AccountingLink

    Business combinations

    2 August 2018

    Technical Line - A closer look at the guidance on accounting for share-based payments to nonemployees
    Our Technical Line summarizes the FASB’s final guidance that aligns the accounting for share-based payments to nonemployees with the accounting for share-based payments to employees, with certain exceptions, and describes how entities will apply the new measurement and transition provisions. Early adoption is permitted for entities that have adopted the new revenue guidance.

    22 June 2018

    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.

    21 June 2018

    To the Point - FASB simplifies the accounting for share-based payments to nonemployees
    The FASB issued final guidance to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower their cost and reduce volatility in the income statement. Early adoption is permitted, including in an interim period, but not before an entity adopts ASC 606, Revenue from contracts with customers.

    7 February 2018

    Financial Reporting Developments - Business combinations
    We have updated our FRD publication on business combinations to include interpretive guidance on how to apply the recognition and measurement principles in ASC 805 to acquired contracts with customers that are accounted for under ASC 606. Refer to Appendix H 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.

    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.