Business Deal Proposal to Clarify Accounting Acquirer Guidance

Companies that buy another business are set to gain clearer guidance to determine which entity is the acquirer for financial reporting purposes.

The Financial Accounting Standards Board Wednesday released a proposal that would more closely align the requirements for identifying the accounting acquirer in what’s called a variable interest entity with rules for combinations that don’t involve such structures. Comments are due by Dec. 16.

Variable interest entity is an accounting term that describes a structure often set up to manage credit or legal risks. Identifying the accounting acquirer affects which entity’s assets and liabilities are remeasured in a business ...