7.11 Disclosures Required When the Initial Accounting for the Business Combination Is Incomplete (Measurement-Period Adjustments)
ASC 805-20
50-4A If the initial accounting for a business combination is incomplete (see paragraphs 805-10-25-13
through 25-14) for particular assets, liabilities, noncontrolling interests, or items of consideration and the
amounts recognized in the financial statements for the business combination thus have been determined only
provisionally, the acquirer shall disclose the following information for each material business combination or
in the aggregate for individually immaterial business combinations that are material collectively to meet the
objective in paragraph 805-10-50-5:
- The reasons why the initial accounting is incomplete
- The assets, liabilities, equity interests, or items of consideration for which the initial accounting is incomplete
- The nature and amount of any measurement period adjustments recognized during the reporting period in accordance with paragraph 805-10-25-17, including separately the amount of adjustment to current-period income statement line items relating to the income effects that would have been recognized in previous periods if the adjustment to provisional amounts were recognized as of the acquisition date. Alternatively, an acquirer may present those amounts separately on the face of the income statement.
During the measurement period, the acquirer has time to obtain the information needed to identify and
measure the consideration transferred, the assets acquired, the liabilities assumed, and any previously
held or noncontrolling interests. The objective of this period is to give the acquirer a reasonable
amount of time in which to obtain the information necessary to enable it to complete the accounting
for a business combination while maintaining normal reporting schedules. However, the measurement
period cannot exceed one year from the acquisition date. Entities should disclose the assets, liabilities,
and items of consideration for which the initial accounting is incomplete. See Section 6.1 for more
information about the measurement period.