As companies are following new rules for booking a business combination, there’s good reason to put a little extra elbow grease into the initial valuations. If there are subsequent adjustments, they have to be made by revising and reissuing previously issued financial statements, warns PricewaterhouseCoopers in a recent alert.

It’s not a new twist on Accounting Standards Codification Topic 805, Business Combinations, originally adopted as Financial Accounting Standard No. 141(R), Business Combinations, and effective in 2009. Instead, PwC is calling attention to the fact that valuation adjustments can’t be made simply by adjusting future statements.

Under current rules, when companies acquire a business, they establish fair values for the individual assets and liabilities. If the valuation process is not complete for any particular items at the end of a reporting period in which the combination occurs, companies book “provisional” amounts. As new information emerges during the fair-value measurement period, the provisional amounts must be adjusted to reflect that new information.

“The provisional amounts should be adjusted to reflect new information about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized or not recognized,” PwC writes. “These adjustments, commonly referred to as ‘measurement period adjustments,’ should be applied retrospectively as of the date of the acquisition.”

That means going back and revising earlier published statements, an unpleasant pill to swallow. Jay Seliber, a partner at PwC, told Compliance Week previously that companies generally are getting more cautious and deliberate about establishing valuations as a result of this requirement. “The risk is if there is a change from the preliminary to the final allocation and it is material to the financial statements, the company will have to go back and revise the previous series of financial statements to reflect the final numbers,” he said.

The PwC alert walks through an example to illustrate how a change from provisional to final measurements would impact financial reporting. The firm reminds preparers that the guidance for “measurement period adjustments” is different from the guidance related to discontinuing operations, changes in segment presentation, and retrospective accounting changes.