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Purchase Accounting Software for ASC 805

Gaapio handles the ASC 805 analysis and documentation behind a purchase price allocation — the business-combination screen, identifiable intangibles, contingent consideration and measurement-period adjustments — producing a memo and disclosure with every conclusion cited to the Codification.

Deals do not wait for the technical accounting queue to clear. The most common pattern we see is not a company getting purchase accounting wrong; it is a company that has closed several acquisitions and has not documented any of them yet, and now needs to catch up under audit.

The backlog is the real problem

A platform company closes acquisitions on a rhythm the finance team did not set. Each one needs a business combination screen, a purchase price allocation, an intangibles analysis, a memo, and eventually a disclosure. Any single one is manageable. Six of them, concurrent with a close calendar and a year-end audit, is how backlogs form.

And the cost of the backlog is rarely the accounting itself. It is that the reasoning behind decisions made eight months ago has to be reconstructed by someone who was not in the room, from a data room they no longer have clean access to.

Business combination or asset acquisition

The screen test and, where the screen is not met, the substantive-process assessment determine everything downstream — and both turn on judgments that need documenting at the time, not afterward.

Identifying the intangibles

Customer relationships, developed technology, trade names, non-compete agreements. Which exist, which are separable, and which the valuation specialist needs a defensible list of.

Contingent consideration

Earnouts classified as an asset, a liability or equity at inception under ASC 480 and ASC 815-40 — a classification that determines whether the arrangement is remeasured through earnings each period or left alone. And once it is remeasured, whether a given change belongs in goodwill or in earnings turns on whether it reflects facts that existed at the acquisition date or something that happened afterward. Both calls need the logic written down rather than assumed.

How Gaapio works an acquisition

  1. 1

    Read the purchase agreement. Upload the SPA and related documents. Gaapio pulls the terms that drive the accounting — consideration structure, earnout mechanics, indemnities, escrow, working capital adjustments, employment arrangements that may be compensation rather than consideration.

  2. 2

    Run the screen. Business combination or asset acquisition, against the ASC 805 criteria, with the analysis documented rather than assumed.

  3. 3

    Build the identifiable intangibles analysis. A defensible inventory of what was acquired, which is what your valuation specialist needs before they can do their work — and what the auditor will test their work against.

  4. 4

    Document consideration and contingencies. Fair value of consideration transferred, classification and measurement of contingent consideration, and the reasoning for each.

  5. 5

    Draft the memo and the disclosure. Reviewer-ready, cited, and structured to survive the scrutiny a fresh acquisition attracts. Measurement-period adjustments tracked and recognized as they are determined, rather than reconstructed at year end — the measurement period cannot exceed one year from the acquisition date.

500+
hours saved in six months
Multiple
acquisitions supported end-to-end

We closed multiple acquisitions this year with complicated purchase price accounting and complex earnout arrangements. We were able to upload the stock purchase agreements and the valuation reports prepared by our specialists, and have Gaapio review the valuation reports against the SPAs — catching inconsistencies and helping us tie the accounting back to the deal terms.

Controller, CPA

Where this sits relative to a valuation firm

Gaapio does not produce a valuation. If you need a fair value opinion on customer relationships, you need a specialist, and you will keep needing one.

What Gaapio does is everything around that engagement: the screen, the identifiable intangibles analysis that scopes the valuation, the consideration and contingency accounting, the memo, and the disclosure. Teams generally find that the specialist engagement gets shorter and cheaper when it starts from a documented list rather than a conversation.

Documented at the time

Judgments captured when they are made, with the supporting reasoning, so nothing has to be reconstructed later.

Consistent across a platform

Ten acquisitions handled the same way, which matters more than any single one being handled quickly.

Anchored to the Codification

The FASB Codification is licensed directly from the Financial Accounting Foundation, with a citation on every conclusion.

Built by CPAs

Including former Big Four. Structured around the review a first-year acquisition actually receives.

Frequently asked questions

Purchase price allocation is the common name for applying the acquisition method under ASC 805: recognizing the identifiable assets acquired and liabilities assumed at fair value, with goodwill as the excess of the consideration transferred — plus the fair value of any noncontrolling interest and of any previously held equity interest — over that net amount. Where the net runs the other way, it is a bargain purchase, which means reassessing the identification and measurement before recognizing a gain rather than booking negative goodwill.

Behind on purchase accounting?

Bring one deal — ideally the messiest one. We'll walk the ASC 805 analysis with you and show you what the documentation looks like.

Request a DemoTalk to a CPA

Related

References: FASB ASC 805, Business Combinations. This page is general information, not accounting advice for a specific entity.