Handbook: Asset acquisitions

Our in-depth guidance explains in detail how to account for asset acquisitions. The guidance includes our latest interpretations based on frequent questions we experience in practice and illustrates how the accounting for asset acquisitions differs from business combinations.

Applicability

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

Relevant dates

• Effective immediately

Asset acquisitions – our perspective

The evaluation of whether an acquired set of assets and activities qualifies as a business may have significant accounting implications. For a transaction or event to be accounted for as a business combination, the acquired set must constitute a business. This is an important determination, given the different accounting models for the acquisition of a group of assets versus a business.

We expect that many transactions will qualify as asset acquisitions under the FASB’s current definition of a business. Acquisitions of assets are accounted for using the cost accumulation and allocation model, rather than the fair value model that applies to business combinations.

In this Handbook, which supplements KPMG Handbook, Business combinations, we provide additional information to help entities understand the accounting for asset acquisitions.

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