EITF reaches a consensus-for-exposure on assumed liabilities in a business combination

Filed under: Liabilities, deferred revenue, business combinations

KPMG reports on the EITF’s consensus-for-exposure to align the recognition criteria for recognizing revenue performance obligations in a business combination with the definition of a performance obligation in ASC 606. The EITF also proposed that the measurement of those obligations reflect the fair value of the remaining obligation assumed in the 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 Q3 2018

Key impacts

• The EITF’s consensus-for-exposure would align the recognition criteria for revenue performance obligations in a business combination with the definition of a performance obligation in ASC 606
• Measurement of the performance obligation would reflect the fair value of the remaining obligation that is assumed
• The fair value measurement of the  performance obligation would consider the related assets that were acquired

Report contents

• Applicability
• Key facts and impacts
• Cloud computing arrangements (see web summary)
• Revenue performance obligations in a business combination
• Episodic television series (see web summary)