Chapter 2 — Identifying a Business Combination

ASC 805 requires an entity to account for a business combination by using the acquisition method. For an entity to apply the acquisition method, the transaction must meet the definition of a business combination and the net assets acquired must meet the definition of a business in ASC 805. This chapter discusses those definitions and addresses the scope of the business combinations guidance in ASC 805-10, ASC 805-20, and ASC 805-30.