The disclosure guidance in ASC 805 applies to all transactions that meet the definition of a business combination, including acquisitions by not-for-profit reporting entities. It does not apply to the formation of a joint venture, nor to the acquisition of a group of assets that do not constitute a business (see FSP 8 for disclosure requirements of such acquisitions). It also does not apply to business combinations between entities under common control.

If an acquiree prepares separate financial statements after an acquirer obtains control of the entity, a question arises as to whether the historical basis of the acquired company should be reflected in those separate financial statements or if the acquiree should “pushdown” the “stepped-up basis” of the acquirer. Pushdown accounting is an accounting election that establishes a new basis for the assets and liabilities of the acquired company. See FSP 17.6 for further discussion regarding the application of and disclosure requirements for pushdown accounting.

In some situations, a reporting entity may consolidate an acquired business in which it has less than 100% ownership. In these instances, the reporting entity must report a noncontrolling interest representing the portion of the acquired business it does not own. The presentation and disclosure requirements associated with noncontrolling interests are addressed in FSP 5.

ASC 810-10-50-3 requires the primary beneficiary of an acquired variable interest entity that is a business to provide the disclosures required by ASC 805 in the period of acquisition. The primary beneficiary of a variable interest entity that is not a business must disclose the amount of gain or loss recognized upon initial consolidation. Refer to FSP 18 for the disclosure requirements for primary beneficiaries.