Audit and Accounting Guide Depository and Lending Institutions, 2nd Edition

Chapter 19 Business Combinations

Introduction

19.01 Business combinations, as defined in the FASB Accounting Standards Codification (ASC) glossary, are transactions or other events in which an acquirer obtains control of one or more businesses. A business, as defined in the FASB ASC glossary, is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. In accordance with FASB ASC 805-10-55-3, a business combination may be structured in a variety of ways for legal, taxation, or other reasons, which include but are not limited to, the following:

• One or more businesses become subsidiaries of an acquirer or the net assets of one or more businesses are legally merged into the acquirer
• One combining entity transfers its nets assets or its owners transfer their equity interests to another combining entity or its owners
• All of the combining entities transfer their net assets or the owners of those entities transfer their equity interests to a newly formed entity (sometimes referred to as a roll-up or put-together transaction)
• A group of former owners of one of the combining entities obtains control of the combined entity

Business combinations may involve one entity acquiring the equity interests or net assets of another entity or both entities transferring their equity interests or net ...