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Chapter 4 — Measurement of Expected Credit Losses

4.8 Considerations Related to Postacquisition Accounting for Acquired Loans

4.8 Considerations Related to Postacquisition Accounting for Acquired Loans

An entity may acquire loans in a business combination or in an asset acquisition. Loans acquired in a business combination are initially recognized at fair value in accordance with ASC 805-20-25-1. Loans acquired in an asset acquisition are initially recognized at the amount paid to the seller plus any fees paid or less any fees received in accordance with ASC 310-20-30-5. Other sections of the Codification may address the initial recognition of loans acquired in exchange for noncash consideration or loans acquired in an asset acquisition that includes other assets acquired or liabilities assumed. ASC 310 requires an investor to initially classify acquired loans as “held for investment” or “held for sale.” For more information about the reclassification of the loans, see Section 4.10.