9.5 Subsequent Measurement of Assets and Liabilities Recognized as a Part of Formation
A joint venture should subsequently measure and account for assets
and liabilities recognized upon formation in accordance with other applicable GAAP.
ASC 805-10-35 and ASC 805-20-35 provide guidance on subsequently measuring and
accounting for certain assets acquired, liabilities assumed, and equity instruments
issued in a business combination. ASC 805-60 references the same business
combination guidance for subsequent measurement.
ASC 718 provides guidance on the subsequent measurement of replacement share-based
payment awards, while the subsequent measurement of goodwill, including impairment
considerations, is addressed in ASC 350-20. Goodwill, which is recognized upon joint
venture formation, should not be amortized; rather, it should be tested for
impairment in a manner consistent with how an entity would test goodwill that is
recognized during a business combination (unless the joint venture qualifies and
elects the private-company alternative to amortize goodwill under ASC 320-20). See
Section 9.6.1 for more information.
ASC 805-60
35-1 A
joint venture shall subsequently measure and account for the
assets and liabilities recognized upon formation in
accordance with the requirements for acquirers of a business
in Sections 805-10-35, 805-20-35, and 805-30-35, and other
generally accepted accounting principles (GAAP), as
applicable.
35-2 A
joint venture that is a private company may elect to apply
the accounting alternatives for the subsequent measurement
of goodwill described in paragraphs 350-20-35-62 through
35-82.