AccountingLink

    Business combinations

    18 October 2017

    Financial Reporting Developments - Business combinations
    We have updated our Financial reporting developments (FRD) publication on business combinations to include recent standard-setting activity related to the new definition of a business and the new leases standard, and to clarify and enhance our interpretive guidance.

    29 June 2017

    Financial Reporting Developments - Intangibles - Goodwill and other
    We have updated our Financial reporting developments (FRD) publication on goodwill and intangibles to reflect the guidance in Accounting Standards Update 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, and to clarify and enhance our interpretative guidance. See Appendix D of the publication for a summary of the updates.

    1 June 2017

    Comment letter - FASB proposal to simplify the accounting for share-based payments to nonemployees
    In our comment letter, we support the FASB’s efforts to reduce the cost and complexity of accounting for share-based payments to nonemployees by aligning it, with certain exceptions, with the accounting for share-based payments to employees. In addition, we recommend that the Board broaden the definition of an employee, simplify the proposed transition and permit the use of the expected term when valuing certain nonemployee awards.

    11 May 2017

    To the Point - FASB clarifies when changes to share-based payments must be accounted for as modifications
    The FASB issued final guidance that clarifies when changes to the terms or conditions of a share-based payment must be accounted for as modifications. Entities will apply modification accounting if the value, vesting conditions or classification of the award changes. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2017. Early adoption is permitted, including adoption in any interim period.

    1 May 2017

    Technical Line - A closer look at the guidance on derecognition of nonfinancial assets and in substance nonfinancial assets
    The FASB issued final guidance that clarifies the scope and application of ASC 610-20 on the sale of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. The guidance clarifies that businesses are generally derecognized using the deconsolidation guidance in ASC 810. It also defines an in substance nonfinancial asset and says that all of the assets promised in a contract with a noncustomer are in the scope of ASC 610-20 if they are all nonfinancial assets or in substance nonfinancial assets.

    9 March 2017

    To the Point - FASB proposes simplifying the accounting for share-based payments to nonemployees
    The FASB proposed aligning the accounting for share-based payments to nonemployees with that for employees, with certain exceptions. The proposal would expand the scope of ASC 718 to include share-based payments made to nonemployees in exchange for goods and/or services used or consumed in an entity’s own business. The proposal would not change today’s cost attribution guidance for nonemployee awards but would move it from ASC 505 50 to ASC 718. The proposal would also expand two practical expedients in ASC 718 to nonemployee awards for nonpublic entities. Comments are due by 5 June 2017.

    23 February 2017

    To the Point - Clarifications to guidance on the derecognition of nonfinancial assets and in substance nonfinancial assets
    The FASB issued new guidance that clarifies the scope and application of ASC 610-20 on the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. It also clarifies that the derecognition of businesses is in the scope of ASC 810 and defines an in substance nonfinancial asset.

    9 February 2017

    Technical Line - A closer look at the FASB’s new guidance on the definition of a business
    The FASB issued new guidance that will likely reduce the number of transactions accounted for as business combinations. The guidance requires an entity to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If that threshold is met, the set of assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in the new revenue recognition guidance.

    27 January 2017

    To the Point - FASB simplifies the accounting for goodwill impairment
    The FASB issued final guidance that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for interim and annual goodwill impairment testing dates after 1 January 2017.

    25 January 2017

    Technical Line - How changes to the definition of a business will affect life sciences entities
    This publication focuses on how life sciences entities will be affected by the final guidance issued by the FASB that narrows the definition of a business.

    25 January 2017

    Technical Line - How changes to the definition of a business will affect real estate entities
    This publication focuses on how real estate entities will be affected by the final guidance issued by the FASB that narrows the definition of a business.

    6 January 2017

    To the Point - FASB narrows the definition of a business
    The FASB issued new guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606.

    30 June 2016

    Comment letter - FASB proposal on goodwill impairment
    In our comment letter, we supported the FASB’s objective of simplifying the accounting for goodwill impairment and said we believe the proposed amendments would reduce the complexity of applying the goodwill impairment assessment. However, we recommended that the Board consider certain changes in the proposal. We also said that we believe the Board should continue to simplify the subsequent accounting for goodwill in the next phase of its project and that any future amendments should be practical in nature.

    16 March 2016

    To the Point - FASB eliminates retrospective application of equity method
    The FASB issued final guidance eliminating the requirement that an investor retrospectively apply the equity method when an investment that it previously accounted for using another method qualifies for the equity method. Early adoption is permitted.

    21 January 2016

    Comment Letter - FASB proposal on the definition of a business
    In our comment letter, we supported the FASB’s objective of helping entities evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses and said we believe the proposed amendments would simplify the evaluation. However, we recommended that the Board consider amending certain language and clarifying some of the examples in the proposal.

    14 December 2015

    Technical Line - FASB proposes changes to the definition of a business - oil and gas
    This publication focuses on how oil and gas entities would be affected by the FASB’s proposal to change the definition of a business.

    24 November 2015

    To the Point - FASB proposes changes to the definition of a business
    The proposal would (1) require that, if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of transferred assets and activities is not a business, (2) require that a business include at least one substantive process and (3) narrow the definition of outputs. The proposed definition of a business would reduce the number of transactions that are accounted for as business combinations. Comments are due by 22 January 2016.