PwC's accounting podcast Who’s the accounting acquirer? Navigating new bus com guidance
Aug 19, 2025
Ryan Blacker, a director at PwC’s National Office, shares insights on the complexities of identifying the accounting acquirer in business combinations. He discusses how new FASB guidance impacts this crucial determination, especially for variable interest entities. The conversation covers the importance of control in acquisitions, the differences between voting interest entities and variable interest entities, and the implications of misidentifying the acquirer. Ryan also highlights effective dates and transition guidelines for implementing the recent accounting standards.
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Business Combination Defined And Why Acquirer Matters
- A business combination occurs when an acquirer obtains control of a business defined as inputs plus a substantive process.
- The accounting acquirer perspective drives acquisition accounting and determines which basis gets stepped up.
Prior VIE Rule Created Accounting-Economic Disconnects
- Under prior guidance, if the legal acquiree was a VIE, the primary beneficiary always was the accounting acquirer.
- That rule could create accounting outcomes that diverged from the economic reality of a deal.
ASU 2025-03 Aligns VIEs With Voting-Interest Tests
- ASU 2025-03 removes the automatic primary-beneficiary result for VIE acquirees in share-exchange business combinations.
- Instead, entities use ASC 805 qualitative factors to determine the accounting acquirer, aligning outcomes with economic substance.