This White Paper provides an overview on the key accounting considerations when assuming share-based compensation awards in a business combination. In addition to discussing the ASC 805 (FAS 141R) accounting model, as well as its predecessor (FAS 141), this White Paper provides a survey of the relevant data conversion and reconciliation challenges the acquirer in a business combination must work through.
In presenting the ASC 805 accounting model, the basic issues are first introduced, followed by advanced topics that may emerge in more complicated acquisition cases. This White Paper is written primarily for corporations that acquire companies with share-based compensation instruments that are assumed as part of the acquisition. Auditors and regulators will also benefit from the analysis of the salient ASC 805 compliance challenges.