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.