What Does It All Mean? Essay
And what might you need to know?
FASB simplified measurement- period adjustments in business combinations Measurement-period adjustments will no longer be accounted for retrospectively. As part of its Simplification Initiative, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, on September 25th 2015. The new guidance eliminated the requirement for an acquirer in a business combination to account for measurement- period adjustments retrospectively. Instead, the acquirer will now recognize a measurement- period adjustment during the period in which they determine the amount of the adjustment, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date.
The Accounting Standard Update was effective for public business entities for fiscal years beginning after December 15th 2015 and interim periods within those fiscal years. For all other entities, the update is effective for this coming fiscal year beginning after December 15th 2016, and interim periods within fiscal years beginning after December 15th 2017. Early adoption is permitted for any interim and annual financial statements that have not been issued yet.
Furthermore, the ASU is applied prospectively to adjustments to provisional amounts that occur after the effective date. This means that the ASU applies to all open…