FASB Updates ‘Business’ Definition

Changing Piling Up

The Financial Accounting Standards Board (FASB) recently issued an accounting standard update narrowing the definition of a business. This definition is significant because it determines what accounting model to use on the acquisition and disposal of a business or a group of nonfinancial assets. There is little economic difference between purchasing—or selling—an asset versus a business, but there is a substantial difference in the accounting, most notably for measurement, acquisition costs, lease classification and goodwill.

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