Mergers, acquisitions, and affiliation activities of not-for-profit (NFP) health care entities has increased significantly in recent years because of the current health care environment and the need for entities to work together.
Standards governing how NFP entities account for mergers and acquisitions have changed with SFAS 164 (codified as ASC 958-805 Not-for-Profit Entities: Mergers and Acquisitions) which became effective for years ending after December 15, 2009. Under the new regulations, if one NFP acquires or essentially obtains control over a target NFP, that target NFP’s assets and liabilities would be recorded on the acquirer’s balance sheet at “fair value.” This is quite different from the previous rules whereby the assets and liabilities would have been recorded at their carrying (book) value.
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