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New Accounting Rules From FASB Deal With Mergers

by Mike Godfrey, Tax-News.com, Washington

14 March 2019


The Financial Accounting Standards Board (FASB) on February 14, 2019, issued a proposed Accounting Standards Update (ASU) on the recognition and measurement of deferred revenue in business combinations.

According to the FASB, stakeholders have observed that diversity exists on whether and how to record deferred revenue in a business combination. The proposed ASU clarifies when acquiring organizations should recognize a contract liability in a business combination.

In the proposal, an organization should recognize deferred revenue from acquiring another organization if there is an unsatisfied performance obligation for which the acquired organization has been paid by the customer.

The FASB is seeking feedback on the ASU and ideas on measurement and other issues relating to acquiring contracts with customers in business combinations, by April 30, 2019.

TAGS: business | accounting | United States | Financial Accounting Standards Board (FASB)

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