7.8 Transactions That Are Separate From the Business Combination
ASC 805-10
50-2 To meet the objective in the preceding paragraph [ASC 805-10-50-1], the acquirer shall disclose the following information for each
business combination that occurs during the reporting period: . . .
e. For transactions that are recognized separately from the acquisition of assets and assumptions of
liabilities in the business combination (see paragraph 805-10-25-20), all of the following:
1. A description of each transaction
2. How the acquirer accounted for each transaction
3. The amounts recognized for each transaction and the line item in the financial statements in which
each amount is recognized
4. If the transaction is the effective settlement of a preexisting relationship, the method used to
determine the settlement amount. . . .
7.8.1 Acquisition-Related Costs
ASC 805-10
50-2 To meet the objective in the preceding paragraph [ASC 805-10-50-1], the acquirer shall disclose the following information for each
business combination that occurs during the reporting period: . . .
f. The disclosure of separately recognized transactions required in (e) [ASC 805-10-50-2(e)] shall include the
amount of acquisition-related costs, the amount recognized as an expense, and the line item or items in
the income statement in which those expenses are recognized. The amount of any issuance costs not
recognized as an expense and how they were recognized also shall be disclosed. . . .
Acquirers typically incur acquisition-related costs — such as third-party costs
for finders’ fees — as well as advisory, legal, accounting, valuation, and other
professional or consulting fees. ASC 805-10-25-23 states, in part, that “[t]he
acquirer shall account for acquisition-related costs as expenses in the periods in
which the costs are incurred and the services are received, with one exception. The
costs to issue debt or equity securities shall be recognized in accordance with
other applicable GAAP” (see Section 5.4.1). ASC 805-10-50-2(f) requires an entity to disclose:
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“[T]he amount of acquisition-related costs.”
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“[T]he amount recognized as an expense.”
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“[T]he line item or items in the income statement in which [the] expenses are recognized.”
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“The amount of any issuance costs not recognized as an expense and how they were recognized.”
While entities will often incur acquisition-related costs in the reporting periods before an acquisition,
the disclosures specified in ASC 805-10-50-2 are required only for business combinations that occur
during the current reporting period or after the reporting date but before financial statements are
issued unless the initial accounting for the business combination is incomplete at the time the financial
statements are issued or are available to be issued.