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Accounting Standards for Private Sector Not-for-Profit Organizations

Combinations – Initial Measurement and Related Disclosures


The Accounting Standards Board (AcSB) has approved a project to provide guidance on the initial measurement of a combination and its related disclosures.

The project will involve:

  • proposing criteria to determine whether a combination transaction is considered a merger or acquisition;
  • determining the accounting requirements for when the transaction is considered a merger, including the issues of recognition, measurement, and disclosure; and
  • considering any modifications needed to Section 1582 Business Combinations, for not-for-profit combination transactions that are considered an acquisition.

Staff Contact(s)

Mohamed Hassanali, CPA, CA Associate Director, Accounting Standards Board

Project Status

  • Information gathering

    Completed prior to June 2018

  • Approving project

    The AcSB approved this project in June 2018, and refined the scope in January 2019

  • Consulting stakeholders

    Exposure Draft consultations conducted in February and March 2020

    Exposure Draft closed for comment on May 15, 2020

  • Deliberating feedback

    The AcSB is deliberating feedback on its Exposure Draft

  • Final pronouncement

    Standard issued in the Handbook on March 1, 2021

Meeting & event summaries

October 27, 2020 AcSB Decision Summary – October 27, 2020

The AcSB completed its deliberations on stakeholder comments on the Exposure Draft “Combinations – Initial Measurements and Related Disclosures.” The Board considered the Not-for-Profit Advisory Committee’s advice, and tentatively decided:

  • that for acquisitions, the difference between consideration transferred and the net assets acquired is recognized in the statement of net assets instead of the statement of operations; and
  • to clarify aspects of the illustrative examples.

The AcSB also finalized the transition provisions.

The AcSB approved the issuance of the final standard, subject to final drafting and a written ballot. The Board plans to issue the final standard in March 2021.

October 14, 2020 Not-for-Profit Advisory Committee Notes – October 14, 2020

The Committee continued discussing stakeholder feedback on the Exposure Draft, “Combinations – Initial Measurements and Related Disclosures.” The Committee advised the AcSB:

  • that the difference between the consideration transferred and net assets acquired should be accounted for in net assets instead of the statement of operations; and
  • the standard should apply on a prospective basis with an option to apply it to combinations that occurred in previous periods.

The Committee also provided the AcSB staff with comments to clarify the standard.


July 21, 2020 Not-for-Profit Advisory Committee Notes – July 21, 2020

The Committee discussed stakeholder feedback on the Exposure Draft, “Combinations – Initial Measurements and Related Disclosures.” The Committee advised the AcSB to:

  • add a reference to Section 1582, Business Combinations, to account for a for-profit enterprise contributed to a NFPO and to clarify if goodwill is recorded;
  • provide an exception from the acquisition method when NFPOs under common control combine; and
  • require measurement of deferred contributions and deferred capital contributions at fair value for an acquired NFPO.

The Committee also recommended the AcSB revise the criteria to distinguish a merger from an acquisition and the related illustrative examples by amending:

  • criterion (b) to include that all parties have meaningful participation in negotiations;
  • criterion (e) to reflect that if all parties have a significant decline or planned significant decline in client communities served, the combination can still be accounted for as a merger;
  • Illustrative Example 2 to demonstrate that internal communications are relevant in assessing if either party to a combination is characterized as the acquirer or acquiree; and
    Illustrative Example 3 to demonstrate how consideration can flow to a third party.

The AcSB will consider the Committee’s comments at the Board meeting on September 9, 2020.


This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.