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