EITF reaches consensus-for-exposure on contract liabilities in 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 an invitation to comment on certain measurement issues related to revenue contract liabilities in a business combination. 

Applicability

EITF Issue No. 18-A

Proposed ASU

Invitation to Comment

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

Relevant dates

• Exposure draft issued in Q1 2019
• Invitation to comment issued in Q1 2019
• Comment letter deadline was April 30, 2019

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 are outlined in an Invitation 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.