This updated white paper provides an overview of the key considerations when assuming share-based compensation awards in a business combination. In addition to detailing the ASC 805 accounting model, we discuss the unique challenges of incorporating assumed awards into existing equity compensation processes. From data conversion and forfeiture rates to the downstream financial reporting, this is an essential guide for acquirers in a business combination.
In presenting the ASC 805 accounting model, we first introduce the basics, then explore many advanced topics that may emerge in more complicated acquisitions. We wrap up with several special cases that appear in practice. While written primarily for corporations that acquire companies with share-based compensation instruments, auditors and regulators will also benefit from the analysis of the salient ASC 805 compliance challenges.
We assist many companies in all facets of their accounting for assumed equity awards, and invite you to reach out should you be in this situation.