Identifying the accounting acquirer

In May 2025, the FASB issued ASU 2025-03, Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (Business Combinations (Topic 805) and Consolidation (Topic 810)), whose amendments revise the definition of the term “acquirer” by modifying the guidance for determining the accounting acquirer in business combinations involving a variable interest entity (VIE).

Before these amendments, the guidance in ASC 805 prescribed that the primary beneficiary of a VIE acquired in a business combination was always the accounting acquirer. After the amendments, the automatic assumption that the accounting acquirer is the primary beneficiary no longer applies in business combinations primarily effected by exchanging equity interests that involve the acquisition of a VIE. Entities must now evaluate additional factors in ASC 805 to determine the appropriate accounting acquirer; as a result, the accounting acquirer may now differ from the accounting acquirer determined under legacy GAAP.

Grant Thornton’s Viewpoint, complete with FASB citations as well as insights and examples developed by our Accounting Principles Group, is designed to help practitioners navigate this challenging topic. This publication discusses how to identify the acquirer only in those business combinations that fall within the scope of ASC 805-10; it does not apply to transactions or events within the scope of ASC 805-50, which has its own discrete scope covering asset acquisitions, transactions between entities under common control, the formation of master limited partnerships, and pushdown accounting.

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