ASC 805, Business Combinations, contains the guidance on accounting for business combinations. It requires the acquirer to apply the acquisition method to the transaction, which involves recording identifiable assets acquired, liabilities assumed, and any noncontrolling interests at their acquisition-date fair values (with fair value measured in accordance with the principles of ASC 820, Fair Value Measurement). A business combination that involves a regulated utility may have certain unique issues as a result of the impact of regulation. This chapter focuses on these issues, including:
  • Measuring the fair value of assets and liabilities arising from, or subject to, regulation
  • Determining whether regulatory assets or liabilities should be recorded as an offset (i.e. record a regulatory offset) of fair value adjustments is appropriate
  • Accounting for merger credits
  • Postacquisition accounting for goodwill
This chapter supplements PwC’s Business combinations and noncontrolling interests guide with business combination accounting issues unique to regulated utilities.
1 Limited exceptions to the fair value measurement principles for acquired assets and liabilities are provided for in ASC 805. See BCG 2 for further information.
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