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consolidated entity, or their affiliates. Example 3 (see paragraphs 958- 805-55-55 through 55-56) illustrates an asset transfer in which the NFP acquirer retains control over the future economic benefits after the acquisition. [FAS 164, paragraph 57, sequence]

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    > > Contingent Consideration

958-805-25-36 The consideration an NFP acquirer transfers in exchange for the acquiree includes any asset or liability resulting from a contingent consideration arrangement. The NFP acquirer shall recognize the contingent consideration as part of the consideration transferred in exchange for the acquiree. [FAS 164, paragraph 58, sequence 58]

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    Determining What Is Part of the Acquisition Transaction

958-805-25-37 In addition to the examples in paragraph 805-10-25-21, a payment by a former owner of an acquired business that is unrelated to the acquiree, such as a contribution to fund activities of the acquirer or its affiliates that are unrelated to those of the acquiree, is an example of a separate transaction that is not to be included in applying the acquisition method. Those contributions made shall be accounted for in accordance with the guidance in Subtopic 720-25. [FAS 164, paragraph 68(d), sequence 68.1.4]

Initial Measurement Merger of Not-for-Profit Entities

958-805-30-1 The new {Glossary link} not-for-profit entity {Glossary link} (NFP) shall measure the assets and liabilities in its financial statements as of the {Glossary link} merger date {Glossary link} at the amounts reported in the financial statements of the merging entities as of that date prepared in accordance with GAAP, adjusted as necessary in accordance with paragraphs 958-805-30-2 through 30-3. [FAS 164, paragraph 12, sequence 12]

958-805-30-2 The merging entities may have measured assets and liabilities using different methods of accounting in their separate financial statements. The new NFP shall adjust the amounts of those assets and liabilities as necessary to reflect a consistent method of accounting. [FAS 164, paragraph 13, sequence 13.1]

958-805-30-3 However, because the carryover method does not reflect a fresh- start measurement, a merger is not an event that permits the election of accounting options that are restricted to the entity’s initial acquisition or recognition of an item (or the reversal of a previous election). Thus, for example, one merging entity’s election to apply the Fair Value Option Subsections of Subtopic 825-10 for a particular financial asset or liability permits neither the new NFP’s election of the fair value option for other financial assets or liabilities at the


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