In what ways has the new Definition of a business issued by the FASB affected Real...

In what ways has the new Definition of a business issued by the FASB affected Real estate industry?

Expert Solution

The Financial Accounting Standards Board (FASB) put a clarification on the more than a decade-old definition of a “business.” The new Definition of a business is included in Accounting Standards Update (ASU) 2017-01, those targets to help companies in applying the wider interpreted FASB Statement No. 141(R), Business Combinations (codification in ASC 805). It may result in more real estate acquisition transactions being accounted for as acquisitions of asset instead of the business combinations. Prior to the new definition, when a deal in real estate was made the buyer would pay a price for the operating real estate and an extra amount for the services needed for closing the transaction (think broker and attorney fees). With the FASB’s new definition, the full amount which the buyer just spent is allowed to be capitalized as an asset, when the assets acquired were not considered a business in accordance with the clarified guidance

ekkarill92 answered 2 years ago

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