In short
The measurement period is the time after a business combination, up to one year from the acquisition date, during which the acquirer adjusts provisional amounts for new information about facts that existed at the acquisition date.
Key takeaways
- Adjustments are recognized in the period they are determined, usually with the offset to goodwill, not by restating prior periods.
- Changes from events after the acquisition date, such as meeting an earnout target, aren't measurement-period adjustments.
- Contingent consideration classified as a liability is remeasured through earnings.
Where it's tested
FAR: Business Combinations & Consolidations — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An acquirer records provisional amounts for a business combination. Six months later, it obtains new information about facts that existed at the acquisition date. How are the provisional amounts adjusted?