Even seemingly straightforward M&A transactions and non-controlling investments can introduce complex issues under ASC 805, but strategically approaching ASC 805 can help improve deal evaluation, structuring and communication. Some examples include accounting and financial reporting for common control (or "put-together") transactions, assessing the necessity for push-down accounting and distinguishing between equity and cost method investments.
Detailed analysis can be necessary to determine the scope of the accounting guidance as well the entity that is subject to its requirements. For example, divestiture alternatives present several accounting and financial reporting issues for sellers to evaluate, such as whether the business can be disposed of to qualify as a discontinued operation before the sale.
Complex capital structures as well as puts, calls and other contingent provisions can require classification of ownership interests outside of equity. They may also introduce valuation complexities that can delay or even derail a transaction if not identified early in the process.
Complex valuation techniques are often required for acquired contracts, intangibles, contingent consideration (i.e., earn-outs) and other assets and liabilities that are difficult to value.
PwC is a trusted resource for helping companies navigate the accounting and financial reporting challenges of business combinations. Our knowledge can help you develop strategies to withstand regulatory scrutiny, anticipate potential areas of focus in filings and meet constantly evolving expectations for clear and transparent financial reporting.
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