FASB Issues ASU On Indemnification Asset Accounting
The June 2012 edition of our A&A Alert addressed a FASB April 2012 proposal to modify the Business Combinations Topic of the Accounting Standards Codification to address post-acquisition date accounting for certain indemnification assets.
In October 2012, FASB issued ASU 2012-06, Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution.
ASU 2012-06 was issued without modification of the provisions contained in the April proposed ASU. In summary, the ASU requires post-acquisition date changes in the value of an indemnification asset to be accounted for on the same basis as the change in the underlying asset subject to the indemnification.
For a summary of this ASU, see the article titled FASB Exposure Draft Clarifies Indemnification Asset Accounting in our June 2012 A&A Alert which is available by clicking here.
ASU 2012-06 is effective for both public and nonpublic entities for years, and interim periods within those years, beginning on or after December 15, 2012, with early adoption permitted.
The full text of the ASU is available by clicking here.
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