29 Sep

  • By Lisa Swanson, CPA/ABV, CVA
  • In blog, news
  • Comments Off

simplify jpegIn our blog post dated May 28, 2015, we mentioned there was a proposed accounting standard that would help simplify the accounting for measurement-period adjustments in business combinations. In September 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.  This new guidance eliminates the requirement that a Company restate prior period financial statements for measurement period adjustments.

Due to ASU No 2015-16, companies will now recognize a measurement-period adjustment when they determine the adjustment amount. The cumulative impact of the adjustments, on current and prior periods, will be recognized in current-period earnings. The adjustment is recorded in each of the income statement line items that are affected. This would include the impact on depreciation, amortization and other income statement line items and their related tax effects.

The Company must also disclose the amount of measurement-period adjustment recorded the current period that would have been recorded in prior periods if the adjustment had been recorded as of the acquisition date. This disclosure may be on the face of the income statement or in the footnotes.

The new standard will take effect for public companies for fiscal years after December 31, 2015 and interim periods within those years.  For non-public companies, the new standard is effective for fiscal years beginning after December 15, 2016 and for interim periods within fiscal years beginning after December 15, 2017.  Early adoption is permitted.

 You may view ASU No. 2015-16 here.