The Consolidation Standard1 is effective as of January 1, 2010 for calendar year-end companies and the impact will soon be reported in the first quarter reporting cycle. As a result of applying the new guidance, certain entities may need to be consolidated while other entities may need to be deconsolidated. Determining who consolidates is just the beginning. There are several other accounting considerations that could follow—such as acquisition accounting for newly consolidated entities, potential changes to impairment tests, and measuring the impact of deconsolidation of an entity under the M&A Standards.2 This volume of Mergers & Acquisitions—A snapshot discusses accounting considerations that companies may face related to the M&A accounting standards upon adoption of the consolidation standard.
1ASC 810 incorporates FAS 167, Amendments to FASB Interpretation No. 46(R), which is the US standard on consolidation.
2Accounting Standards Codification 805 (which incorporates FAS 141(R), Business Combinations), is the US Standard on M&A, and Accounting Standards Codification 810-10-40 (which incorporates FAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment to ARB No. 51) (collectively the "M&A Standards") is the US Standard on deconsolidation.