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Technical line: applying the definition of a business to oil and ...

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See appendix a of our frd, business combinations, for further information on accounting for asset acquisitions. 1. asc 450, contingencies. 2.
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What you need to know• Applying the new definition of a business may not reduce the number of oil and gastransactions that need to be accounted for as business combinations.• Upstream oil and gas entities that have adopted the guidance have found that theyneed to exercise significant judgment to apply the threshold for determining whethera set of transferred assets is not a business. They need to evaluate the riskcharacteristics of acquired properties, which can be challenging.• Midstream oil and gas entities need to evaluate whether transferred assets that wouldn’tbe a single identifiable asset in a business combination should be combined into a singleidentifiable asset for the purpose of applying the threshold. When the threshold is notmet, the presence of a SCADA system may represent a substantive process.• The guidance is effective for entities that are not public business entities for fiscalyears beginning after 15 December 2018 and interim periods within fiscal yearsbeginning aft...