The staff of the Securities and Exchange Commission has updated its guidance to reflect the latest rules on business combinations.

Staff Accounting Bulletin No. 112 amends and rescinds bits and parts of the accounting bulletin series to bring it into conformity with current authoritative accounting and auditing guidance and other SEC rules and regulations. The changes are intended to make the guidance consistent primarily with Financial Accounting Statement No. 141R, Business Combinations, and FAS 160, Noncontrolling Interests in Consolidated Financial Statements.

The various adjustments described in SAB 112 reflect changes in accounting rules such as FAS 141R’s renaming of the “purchase method” to the “acquisition method,” the requirement to expense rather than capitalize transaction costs, and the use of fair value to measure contingencies acquired in a business combination, among others.

Jeff Ellis, managing director at Huron Consulting Group and Steve Quinlivan, an M&A lawyer with the law firm Leonard, Street and Deinard, both described the changes as “housekeeping” in nature. “But (it is) a worthwhile read for lawyers and others who do public company merger and acquisition work for a refresher on pertinent topics,” said Quinlivan.

FAS 141R became effective with the beginning of 2009 to change the way companies account for mergers, acquisitions, and other types of business combinations, relying more heavily on fair-value measurements and changing the way entities are expected to account for contingencies. FAS 160 changes the way entities account for their minority, or non-controlling, interest in other business units.

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