FASB Issues Proposal and Invitation to Comment on Recognizing and Measuring Deferred Revenue in Business Combinations

NORWALK, Conn.–(BUSINESS WIRE)–The Financial Accounting Standards Board (FASB)
today issued a proposed Accounting Standards
Update (ASU)
and Invitation to Comment (ITC) on the recognition
and measurement of deferred revenue in business combinations.
Stakeholders are encouraged to review and provide input on the
proposed ASU
and ITC by April 30, 2019.

Stakeholders observed that diversity exists on whether and how to record
deferred revenue in a business combination. The Emerging
Issues Task Force
(EITF) worked with the FASB to develop a proposed
standard and an Invitation to Comment to solicit feedback on these

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

asks stakeholders to provide feedback and ideas on
measurement and other issues related to acquiring contracts with
customers in business combinations:

  1. Payment terms and their effect on the subsequent revenue recognized,
  2. Costs to fulfill a performance obligation in measuring the fair value
    of a contract liability for a revenue contract.

The proposed ASU and ITC are available at www.fasb.org.

About the Financial Accounting Standards Board

Established in 1973, the FASB is the independent, private-sector
organization, based in Norwalk, Connecticut, that establishes financial
accounting and reporting standards for public and private companies and
not-for-profit organizations that follow Generally Accepted Accounting
Principles (GAAP). The FASB is recognized by the Securities and Exchange
Commission as the designated accounting standard setter for public
companies. FASB standards are recognized as authoritative by many other
organizations, including state Boards of Accountancy and the American
Institute of CPAs (AICPA). The FASB develops and issues financial
accounting standards through a transparent and inclusive process
intended to promote financial reporting that provides useful information
to investors and others who use financial reports. The Financial
Accounting Foundation (FAF) supports and oversees the FASB. For more
information, visit www.fasb.org.


John C. Pappas
(203) 956-3440

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