Appendix H — Roadmap Updates for 2023

Digital Assets

Added section to clarify that in a business combination, acquired digital assets classified as intangible assets, as well as digital assets that meet the definition of a financial asset, are typically recognized and measured at fair value as of the acquisition date.

Call Options to Acquire a Controlling Interest in a Business

Added section to clarify that, generally, an acquirer should account for a freestanding call option as a previously held equity interest and remeasure the call option to its acquisition-date fair value, with any resulting gain or loss recognized in earnings in accordance with ASC 805-10-25-10 upon exercise.

Pushdown Accounting for an Asset Acquisition

Added section to clarify that it may be acceptable to apply or elect pushdown accounting for an asset acquisition.

Identifying the Receiving Entity in a Common Control Transaction

Added discussion of considerations in identifying the receiving entity in a common control transaction.

Updated to note the FASB’s recently issued guidance in ASU 2023-05 on joint venture formations and its recently proposed ASU on purchased financial assets.

Transactions Outside the Scope of ASC 805-10, ASC 805-20, and ASC 805-30

Added a Changing Lanes discussion summarizing the FASB’s newly issued ASU 2023-05, which provides guidance on the recognition and initial measurement of joint venture formations.

Step 2 — Combine the Assets Into Similar Assets

Updated to clarify that an entity should consider the definition of an intangible asset class as well as its ASC 350-30 disclosures when assessing its major classes of assets in the application of the screen test.

Composition of the Governing Body of the Combined Entity

Expanded discussion of special considerations in circumstances in which the composition of the combined entity's governing body is required to include certain independent directors. Also added Example 3-1 to illustrate the consideration of independent directors. All subsequent examples were renumbered.

Recognition and Measurement Principles

Added a Changing Lanes discussion of the FASB’s issuance of Concepts Statement 8, Chapter 4, which supersedes Concepts Statement 6 and includes new definitions of elements of financial statements, including definitions of assets and liabilities.

Purchased Financial Assets — After Adoption of 2016-13

Added a Changing Lanes discussion of the FASB’s proposed ASU that would amend the guidance in ASU 2016-13 on the accounting upon the acquisition of financial assets acquired in (1) a business combination, (2) an asset acquisition, or (3) the consolidation of a VIE that is not a business.

Change in the Reporting Entity

Clarified that when determining whether a change in the reporting entity has occurred, entities should assess the substance of the transaction.

Identifying the Predecessor in Certain Common Control Transactions

Clarified that if additional periods are required in an SEC filing for periods before the entities were under common control, SEC Regulation S-X requires the registrant to determine which entity’s financial statements should be presented as the predecessor.

Financial Statement Presentation by the Transferring Entity

Clarified that a transferring entity should consider whether a common control transaction indicates that long-lived assets (asset group) to be transferred should be tested for impairment before the disposal date.

Summary of Significant Differences Between the Accounting for a Business Combination and the Accounting for an Asset Acquisition

Updated table to clarify treatment of contingent consideration in an asset acquisition.

Scope

Expanded discussion of factors to consider in a reverse asset acquisition, including the indicators in ASC 805-10-55, in certain circumstances. Added Example C-1 to illustrate a reverse asset acquisition. All subsequent examples were renumbered.

Contingent Consideration

Clarified that it would be acceptable for an entity to account for contingent consideration in an asset acquisition under a probable and reasonably estimable approach or when the contingency is resolved approach.

Purchased Financial Assets — After Adoption of ASU 2016-13

Added a Changing Lanes discussion of the FASB’s proposed ASU that would amend the guidance in ASU 2016-13 on the accounting upon the acquisition of financial assets acquired in (1) a business combination, (2) an asset acquisition, or (3) the consolidation of a VIE that is not a business.