Defining Issues   |   September 2018
 

EITF reaches consensus-for-exposure on contract liabilities in business combinations

Filed under: Business combinations

KPMG reports on the EITF’s consensus-for-exposure to align the criteria for recognizing revenue contract liabilities in a business combination with the definition of a performance obligation in ASC 606. The EITF also directed the FASB staff to draft a discussion paper with an invitation to comment on certain measurement issues related to revenue contract liabilities in a business combination. 

Applicability

EITF Issue No. 18-A

  • All companies that acquire revenue contracts in a business combination after the adoption of ASC 606

Relevant dates

  • Exposure draft expected in Q4 2018
  • Discussion paper on certain related issues with invitation to comment expected in Q4 2018

Key impacts

  • The EITF’s consensus-for-exposure on business combinations would align the recognition criteria for revenue contract liabilities in a business combination with the definition of a performance obligation in ASC 606
  • The obligation would be measured at fair value
  • Certain issues related to the measurement of contract liabilities in a business combination will be outlined in a discussion paper with an invitation for stakeholders to comment

Report contents

  • Applicability
  • Key facts and impacts
  • Revenue performance obligations in a business combination

Related content

At the same meeting, the EITF reached consensus for exposure to permit further cost capitalization for episodic TV series. Read our web article