Distinguishing between a Merger and an Acquisition

FASB ASC 958-805 provides guidance on distinguishing between a merger and an acquisition.

In a merger, the governing bodies of two or more not-for-profit organizations cede control of those entities to create a new not-for-profit organization. If the participating entities retain shared control of the new entity, they have not ceded control.

In an acquisition, the acquirer obtains control of one or more nonprofit activities or businesses. The formation of a new entity is not considered a significant factor in assessing whether one entity has obtained control over another.

Ceding control to a new entity is the sole definitive criterion for identifying a merger and, accordingly, FASB ASC 958-805 provides guidance on how to determine whether control has been ceded to a new entity. The following characteristics should be assessed:

1. The process leading to the combination;
2. The participants to the combination;
3. The combined entity.

FASB ASC 958-805 states that in a merger, generally no one party dominates or is capable of dominating the negotiations and process leading to the formation of the combined entity. (In an acquisition, on the other hand, one party—the acquirer—often dominates that process, and sometimes may, in effect, dictate the terms of the transaction, including the date the combination occurs.)

In an acquisition, one party obtaining control over the other is the sole definitive criterion. FASB ASC 958-805 provides that the characteristics of the entities participating in a combination and of the resulting combined entity that can help to distinguish between a merger and an acquisition fit into two groups:

1. Governance and related control powers;
2. Financial capacity.

The following examples are included in the guidance:

• If one entity appoints significantly more of the governing board of the newly formed entity, retains significantly more of its key senior officers, or retains its bylaws, operating policies, and practices substantially unchanged, it is more likely to be a feature of an acquisition than of a merger.
• Similarly, the relative financial strength and relative size of the participants in the combination may help to determine whether one participant is able to dominate the process leading to the combination. If one entity is financially strong and the other is experiencing financial difficulty, the stronger entity may be able to dominate the transaction, which would indicate that the transaction is an acquisition rather than a merger. If a participant is substantially larger than each of the others in terms of revenues, assets, and net assets, it also may be able to dominate the transaction.

FASB ASC 958-805 provides, however, that relative size, like relative financial strength and the other indicators discussed, is only one characteristic that may help to distinguish between a merger and an acquisition in particular situations—none of the indicators, by itself, is determinative.

A merger generally is accomplished by combining all of the assets and liabilities of the merging entities into a newly formed entity that assumes all of the assets and liabilities of the participating entities without a transfer of cash or other assets to those entities or any of their owners, members, sponsors, or other designated beneficiaries. The creators of the merged entity cease to exist as autonomous entities and do not hold financial interests in the merged entity.

Accounting for a Merger

The not-for-profit entity that results from a merger (i.e., the new entity) should account for the merger by applying the carryover method. The carryover method requires combining the assets and liabilities of the merging entities as of the merger date, with certain adjustments which are described below. Accordingly, the new entity recognizes in its financial statements the assets and liabilities reported in the separate financial statements of the merging entities as of the merger date. A few specifics pointed out by FASB ASC 958-805 are as follows:

• The new entity should not recognize additional assets or liabilities that GAAP did not require or permit the merging entities to recognize.
• If assets and liabilities are measured by the merging entities using different methods of accounting in their separate financial statements, the new entity will have to adjust those amounts to reflect a consistent method.
• The new entity should eliminate the effects of any intraentity transactions on its assets, liabilities, and net assets as of the merger date.

In keeping with the concept that a merger results in a new reporting entity, the initial reporting period of the new entity begins with the merger date, and the merger itself should not be reported as an activity of the new entity's initial reporting period. The combined assets, liabilities, and net assets of the merging entities are included as of the beginning of the initial reporting period.

