new guidance on the accounting for and disclosure of crypto assets after adoption of ASU 2023-08, which is addressed in PwC’s Crypto assets guide.
Revisions made in September 2023
Chapter 2: Acquisition method
- BCG 2.7.1.3 was updated to add Example BCG 2-29, which illustrates the accounting for transaction costs incurred by the acquiree on behalf of the seller as well as costs incurred directly by the seller in the acquiree’s pre-acquisition financial statements.
Chapter 5: Partial acquisitions and changes in NCI
- Example BCG 5-11 in BCG 5.4.4 was updated to clarify existing guidance on accounting for a reallocation of accumulated other comprehensive income upon a change in ownership that does not result in a change of control.
Chapter 7: Common control transactions
- Example BCG 7-9 in BCG 7.1.3.3 was enhanced to provide additional analysis on the accounting by the receiving entity in a common control transaction, including consideration of the application of pushdown accounting.
Chapter 10: Pushdown accounting
- BCG 10.1.11 was removed. The related guidance, which addressed presentation and disclosure considerations for an acquiree that elects pushdown accounting, is included in FSP 17.6.
Copyrights
This publication has been prepared for general informational purposes, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this publication was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees, and agents shall not be responsible for any loss sustained by any person or entity that relies on the information contained in this publication. Certain aspects of this publication may be superseded as new guidance or interpretations emerge. Financial statement preparers and other users of this publication are therefore cautioned to stay abreast of and carefully evaluate subsequent authoritative and interpretative guidance.
The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, and is reproduced with permission.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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