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Chapter 4 — Recognizing and Measuring the Identifiable Assets Acquired and Liabilities Assumed

4.2 Classifying or Designating the Assets Acquired and Liabilities Assumed

4.2 Classifying or Designating the Assets Acquired and Liabilities Assumed

ASC 805-20
25-6 At the acquisition date, the acquirer shall classify or designate the identifiable assets acquired and liabilities assumed as necessary to subsequently apply other GAAP. The acquirer shall make those classifications or designations on the basis of the contractual terms, economic conditions, its operating or accounting policies, and other pertinent conditions as they exist at the acquisition date.
25-7 In some situations, GAAP provides for different accounting depending on how an entity classifies or designates a particular asset or liability. Examples of classifications or designations that the acquirer shall make on the basis of the pertinent conditions as they exist at the acquisition date include but are not limited to the following:
  1. Classification of particular investments in securities as trading, available for sale, or held to maturity in accordance with Section 320-10-25
  2. Designation of a derivative instrument as a hedging instrument in accordance with paragraph 815-10- 05-4
  3. Assessment of whether an embedded derivative should be separated from the host contract in accordance with Section 815-15-25 (which is a matter of classification as this Subtopic uses that term).