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ARTICLE · 17 APRIL 2015

FASB Issues ASU On Pushdown Accounting

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The latest ASU gives an acquired entity the option to apply pushdown accounting* when there is a change-of-control event.

United StatesAccounting and Audit
Paul Peterson
Paul Peterson
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On November 18, FASB issued Accounting Standards Update (ASU) 2014-17, Business Combinations (Topic 805): Pushdown Accounting, while the SEC simultaneously rescinded its guidance on the subject, called SAB Topic 5J.

The latest ASU gives an acquired entity the option to apply pushdown accounting* when there is a change-of-control event.

Significance of the New Standard

The ASU is significant because it makes pushdown accounting optional for the acquired entity when there is a change of control. The old SEC guidance did not allow pushdown accounting until the acquirer owned at least 80% of the acquired company, and it generally required pushdown accounting when the acquirer owned more than a 95% stake.

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