Title: FASB Clarifies the Definition of a Business (January 13, 2017) | DART – Deloitte Accounting Research Tool
Headings: FASB Clarifies the Definition of a Business (January 13, 2017)
FASB Clarifies the Definition of a Business (January 13, 2017)
Heads Up | Volume 24, Issue 3
FASB Clarifies the Definition of a Business
by Emily Hache and Stefanie Tamulis, Deloitte & Touche LLP
Editor’s Note
Signiﬁcance of the Standard
Editor’s Note
Key Provisions of the ASU
“Single Identifiable Asset” or “Group of Similar Identifiable Assets” Screen
Single Identifiable Asset
Group of Similar Identifiable Assets
Case A: Acquisition of Real Estate
Substantive Process
A Set With No Outputs
Case C: Acquisition of Biotech
A Set With Outputs
Case F: License of Distribution Rights
Deﬁnition of Output
Convergence With IFRSs
Effective Date and Transition
Footnotes

Content: ABC acquires a portfolio of 10 single-family homes that each have in-place leases. The only elements included in the acquired set are the 10 single-family homes and the 10 in-place leases. Each single-family home includes the land, building, and property improvements. Each home has a different floor plan, square footage, lot, and interior design. No employees or other assets are acquired. 805-10-55-53 ABC ﬁrst considers the threshold guidance in paragraphs 805-10-55-5A through 55-5C. ABC concludes that the land, building, property improvements, and in-place leases at each property can be considered a single asset in accordance with paragraph 805-10-55-5B. That is, the building and property improvements are attached to the land and cannot be removed without incurring signiﬁcant cost. Additionally, the in-place lease is an intangible asset that should be combined with the related real estate and considered a single asset. 805-10-55-54 ABC also concludes that the 10 single assets (the combined land, building, in-place lease intangible, and property improvements) are similar. Each home has a different floor plan; however, the nature of the assets (all single-family homes) are similar.