A.4 Common-Control Transactions May Trigger Pushdown Accounting

In a common-control transaction, the receiving entity recognizes the transferred assets and liabilities at their carrying amounts on the date of transfer. However, sometimes the carrying amounts of the assets and liabilities transferred in the parent’s consolidated financial statements differ from those in the transferring entity’s separate financial statements (e.g., if the transferring entity had not applied pushdown accounting). ASC 805-50-30-5 states that, in such cases, the receiving entity’s financial statements must “reflect the transferred assets and liabilities at the historical cost of the parent of the entities under common control.” We believe that the historical cost of the parent refers to the historical cost of the ultimate parent or controlling shareholder. While ASU 2014-17 made it optional to apply pushdown accounting in an acquiree’s separate financial statements, it did not amend the guidance in ASC 805-50-30-5.