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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. It also does not apply to business combinations between entities under common control.
If an acquiree prepares separate financial statements, 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.
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