D.5 Subsequent Measurement of Assets and Liabilities Recognized Upon Formation
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.
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 (see Chapter 10 of Deloitte’s Roadmap Share-Based Payment
Awards), while the subsequent measurement of goodwill, including
impairment considerations, is addressed in ASC 350-20 (see Deloitte’s Roadmap
Goodwill and Intangible
Assets). 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 D.6.1 for more
information.