Accounting for an Acquisition

The accounting for an acquisition of a not-for-profit organization is likely to be more complex than the accounting for a merger. The acquisition method used in FASB ASC 958-805 is the same as the acquisition method described in FASB ASC 805. However, acquisitions in the not-for-profit organization environment can be fundamentally different from acquisitions in the commercial enterprise environment. For example, consideration (cash, securities, etc.) is not often exchanged in the acquisition of one not-for-profit organization by another not-for-profit organization. The purchase price forms a large piece of the accounting for an acquisition under FASB ASC 805 and accordingly, the additional guidance provided in FASB ASC 958-805 helps apply the acquisition method to the not-for-profit environment.

In FASB ASC 958-805, the following are the steps in applying the acquisition method to not-for-profit organizations:

1. Identifying the acquirer;
2. Determining the acquisition date;
3. Recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree;
4. Recognizing and measuring goodwill (or the immediate charge to the statement of activities when required) or the contribution received.

Each of these steps will be discussed below.

Identifying the acquirer. The guidance in FASB ASC 958-810, or, for a health-care-related acquirer, FASB ASC 954, should be used to identify the acquirer, which is the entity that retains control. If the acquiring entity is not clear from this existing guidance, FASB ASC 958-805 provides the following additional guidance:

• In an acquisition effected primarily by transferring cash or other assets or by incurring liabilities, the acquirer usually is the entity that transfers the cash or other assets or incurs the liabilities.
• The acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or change in net assets) is significantly larger than that of the other combining entity or entities.
• If one of the combining entities can select or dominate the process of selecting the management team of the resulting entity, that entity is likely to be the acquirer.
  • The combined entity often retains the mission and the legal name of the acquirer.
  • In an acquisition involving more than two entities, determining the acquirer includes a consideration of, among other things, which of the combining entities initiated the transaction, as well as the relative size of the combining entities.
  • The acquirer usually is the entity whose governing body has the ability to select or dominate the process of selecting the governing body of the combined entity, which may be a newly created entity, although whether a new entity is created is not a significant factor in identifying an acquisition. That ability may be demonstrated by an entity's powers to elect or appoint members to the combined entity's governing body or an entity's powers to dominate the process of selecting a voting majority. In determining whether one of the entities has the power to dominate the selection process, consideration shall be given to the existence of rights to elect or appoint members to the governing body that are provided by the entity's articles of incorporation, by its bylaws, or by provisions in the acquisition agreement. Consideration also shall be given to the ability of one entity to dominate the selection process through other means.

FASB ASC 958-805 provides that the following factors be considered in assessing which entity is able to select or to dominate the process of selecting the governing body:

1. If the combined entity's articles of incorporation or bylaws state that the members of the governing body are appointed, whether one of the entities has the right to appoint a voting majority of the governing body.
2. If the combined entity's governing body is self-perpetuating:
   1. Whether one of the entities has the right to select a voting majority of the initial governing body of the entity as part of the acquisition agreement;
   2. Whether one of the entities has the ability to dominate the selection of a voting majority of the initial governing body of the entity through means other than negotiated selection rights, such as through disproportionate representation on the committee that selects nominees for that body.
3. If the initial governing body of the combined entity is selected by the governing members of the combining entities, whether one entity's members have the majority of the voting rights.
4. Any other rights to appoint or designate members of the combined entity's governing body either as of the acquisition date or in the near future (such as upon the expiration of the terms of some or all of the initial members).
5. If positions on the combined entity's governing body are designated positions, the effect of those designated positions on the ability of an entity to appoint a voting majority of the resulting entity's governing body.
6. The powers of any sponsoring entities or members of a not-for-profit corporation and the composition of those sponsors and members. If sponsors and corporate members have limited powers, the effect of those limited powers on the ability of one of the entities to control the combined entity.
7. If the combined entity's governing body delegates powers to committees, the nature of those delegated powers and the composition of the committees.
8. The effect of voting requirements (such as supermajority voting requirements) on the ability of one entity to appoint or dominate the selection of a supermajority of the governing body of the combined entity.

Determining the acquisition date. The acquisition date is the date on which the acquiring organization obtains control of the organization that it is acquiring. This may likely be the date any consideration is transferred and/or the date one organization becomes the sole member of the other. SFAS 164 focuses on when control is obtained, which may be a specific “closing” date, but may also be obtained before such closing date, depending on the facts and circumstances of the individual transaction.

Recognizing and measuring assets acquired and liabilities assumed. As of the acquisition date, the acquiring organization recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the organization acquired. These recognized items are measured at their fair value.

FASB ASC 958-805 specifies that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must be part of what the acquiring organization and the acquired organization exchanged (or contributed) in the acquisition transaction rather than the result of separate transactions. In addition, the acquiring organization's application of FASB ASC 958-805's recognition principle and conditions may result in recognizing some assets and liabilities that the acquired organization had not previously recognized as assets and liabilities in its financial statements. For example, the acquiring organization would recognize the acquired identifiable intangible assets, such as a brand name, a patent, or a customer relationship, that the acquired organization did not recognize as assets in its financial statements because it developed them internally and charged the related costs to expense.

FASB ASC 958-805 includes specific guidance on numerous specific accounting topics relative to determining the assets and liabilities that would be recognized in an acquisition. These include:

• Leases;
• Reacquired rights;
• Assembled workforce;
• Trademarks, trade names, and other marketing-related intangible assets;
• Customer and donor lists;
• Order or production backlog;
• Customer contracts and relationships;
• Artistic-related intangible assets (plays, operas, books, compositions, etc.);
• Contract-based intangible assets (licensing and royalty agreements, broadcast rights, franchise agreements, etc.);
• Collections.

FASB ASC 958-805 specifies certain exceptions to its recognition and/or measurement principles that are described above. These exceptions might result in certain assets or liabilities being recognized differently than what is described in general terms above. The exceptions also might result in assets or liabilities being measured at a value other than fair value. The following is a general discussion of the exceptions specified in FASB ASC 958-805:

• Donor relationships—The acquiring organization should not recognize an acquired donor relationship as an identifiable intangible asset separately from goodwill.
• Collections—If the acquiring organization has a policy of not capitalizing collections, it should not recognize as an asset those items it acquires as part of an acquisition that it adds to its collection. Instead, it should:
  • Recognize the cost of purchased collection items as a decrease in net assets and a cash outflow for investing activities;
  • Not recognize the fair value of contributed collection items—either as an asset or as contribution revenue.
• Conditional promises to give—These should be recognized only if the conditions are substantially met as of the acquisition date. A transfer of assets with a conditional promise to contribute them is a refundable advance (i.e., liability) unless the conditions have been substantially met as of the acquisition date.
• Contingencies—If the fair value of an asset or liability arising from a contingency can be determined, it should be recognized at fair value. If fair value cannot be determined, an asset or liability should be recognized if both of the following are met:
  • It is probable that an asset existed or liability had been incurred at the acquisition date.
  • The amount of the asset or liability can be estimated.
• Income taxes—Deferred tax assets and liabilities should be recognized and measured in accordance with FASB ASC 740-10.
• Employee benefits—Liabilities (and assets, if any) would be recognized and measured in accordance with other GAAP. This would include deferred compensation contracts, compensated absences, pensions (including defined benefit pension plans and their settlement or curtailment), postretirement benefits other than pensions, and one-time termination benefits associated with the exit or disposal activities.
• Indemnification assets—If the seller indemnifies the acquiring organization for a contingency or uncertainty, the acquiring organization recognizes an indemnification asset measured on the same basis as the indemnified item, subject to a valuation allowance for uncollectible amounts.
• Reacquired rights—These would be measured on the basis of the remaining contractual term of the related contract regardless of how potential renewals might factor into determining fair value.
• Assets held for sale—A long-lived asset (or disposal group) that is classified as held for sale in accordance with FASB ASC 360-10 is measured at fair value, less costs to sell.

Recognizing and measuring goodwill acquired or a contribution received. FASB ASC 958-805 provides that, unless the operations of the acquired organization as part of the combined entity are expected to be predominantly supported by contributions and returns on investments (see below), the acquiring organization should recognize goodwill as of the acquisition date, measured as the excess of 1. over 2. below:

1. The aggregate of:
   1. The consideration transferred measured at its acquisition-date fair value (discussed below);
   2. The fair value of any noncontrolling interest in the acquired organization;
   3. In an acquisition achieved in stages, the acquisition-date fair value of the acquiring organization's previously held equity interest in the acquired organization.
2. The net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

If the operations of the acquired organization as part of the combined entity are expected to be predominantly supported by contributions and returns on investments, the acquiring organization should recognize the amount computed above as a separate charge in its statement of activities as of the acquisition date rather than as goodwill. “Predominantly supported by” means that contributions and returns on investments are expected to be significantly more than the total of all other sources of revenue.

The acquiring organization must consider all relevant qualitative and quantitative factors in determining the expected nature of the predominant source of support for an acquired organization's operations as part of the combined entity. For example, an acquirer shall consider qualitative and quantitative information about all forms of contributed support, including contributions that are precluded from being recognized or are not required to be recognized in the financial statements (such as certain contributed services and collection items and conditional promises to give).

In practice, this is likely to result in few not-for-profit organization acquisitions resulting in the recognition of goodwill, as reliance on contribution revenue and investment earnings as a predominant revenue source is common. On the other hand, not-for-profit organizations that derive a large part of their revenues from contractual activities or government grants that are acquired are more likely to result in goodwill being recognized, dependent, obviously, on the calculation described above.

In some acquisitions by not-for-profit entities, no consideration is transferred (and there are no previously held interests or noncontrolling interests). In that situation, the result of the above will be to measure goodwill or the separate charge to the statement of activities as the excess of liabilities assumed over assets acquired.

In some cases, the amount calculated as item 2. above will exceed the amount calculated in item 1. In that instance, the acquiring organization should recognize the excess as a separate credit in its statement of activities as of the acquisition date. This effectively treats the acquisition as a contribution received. In essence, the acquiring organization is receiving more in net assets than it is giving up in consideration. The difference is considered a contribution.

Consideration Transferred

The calculation described above to determine the amount of goodwill, charge to the activities statement, or contribution received in accounting for an acquisition includes as a component “consideration transferred.” FASB ASC 958-805 has specific guidance as to how to arrive at this amount. Specifically, the consideration transferred in an acquisition should be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquiring organization and the liabilities incurred by that organization. The acquiring organization might transfer consideration to the former owner of the acquired organization or to a designee of the former owner. The acquirer also might receive assistance from an unrelated third party, which shall be taken into account in measuring consideration transferred. Examples provided of potential forms of consideration include cash, other assets, a business or a nonprofit activity of the acquiring organization, and contingent consideration. For contingent consideration, the acquiring organization should recognize the acquisition-date fair value of contingent consideration as part of the consideration transferred in exchange for the acquired organization.

FASB ASC 958-805 specifies that an asset transferred by the acquiring organization to an unrelated third party as a required condition of an acquisition should be accounted for as consideration transferred for the acquired organization unless the acquirer retains control over the transferred assets. An acquirer that retains control over the transferred assets should measure those assets and liabilities at their carrying amounts immediately before the acquisition date and shall not recognize a gain or loss in the statement of activities on assets or liabilities it controls both before and after the acquisition. Examples provided in FASB ASC 958-805 of asset transfers in which control over the future economic benefits of the transferred assets is retained by the acquirer include the following:

1. The assets are transferred to the acquired organization rather than to its former owners or are otherwise transferred to a recipient that is controlled by the acquirer. By virtue of its control over the recipient, the acquiring entity has the ability to revoke the transfer or to direct the use of the assets to itself or an affiliate.
2. The asset transfer is otherwise revocable, repayable, or refundable.
3. The assets are transferred with the stipulation that they be used on behalf of, or for the benefit of, the acquired organization, the acquiring organization, the consolidated entity, or their affiliates.

Measurement Period

The initial accounting for an acquisition may not be complete by the end of the fiscal year in which the acquisition occurred. In this case FASB ASC 958-805 specifies that the acquiring organization should report “provisional” amounts for the items for which the accounting is incomplete. During what is defined as the “measurement period” the acquiring organization should retrospectively adjust the provisional amounts to reflect new information obtained about the facts and circumstances that existed as of the acquisition date. FASB ASC 958-805 also provides that during the measurement period, the acquiring organization should also recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. However, the measurement period shall not exceed one year from the acquisition date.

Presentation

FASB ASC 958-805 requires that the amounts calculated above be reflected in the statement of activities as separate line items. Examples of how the computed charge to the statement of activities discussed above would be labeled are “excess of consideration paid over net assets acquired in acquisition of Entity X” or “excess of liabilities assumed over assets acquired in acquisition of Entity X.” If a contribution is recorded, it might be labeled “contribution received in donation of Entity X” or “excess of fair value of net assets acquired over consideration paid in acquisition of Entity X.” This latter example is a bit more descriptive of what is actually being recorded and would likely be helpful to the financial statement reader. In reporting this contribution, the acquiring organization will need to examine whether there are any restrictions on the contribution received which would affect the net asset classification of the contribution received.

Goodwill and Other Intangible Assets Acquired in an Acquisition

FASB ASC 958-805 specifies that the guidance of FASB ASC 350 should be applied in subsequent accounting for goodwill and other intangible assets recognized in the acquisition of a business or a nonprofit activity.

Previously Recognized Goodwill

A not-for-profit organization that is predominantly supported by contributions and returns on investments is required to write off previously recognized goodwill by a separate charge in the statement of activities for the effect of the accounting change. An entity that is not predominantly supported by contributions and returns on investments should follow the guidance of FASB ASC 350 as to accounting for goodwill by reporting units and should subject goodwill in each reporting unit to a transitional impairment evaluation.

Push Down Accounting

In November 2014 the FASB issued ASU 2014-17 Business Combinations (Topic 805) Pushdown Accounting to address whether an acquired entity can reflect the acquirer's accounting and reporting basis (pushdown accounting) in its separate financial statements. This guidance only impacts separately issued financial statements of the acquired entity. If separately issued financial statements of the acquired entity are not issued, there is no impact of ASU 2014-17.

ASU 2014-17 provides that an acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. An acquired entity should determine whether to elect to apply pushdown accounting for each individual change-in-control event in which an acquirer obtains control of the acquired entity.

If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, ASU 2014-17 provides that an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period to the acquired entity's most recent change-in-control event. ASU 2014-17 provides that an election to apply pushdown accounting in a reporting period after the reporting period in which the change-in-control event occurred should be considered a change in accounting principle in accordance with Topic 250, Accounting Changes and Error Corrections. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable.

Further, ASU 2014-17 provides that if an acquired entity elects the option to apply pushdown accounting in its separate financial statements, it should disclose information in the current reporting period that enables users of financial statements to evaluate the effect of pushdown accounting.

ASU 2014-17 became effective on November 18, 2014.

Disclosures

FASB ASC 958-805 has extensive disclosure requirements for both mergers and acquisitions. These are listed below.

Disclosures for a Merger

The new entity should disclose the following information for the merger that resulted in its formation:

1. The name and a description of each merging entity.
2. The merger date.
3. The primary reasons for the merger.
4. For each merging entity:
   1. The amounts recognized as of the merger date for each major class of assets and liabilities and each class of net assets;
   2. The nature and amounts, if applicable, of any significant assets (for example, conditional promises receivable or collections) or liabilities (for example, conditional promises payable) that GAAP does not require to be recognized.
5. The nature and amount of any significant adjustments made to conform the individual accounting policies of the merging entities or to eliminate intraentity balances.
6. If the new entity is a public entity, the following supplemental pro forma information:
   1. If the merger occurs at other than the beginning of an annual reporting period and the entity's initial financial statements thus cover less than an annual reporting period, the following information for the current reporting period as though the merger date had been the beginning of the annual reporting period:
      1. Revenue;
      2. For an entity subject to the health care Guide, the performance indicator;
      3. Changes in unrestricted net assets, changes in temporarily restricted net assets, and changes in permanently restricted net assets.
   2. If the new entity presents comparative financial information in the annual reporting period following the year in which the merger occurs, the entity should disclose the supplemental pro forma for the comparable prior reporting period as though the merger date had been the beginning of that prior annual reporting period.

If disclosure of any of the information required by this subparagraph is impracticable, the entity shall disclose that fact and explain why the disclosure is impracticable.

Disclosures for an Acquisition

FASB ASC 958-805 provides that the acquiring organization should disclose information that enables users of its financial statements to evaluate the nature and financial effect of an acquisition that occurs either

1. During the current reporting period; or
2. After the reporting date but before the financial statements are issued or are available to be issued.

To meet these, the acquiring organization should disclose the following information for each acquisition that occurs during the reporting period:

1. The name and a description of the acquiree.
2. The acquisition date.
3. If applicable, the percentage of ownership interests, such as voting equity instruments, acquired.
4. The primary reasons for the acquisition and a description of how the acquirer obtained control of the acquiree.
5. A qualitative description of the factors, such as expected synergies from combining operations of the acquiree and the acquirer, intangible assets that do not qualify for separate recognition, or other factors, such as the nonrecognition of collections, that make up either
   1. The goodwill recognized; or
   2. The separate charge recognized in the statement of activities.
6. The acquisition-date fair value of the total consideration transferred (or if no consideration was transferred, that fact) and the acquisition-date fair value of each major class of consideration, such as:
   1. Cash;
   2. Other tangible or intangible assets, including a business or subsidiary of the acquirer;
   3. Liabilities incurred, for example, a liability for contingent consideration.
7. For contingent consideration arrangements and indemnification assets:
   1. The amount recognized as of the acquisition date;
   2. A description of the arrangement and the basis for determining the amount of the payment;
   3. An estimate of the range of outcomes (undiscounted) or, if a range cannot be estimated, that fact and the reasons why a range cannot be estimated. If the maximum amount of the payment is unlimited, the acquirer shall disclose that fact.
8. For acquired receivables not subject to the requirements of FASB ASC 310-30:
   1. The fair value of the receivables;
   2. The gross contractual amounts receivable;
   3. The best estimate at the acquisition date of the contractual cash flows not expected to be collected.

The disclosures shall be provided by major class of receivable, such as loans, contributions, direct finance leases in accordance with FASB ASC 840, and any other class of receivables.

9. The amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed.
10. For assets and liabilities arising from contingencies recognized at the acquisition date:
    1. The amounts recognized at the acquisition date and the measurement basis applied;
    2. The nature of the contingencies.

An acquirer may aggregate disclosures for assets and liabilities arising from contingencies that are similar in nature.

11. For assets and liabilities arising from contingencies that have not been recognized at the acquisition date, the disclosures required by FASB ASC 450 if the criteria for disclosures in that Statement are met. The disclosures, if any, required by this paragraph and by 10. above should be included in the note that describes the acquisition.
12. The total amount of goodwill that is expected to be deductible for tax purposes.
13. The amount of collection items acquired that are recognized in the statement of activities as a decrease in the acquirer's net assets.
14. The undiscounted amount of conditional promises to give acquired or assumed and a description and the amount of each group of promises with similar characteristics, such as amounts of promises conditioned on establishing new programs, completing a new building, or raising matching gifts by a specified date.
15. For transactions that are recognized separately from the acquisition of assets and assumptions of liabilities in the acquisition:
    1. A description of each transaction;
    2. How the acquirer accounted for each transaction;
    3. The amounts recognized for each transaction and the line item in the financial statements in which each amount is recognized;
    4. If the transaction is the effective settlement of a preexisting relationship, the method used to determine the settlement amount.
16. The disclosure of separately recognized transactions should include the amount of acquisition-related costs, the amount recognized as an expense, and the line item or items in the statement of activities in which that expense is recognized. The amount of any issuance costs not recognized as an expense and how they were recognized also shall be disclosed.
17. If the acquisition results in an inherent contribution received, a description of the reasons that the transaction resulted in a contribution received.
18. For each acquisition in which the acquirer holds less than 100% of the equity interests in the acquiree at the acquisition date:
    1. The fair value of the noncontrolling interest in the acquiree at the acquisition date;
    2. The valuation technique(s) and significant inputs used to measure the fair value of the noncontrolling interest.
19. In an acquisition achieved in stages:
    1. The acquisition-date fair value of the equity interest in the acquiree held by the acquirer immediately before the acquisition date;
    2. The amount of any gain or loss recognized as a result of remeasuring to fair value the equity interest in the acquiree held by the acquirer before the acquisition and the line item in the statement of activities in which that gain or loss is recognized.
20. If the acquirer is a public entity as defined in paragraph 3(w):
    1. Each of the following amounts attributable to the acquiree since the acquisition date that are included in the statement of activities for the reporting period:
       1. Revenues;
       2. For an entity subject to the health care Guide, the performance indicator;
       3. Changes in unrestricted net assets, changes in temporarily restricted net assets, and changes in permanently restricted net assets.
    2. The following supplemental pro forma information for the current reporting period as though the acquisition date for all acquisitions that occurred during the current year had been the beginning of the annual reporting period:
       1. The revenue of the combined entity;
       2. For an entity subject to the health care Guide, the performance indicator;
       3. Changes in unrestricted net assets, changes in temporarily restricted net assets, and changes in permanently restricted net assets.
    3. If the acquirer presents comparative financial statements, the supplemental pro forma information in 20.a.(1)–(3) above for the comparable prior reporting period as though the acquisition date for all acquisitions that occurred during the current year had been the beginning of the comparable prior annual reporting period.

If disclosure of any of the information required by this subparagraph is impracticable, the acquirer shall disclose that fact and explain why the disclosure is impracticable.

For individually immaterial acquisitions occurring during the reporting period that are material collectively, the acquiring organization should disclose the information required by 5. through 20. above in the aggregate.

If the date of an acquisition is after the reporting date but before the financial statements are issued or available for issue, the acquirer shall disclose the information required above unless the initial accounting for the acquisition is incomplete at the time the financial statements are issued or are available to be issued. In that situation, the acquirer shall describe which disclosures could not be made and the reason that they could not be made.

The acquiring organization should disclose information that enables users of its financial statements to evaluate the financial effects of adjustments recognized in the current reporting period that relate to acquisitions that occurred in the current or previous reporting periods. To meet these objectives, the acquiring organization should disclose the following information for each material acquisition or in the aggregate for individually immaterial acquisitions that are material collectively:

1. If the initial accounting for an acquisition is incomplete for particular assets, liabilities, noncontrolling interests, or items of consideration and the amounts recognized in the financial statements for the acquisition thus have been determined only provisionally:
   1. The reasons that the initial accounting is incomplete;
   2. The assets, liabilities, equity interests, or items of consideration for which the initial accounting is incomplete;
   3. The nature and amount of any measurement period adjustments recognized during the reporting period.
2. For each reporting period after the acquisition date until the entity collects, sells, or otherwise loses the right to a contingent consideration asset, or until the entity settles a contingent consideration liability or the liability is canceled or expires:
   1. Any changes in the recognized amounts, including any differences arising upon settlement;
   2. Any changes in the range of outcomes (undiscounted) and the reasons for those changes;
   3. The disclosures required by paragraph 32 of SFAS 157 (FASB ASC 820-10-15).
3. A reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period as required by SFAS 142, as amended. (FASB ASC 350)