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wholly-owned subsidiary, thereby increasing the parent’s percentage of ownership in the less-than-wholly-owned subsidiary but leaving all of the existing noncontrolling interest outstanding.[FAS 141(R), paragraph D8, sequence 589FAS 164, paragraph A141, sequence 242.1.4]

  • e.

    A parent’s less-than-wholly-owned subsidiary issues its shares in exchange for shares of another subsidiary previously owned by the same parent, and the noncontrolling shareholders are not party to the exchange. That is not a business combination from the perspective of the parent. [FAS 141(R), paragraph D8, sequence 590FAS 164, paragraph A141, sequence 242.1.5]

  • f.

    A limited liability company is formed by combining entities under common control. [FAS 141(R), paragraph D8, sequence 591FAS 164, paragraph A141, sequence 242.1.6]

  • g.

    Two or more not-for-profit entities (NFPs) that are effectively controlled by the same board members transfer their net assets to a new entity, dissolve the former entities, and appoint the same board members to the newly combined entity. [FAS 164, paragraph A141, sequence 242.1.7]

22.

Add paragraph

805-50-15-6B,

with

a

link

to

transition

paragraph

958-805-

65-1, as follows:

805-50-15-6B Mergers and acquisitions between or among two or more NPFs, all of which benefit a particular group of citizens, shall not be considered common control transactions solely because those entities benefit a particular group. [FAS 164, paragraph A142, sequence 243.2] The mission, operations, and historical sources of support of two or more NFPs may be closely linked to benefiting a particular group of citizens. However, that group neither owns nor controls the NFPs. [FAS 164, paragraph A142, sequence 243.1]

Amendments to Subtopic 805-740

23. Amend paragraphs 805-740-05-1 transition, as follows:

through 05-2, with no change to

Business Combinations—Income Taxes

805-740-05-1 This Subtopic provides incremental guidance on accounting for income taxes related to business combinations and to acquisitions by not- for-profit entities. This Subtopic requires recognition of deferred tax liabilities and deferred tax assets (and related valuation allowances, if necessary) for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination or in an acquisition by a not-for-profit entity.

805-740-05-2 The recognition and measurement requirements related to accounting for income taxes in this Subtopica business combination are exceptions to the recognition and measurement principles that are otherwise

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