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classifications and designations unless either of the following situations applies: [FAS 164, paragraph 11, sequence 11.1]

  • a.

    The merger results in a modification of a contract in a manner that would change those previous classifications or designations [FAS 164, paragraph 11, sequence 11.1.1]; for example, if the provisions of a lease are modified in a way that would require the revised agreement to be considered a new agreement under paragraph 840-10-35-4 [FIN 21, paragraph 13, sequence 34]

  • b.

    Reclassifications are necessary to conform accounting policies in accordance with paragraph 958-805-30-2. [FAS 164, paragraph 11, sequence 11.1.2]

958-805-25-10 In situation (a) in the preceding paragraph, the new NFP shall classify or designate the asset or liability on the basis of the contractual terms, economic conditions, its operating or accounting policies, and other pertinent conditions as they exist at the date of that modification. In situation (b) in the preceding paragraph, the new NFP shall classify or designate the asset or liability on the basis of the conformed accounting policies at the merger date. [FAS 164, paragraph 11, sequence 11.2]

958-805-25-11 At the merger date, the new NFP may contemplate renegotiating and modifying leases of the business or nonprofit activity acquired. Modifications made after the merger date, including those that were planned at the time of the combination, are postcombination events that should be accounted for separately by the new NFP in accordance with Topic 840. [FIN 21, paragraph 15, sequence 136.1.1.2]

Acquisition by a Not-for-Profit Entity

958-805-25-12 A {Glossary link} not-for-profit entity {Glossary link} (NFP) shall account for each acquisition of a {Glossary link} business {Glossary link} or {Glossary link} nonprofit activity {Glossary link} by applying the acquisition method described in the Acquisition by a Not-for-Profit Entity Subsections of this Subtopic. [FAS 164, paragraph 20, sequence 20]

958-805-25-13 The acquisition method in the Acquisition by a Not-for-Profit Entity Subsections is the same as the acquisition method described in Topic 805. However, these Subsections include guidance on aspects of the following items that are unique or especially significant to an NFP: [FAS 164, paragraph 22, sequence 22.1]

  • a.

    Identifying the acquirer [FAS 164, paragraph 22, sequence 22.1.1]

  • b.

    Identifying the acquisition date [FAS 164, paragraph 22, sequence

      • 22.1.2

        ]

  • c.

    Recognizing the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree [FAS 164, paragraph 22, sequence 22.1.3]

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