Summary of Statement No. 38

Accounting for Preacquisition Contingencies of Purchased Enterprises—an amendment of APB Opinion No. 16 (Issued 9/80)


This Statement specifies how an acquiring enterprise should account for contingencies of an acquired enterprise that were in existence at the purchase date and for subsequent adjustments that result from those contingencies. Amounts that can be reasonably estimated for contingencies that are considered probable are recorded as a part of the allocation of the purchase price. Subsequent adjustments are included in net income when the adjustments are determined except in limited circumstances described in this Statement.