Currently, ASC 805 and IFRS 3 state that the assets acquired and liabilities assumed in a business combination generally should be recognized and measured at fair value on the acquisition date. ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, creates a difference between US GAAP and IFRS, as under US GAAP, contract assets and contract liabilities acquired in a business combination will now be recognized and measured in accordance with ASC 606, largely based on their contractual terms as if the acquirer entered into the original contract on the same date with the same terms.

ASU 2021-08 is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For all other entities, the new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should apply the guidance in ASU 2021-08 on a prospective basis to all business combinations with an acquisition date on or after the effective date. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued.