This free, guided checker walks your finance team through the key decision points for ASC 805 Purchase Price Allocation & Goodwill. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level US GAAP screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
All acquisition-method measurements - consideration transferred, identifiable assets, liabilities, and any noncontrolling interest - are made as of the acquisition date, which is generally the closing date but can differ when control passes earlier or later. Review the agreement for the point at which the acquirer obtains the ability to direct the acquiree's relevant activities, and confirm regulatory approvals or closing conditions have been met. A common error is defaulting to the legal closing date when control actually transferred on a different date.
Establish the acquisition date under ASC 805-10-25-6 before measuring consideration, net assets, or goodwill.
Official guidance: FASB Accounting Standards Codification
ASC 805-20 requires recognition apart from goodwill of the assets acquired and liabilities assumed, measured at fair value with limited exceptions (for example income taxes under ASC 740 and employee benefits).
Complete the identification and fair value measurement of the identifiable net assets under ASC 805-20-25-1 before computing goodwill.
Official guidance: FASB Accounting Standards Codification
An intangible asset is identifiable if it arises from contractual or legal rights or if it is separable - capable of being sold, licensed, or transferred - even if the entity does not intend to do so (ASC 805-20-25-10). Test each candidate against these criteria and value customer relationships, technology, trade names, order backlog, and noncompete agreements separately from goodwill. A common error is subsuming valuable intangibles into goodwill, which overstates goodwill and understates future amortization.
Analyze and value the identifiable intangibles under ASC 805-20-25-10 before residual goodwill can be measured.
Official guidance: FASB Accounting Standards Codification
The NCI measurement basis is an election available on a transaction-by-transaction basis: acquisition-date fair value produces full goodwill, while the proportionate share of identifiable net assets limits goodwill to the acquirer's interest (ASC 805-20-30-7). Determine the basis before computing goodwill, because it changes the NCI amount added to the residual. A common error is defaulting to the proportionate-share method without documenting the election, or carrying an IFRS-style choice across similar deals without reassessing it.
Elect the NCI measurement basis under ASC 805-20-30-7 before finalizing the goodwill residual.
Official guidance: FASB Accounting Standards Codification
Consideration transferred is the sum of the acquisition-date fair values of assets given, liabilities incurred to former owners, and equity issued, plus contingent consideration and any previously held equity interest remeasured to fair value (ASC 805-30-30-7). Measure equity issued at the acquisition-date price, classify contingent consideration as a liability or equity, and exclude amounts that are really post-combination compensation. A common error is using the announcement-date share price or omitting contingent consideration, both of which distort goodwill.
Measure the consideration transferred, including contingent consideration, at acquisition-date fair value under ASC 805-30-30-7 before computing goodwill.
Official guidance: FASB Accounting Standards Codification
Goodwill is a residual: consideration transferred plus NCI plus any previously held interest, less the net identifiable assets at fair value.
The excess is recognized as goodwill under ASC 805-30-30-1. A potential bargain purchase exists; reassess before recognizing a gain under ASC 805-30-25-4.
Official guidance: FASB Accounting Standards Codification
Send us your situation and one of our senior CPAs will review it with you - fixed fee, no surprises.
Contact Us