Deloitte
Accounting Research Tool
...
Chapter 1 — Overview of Accounting for Business Combinations

1.4 Asset Acquisitions

1.4 Asset Acquisitions

An asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business; such an acquisition therefore does not meet the definition of a business combination. The accounting for these transactions is addressed in the “Acquisition of Assets Rather Than a Business” subsections of ASC 805-50. Asset acquisitions are accounted for by using a cost accumulation model (i.e., the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values, with some exceptions). In contrast, a business combination is accounted for by using a fair value model (i.e., the assets and liabilities are generally recognized at their fair values, and the difference between the consideration paid, excluding transaction costs, and the fair values of the assets and liabilities is recognized as goodwill or, in unusual circumstances, a bargain purchase gain). As a result, there are differences between the accounting for an asset acquisition and the accounting for a business combination. Appendix C of this publication addresses asset acquisitions as well as the differences between the accounting for asset acquisitions and the accounting for business combinations.