Since government combinations rarely occur in state government, there is not a separate note to disclose. If a state agency is involved in a government combination that is related to deferred outflows of resources or deferred inflows of resources, disclose the government combination(s) in Note 28.

For all government combinations, the state agency must disclose the following in an additional (supplemental) note in the period the combination occurs:

• A brief description of the government combination. Identify the entities involved and indicate whether the participating entities were within the same financial reporting entity.
• Date of the combination
• Primary reason(s) for the combination

Government Mergers and Transfers of Operations

The new or continuing state agency that results from a merger or transfer of operations must disclose:

• Amounts recognized as of the merger date or the effective transfer date, such as:
  • Total assets (distinguish between current assets, capital assets and other assets)
  • Total deferred outflows of resources
  • Total liabilities (distinguish between current and noncurrent amounts)
  • Total deferred inflows of resources
  • Total net position by component
• A brief description of the nature and amount of significant adjustments made for the purpose of:
  • Bringing the individual accounting policies of the state agencies involved into conformity
  • Adjusting for impairment of capital assets resulting from the merger or transfer
• If the initial amounts are different from the final amounts, the new or continuing state agency discloses the initial amounts before the significant adjustments above to reach the final amounts recognized as of the merger or transfer above.

Government Acquisitions

In the period of acquisition, the acquiring state agency discloses:

• A brief description of the consideration provided
• The total amount of the net position acquired as of the acquisition date
• A brief description of contingent consideration arrangements (including the basis for determining the contingent payments)

Disposals of Government Operations

The disposing state agency discloses:

• Identification of the operations and description of the facts and circumstances leading to the disposal of the operations
• The following amounts if these amounts are not presented separately in the financial statements:
  • Total proprietary fund revenues and expenses – distinguish between operating and non-operating (if applicable)
  • Total governmental fund revenues and expenditures (if applicable)

Sample

Sample University finalized the acquisition of a private ABC University Law School in Texas on Aug. 1, 20XX for the purpose of enhancing the academic ranking of the Sample University by having a law school. ABC University Law School is not part of the financial reporting entity of the state.

As of the Aug. 1, 20XX acquisition date, the net position of ABC University Law School acquired by Sample University was $15,000,000.00. Sample University provided $25,000,000.00 consideration to ABC University Law School for the purchase. No contingent consideration arrangements were made. The excess of the consideration provided over the net position acquired of ABC University Law School is reported by Sample University as deferred outflows of resources and amortized over a ten-year contract period. The outstanding deferred outflows of resources as of Aug. 31, 20XX was $9,916,666.67. The amortization expense for fiscal 20XX was $83,333.33.

For a sample of deferred outflows of resources and deferred inflows of resources, see Note 28.