Definition of a Business: Drilling Down on the Oil and Gas Industry
This publication explains the definition of a business and includes examples from the upstream and midstream sectors.
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In 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01, Clarifying the Definition of a Business. The definition of a business is fundamental to the determination of whether transactions are accounted for as acquisitions (or disposals) of assets or businesses. That distinction impacts how the acquisition is treated in the financial statements, for instance, whether deal costs are capitalized or expensed. The primary goal of ASU 2017-01 was to narrow that definition, which is generally expected to result in fewer transactions qualifying as business combinations.
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