The Financial Accounting Standards Board has issued rules to help nonprofit organizations properly account for mergers and acquisitions involving other not-for-profits.

FASB Statement No. 164, “Not-for-Profit Entities: Mergers and Acquisitions,” governs the information that a not-for-profit entity should provide in its financial reports about a combination with one or more other not-for-profit entities, businesses or nonprofit activities.

FAS 164 sets out the principles and requirements for how a not-for-profit entity should determine whether a combination is in fact a merger or an acquisition. The standard applies the carryover method in accounting for a merger, and the acquisition method in accounting for an acquisition, including determining which of the combining entities is the acquirer. In addition, FAS 164 determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of a merger or an acquisition involving a not-for-profit.

The statement is also intended to improve the information a not-for-profit entity provides about goodwill and other intangible assets after an acquisition by amending FASB Statement No. 142, “Goodwill and Other Intangible Assets,” to make it fully applicable to nonprofits.

“Statement 164 will provide important information to users of financialstatements regarding not-for-profit organizations that have merged oracquired an entity,” said FASB project manager Jeffrey Mechanick. 


FAS 164 is effective for mergers occurring on or after Dec. 15, 2009, and acquisitions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after Dec. 15, 2009.

Statement 164 can be found online at www.fasb.org.

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