Perspective and Issues

Accounting for Mergers and Acquisitions of Not-For-Profit Organizations

Distinguishing between a Merger and an Acquisition

Accounting for a Merger

Accounting for an Acquisition

Identifying the acquirer

Determining the acquisition date

Recognizing and measuring assets acquired and liabilities assumed

Recognizing and measuring goodwill acquired or a contribution received

Consideration Transferred

Measurement Period


Goodwill and Other Intangible Assets Acquired in an Acquisition

Previously Recognized Goodwill


Disclosures for a Merger

Disclosures for an Acquisition



Business combinations may take a number of legal forms, but whatever the form, all combinations will be accounted for as either purchases (now referred to as “acquisitions”) or poolings of interests (now referred to as “mergers”). This chapter will provide some of the basic theory and requirements to address those infrequent times when they do combine operations. Chapter 11, Affiliated Organizations, describes potential relationships between not-for-profit organizations and between not-for-profit organizations and for-profit organizations. That chapter provides information as to when an affiliation is accounted for as a business combination. This chapter describes how to account for transactions that are business combinations.

The FASB issued ASU 2010-07 (Not-for Profit Entities—Topic 958 Not-for-Profit Entities: ...

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