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3110 Significant Business Combination
us SEC - Financial Reporting Manual
3110.1 Pro forma financial information is required if a significant business combination has occurred in the latest fiscal year or subsequent interim period, or is probable (see Section 2005.4). This includes any transaction or event that results in the registrant obtaining control over another entity. See Topic 2 for definition of a business and tests of significance. Pro forma presentation is not required if the transaction is already fully reflected in historical statements as a reorganization.
NOTE: While the acquisition of an investment to be accounted for under the equity method meets the definition of a business for purposes of S-X 3-05 financial statements and S-X Article 11, full pro forma financial information prepared under Article 11 generally is not required if the registrant elects the fair value option for the investment under ASC 825. In this situation, we expect registrants to include a narrative discussion explaining how the application of ASC 825 for this investment will impact the results of operations and balance sheet in future periods. |
3110.2 Additional pro forma information also may be appropriate if an acquiree of the registrant consummated a significant business combination of its own during the year, if that information would be material to an understanding of the registrant or a vote on a transaction.
3110.3 Pro forma financial statements are not required for individually insignificant businesses unless they are significant in the aggregate at over the 50% level. If certain financial statements are included in the filing under S-X 3-05(b)(2)(i), registrants should consider whether the pro forma financial information would be misleading without giving effect to all individually insignificant acquisitions. Also, if a registrant presents the financial statements of an individually insignificant business, the staff encourages the registrant to also include S-X Article 11 pro forma financial information in the filing.
3110.4 Pro forma information required by S-X Article 11 should be filed at the same time the audited financial statements of the acquired business are filed. Presentation of the acquiree's financial statements without accompanying pro forma information can be misleading, and there is an expectation that the information required by Item 9.01 of Form 8-K will be filed as promptly as feasible. The pro forma information presented in connection with a Form 8-K reporting consummation of an acquisition is not expected to reflect definitive conclusions regarding allocation of the purchase price or other effects. However, uncertainties affecting the pro forma presentation and the possible consequences when they are resolved, if material, should be highlighted.
This is a work of the U.S. Government
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