KPMG has put together this whopping 615-page handbook on accounting for business combinations. To my knowledge, this is the first comprehensive resource from one of the Big 4 that addresses accounting for de-SPAC transactions. Check out this excerpt from the discussion of how to determine the accounting acquirer in a deal involving a SPAC:
The accounting acquirer determination in a SPAC merger is critical because it dictates the accounting basis of the merged entity. Additionally, determining the predecessor is often correlated with this determination, which affects the form and content of financial statements required in SEC filings. While the SPAC is typically the legal acquirer, the accounting does not always follow the legal form. In many cases, the target company (the legal acquiree) will be considered the accounting acquirer in what is referred to as a reverse recapitalization. When the SPAC is both the legal and accounting acquirer the transaction is commonly referred to as a forward merger.
Similar to a reverse acquisition involving a shell company (see Paragraphs 9.014 through 9.015), a reverse recapitalization is in substance the issuance of shares by the target company for the net monetary assets of the SPAC, accompanied by a recapitalization. This is because, in most cases, the SPAC will not meet the definition of a business and its only assets are cash and cash equivalents (e.g., nonmonetary assets are nominal).
Conversely, in a forward merger, the transaction is accounted for as a business combination or asset acquisition, depending on whether the target company meets the definition of a business (see Section 2). Because of the significance of the target company’s operations relative to those of the SPAC, the target company is usually considered the predecessor entity for SEC reporting purposes.
The handbook also addresses changes to the standards governing the treatment of deferred revenue in a business combination made by ASU 2021-08, which FASB adopted late last year.
– John Jenkins