FASB Releases ASU on Identifying the Acquirer in a Business Combination

The FASB has released Accounting Standards Update (ASU) No. 2025-03, Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which is based on an EITF Issue. The ASU revises the guidance in ASC 805 to clarify that, in determining the accounting acquirer in “a business combination that is effected primarily by exchanging equity interests in which a VIE is acquired,” an entity would be required to consider the factors in ASC 805-10-55-12 through 55-15. Previously, the accounting acquirer in such transactions was always the primary beneficiary.

For all entities, the ASU’s amendments will become effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods.

For more information, see the press release on the FASB’s Web site.