Issues In-Depth | August 2019

 

Accounting for asset acquisitions

KPMG explains how to account for asset acquisitions. The guidance includes Q&As and examples clarifying how the accounting for asset acquisitions differs from business combinations  accounting.

Applicability

An acquirer entering into a transaction considered to be an asset acquisition

Relevant dates

  • Effective immediately

Key impacts

  • Accounting for asset acquisitions follows a cost accumulation model, rather than the fair value model that applies to business combinations
  • As entities adopt the new definition of a business, we expect more transactions to qualify as asset acquisitions 
  • ASC 805-50 provides only limited guidance, so entities need to consider other sources, such as:
    • ASC 805 on business combinations
    • Other existing US GAAP
    • Superseded US GAAP on business combinations that was consistent with a cost accumulation model 

Report contents

  • Executive summary
  • Scope of ASC 805-50
  • Determining the cost of the acquisition
  • Allocating the cost of an asset acquisition
  • SEC reporting considerations

Spotlight on contributors

David Elsbree Jr.

David Elsbree Jr.

Partner, Dept. of Professional Practice, KPMG US

Dan Langlois

Dan Langlois

Partner, Dept. of Professional Practice, KPMG US

 

 

Subscribe to our newsletter

Receive timely updates on accounting and financial reporting topics from KPMG.