Defining Issues | May 2019
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
- 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.