The proposed amendments would require an acquirer to recognize and measure contract assets and contract liabilities in a business combination based on the guidance of ASC 606 rather than fair value.
Applicability
- All entities that acquire a business after the adoption of Topic 606
Relevant dates
- December 15, 2020 – Proposed ASU issued
- March 15, 2021 – Comments due
Key impacts
Would require entities to use principles in ASC 606 to recognize and measure contract assets and liabilities in revenue contracts acquired in a business combination rather than fair value.
Would not change the requirements to recognize and measure, at fair value, other customer-contract intangibles – e.g. backlog intangible, favorable contract intangible, unfavorable contract liability.
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