Step Acquisitions Involving Foreign Entities Addressed in Narrow-Scoped FASB Provision

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By Denise Lugo

NORWALK, Conn.--A narrow-scoped accounting provision was issued March 4 by the Financial Accounting Standards Board to resolve diversity in practice for the treatment of business combinations achieved in stages--referred to as step acquisitions--involving a foreign entity.

FASB issued the guidance as ASU No. 2013-05, Foreign Currency Matters (Topic 830), Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets Within a Foreign Entity or of an Investment in a Foreign Entity, a Consensus of the FASB Emerging Issues Task Force.

Some entities view step acquisitions as being composed of two events:

  • the disposition of an equity method investment, and

  • simultaneous acquisition of a controlling financial interest.


By Denise Lugo

Text of the ASU is at

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