PwC's accounting podcast Who’s the accounting acquirer? Navigating new bus com guidance
Aug 19, 2025
Ryan Blacker, a director at PwC’s National Office, shares insights on the complexities of identifying the accounting acquirer in business combinations. He discusses how new FASB guidance impacts this crucial determination, especially for variable interest entities. The conversation covers the importance of control in acquisitions, the differences between voting interest entities and variable interest entities, and the implications of misidentifying the acquirer. Ryan also highlights effective dates and transition guidelines for implementing the recent accounting standards.
AI Snips
Chapters
Transcript
Episode notes
ASU 2025-03 Aligns VIEs With Voting-Interest Tests
- ASU 2025-03 removes the automatic primary-beneficiary result for VIE acquirees in share-exchange business combinations.
- Instead, entities use ASC 805 qualitative factors to determine the accounting acquirer, aligning outcomes with economic substance.
Treat Cash Deals As Clear Acquisitions
- Do not change the cash-deal approach: cash deals still give an obvious acquirer because sellers are bought out.
- Reserve the ASC 805 share-exchange factors for transactions where equity remains with combined owners.
Start With Relative Voting Rights
- Evaluate relative post-combination voting rights as a primary indicator of the accounting acquirer.
- If voting splits are close, weigh other ASC 805 factors more heavily.