PricewaterhouseCoopers is offering a free tip on how to account for tax uncertainties and valuation allowances acquired in a business combination.

Recently implemented rules on accounting for business combinations, found in ASC 850 Business Combinations, amended income tax accounting rules in terms of how to account for changes in valuation allowances on deferred tax assets and income tax uncertainties when those are acquired in a business combination.

The rules say that adjustments to those items subsequent to the acquisition date are generally recognized in income tax expense unless they qualify as measurement period adjustments, according to PwC. “Only adjustments that are recorded during the measurement period and which reflect new information obtained about facts and circumstances that existed as of the acquisition date are recorded as an adjustment to the acquisition accounting,” PwC wrote in an alert advising companies of the nuance.

The firm says the same guidance also applies to adjustments when those items were acquired in a business combination that was accounted for under earlier business combination rules. The alert walks through two practical examples to illustrate how the detailed application of the rule would apply in real situations.