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2.12 Conforming acquiree’s accounting policies to those of acquirer
Publication date: 31 May 2022
us Business combinations guide
Absent justification for different accounting policies, the acquiree’s policies should be conformed to those of the acquirer. Dissimilar operations or dissimilar assets or transactions of the acquiree may provide justification for different accounting policies. However, the presence of intercompany transfers or the use of common manufacturing facilities or distribution systems are examples of circumstances that would establish a presumption that the operations of the acquiree are similar to those of the acquirer.
Depending on the nature of the assets acquired or liabilities assumed, the acquirer may not have an existing accounting policy. We believe that when the acquirer does not have an existing accounting policy related to the newly acquired assets or liabilities, the acquirer is not required to inherit the accounting policy of the acquiree. That is, the acquirer may select and apply any accounting policy that is acceptable under US GAAP.
In other circumstances, the acquirer may have existing accounting policies and want to change its policies to conform to those of the acquiree. Conforming the acquirer’s accounting policies to those of the acquiree is a change in accounting principle and the preferability requirements of ASC 250 must be considered.
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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