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ASC 805-10-25-1 requires use of the acquisition method while ASC 805-10-05-04 summarizes the steps in that method.

Excerpt from ASC 805-10-25-1

An entity shall account for each business combination by applying the acquisition method.

Excerpt from ASC 805-10-05-4

The acquisition method requires all of the following steps:
  1. Identifying the acquirer
  2. Determining the acquisition date
  3. Recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree
  4. Recognizing and measuring goodwill or a gain from a bargain purchase.

Specific issues surrounding the application of the acquisition method for partial and step acquisitions and the recognition and measurement of noncontrolling interest are discussed in BCG 5 and BCG 6, respectively.

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