Business combinations (ASC 805): disclosure examples

We make significant estimates, assumptions, and judgments when valuing assets acquired and liabilities assumed, especially with respect to purchased intangible assets, in connection with the initial purchase price allocation of an acquired business. Critical estimates in valuing certain purchased intangible assets include, but are not limited to, cash flows that an asset is expected to generate in the future, discount rates, the time and expense that would be necessary to recreate the assets, and the profit margin a market participant would receive on such recreated assets. The amounts and useful lives assigned to identified intangible assets impact the amount and timing of future amortization expense.

One of our business combinations has included post-closing payments contingent upon the occurrence of future events and/or certain conditions being met. Critical estimates used in valuing our contingent consideration obligation include, but are not limited to, estimated future cash payments related to customers entering into qualified new transactions and risk-adjusted discount rates used to present value the expected cash flows. These estimates and assumptions are updated to revalue our contingent consideration liability at the end of each reporting period. Accordingly, subsequent changes in underlying facts and circumstances could result in changes in these estimates and assumptions, which could have a material impact on the estimated future fair values of these obligations.

Recent Accounting Pronouncements

Refer to “Recently Adopted Accounting Pronouncements” and “Recently Issued Accounting Pronouncements” in Note 1. Description of Business and Summary of Significant Accounting Policies in Part II, Item 8 of this Annual Report on Form 10-K for a description of recent accounting pronouncements and our expectation of their impact, if any, on our results of operations and financial condition.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk

Our sales contracts are primarily denominated in U.S. dollars. A portion of our operating expenditures are denominated in foreign currencies, making them subject to fluctuations in foreign currency exchange rates. Additionally, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statement of operations. Foreign currency remeasurement gains and losses and foreign currency transaction gains and losses have not had a significant impact to our consolidated financial statements.

Purchase Price Allocation	Asset Life
Current assets	48
Intangible assets	770	2 - 5 years
Goodwill	1,748	Indefinite
Other assets	124
Assets acquired	2,690
Current liabilities assumed	83
Long-term liabilities assumed	13
Deferred tax liabilities, non-current	187
Net assets acquired	2,407

Identifiable intangible assets acquired in connection with the Moveworks acquisition (in millions) and the weighted-average lives are as follows:

Intangible Assets	Asset Life (years)
Developed technology	505	5
Customer relationships	220	5
Order backlog	25	2
Brand assets	20	4
Total	770

Goodwill, which is not deductible for income tax purposes, is primarily attributed to the value expected from synergies resulting from the business combination. The fair values assigned to tangible and intangible assets acquired, liabilities assumed and income taxes payable and deferred taxes are based on management’s estimates and assumptions. The provisional measurements of fair value for certain assets and liabilities may be subject to change as additional information is received. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

As contemplated by the terms of the merger agreement, in August 2025, the Company and Moveworks entered into a term loan credit agreement pursuant to which Moveworks drew $ 25 million. In December 2025, Moveworks drew an additional $ 5 million on the term loan credit agreement. The loan was settled on the closing date of the Moveworks acquisition.

Logik.io Inc.

On May 30, 2025, we acquired all outstanding shares of Logik.io Inc., a provider of an AI-powered, composable Configure, Price, Quote (“CPQ”) solution for total purchase consideration of $ 506 million, which consists primarily of approximately 2.1 million shares of ServiceNow common stock with a value of approximately $ 434 million and $ 62 million in cash. The fair value of the stock consideration is based on the May 30, 2025 closing price of ServiceNow common stock at $ 202.22 . The acquisition is intended to expand our growing CRM footprint and accelerate our sales and order management capabilities with the acquired CPQ solutions technology.

The allocation is subject to revision, as certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, the final valuation of property, plant and equipment and intangible assets acquired, which may impact the amount of goodwill recognized. The final valuation will be completed no later than one year from the acquisition date. The results for the acquired business are reported within our Midstream segment.

The purchase price allocation resulted in the recognition of $ 379 million in goodwill by our Midstream segment, all of which is deductible by MPLX for tax purposes. Goodwill represents the accelerated growth opportunities in the Permian using Northwind Midstream’s asset base, which is complementary and adjacent to MPLX’s existing Delaware basin natural gas system and offers optionality to direct volumes through our integrated system.

Pro forma financial information assuming the Northwind Midstream Acquisition had occurred as of the beginning of the calendar year prior to the year of the acquisition, as well as the revenues and earnings generated during the period since the acquisition date, were not material for disclosure purposes.

Divestiture of Rockies Operations

On November 12, 2025, MPLX completed the sale of its Rockies gathering and processing operations (the “Rockies”) to a subsidiary of Harvest Midstream (“Harvest”) for $ 980 million in cash. The transaction resulted in a gain of $ 159 million, which is included in net gain on disposal of assets on the accompanying consolidated statements of income. The sale of these non-core gathering and processing assets did not represent a strategic shift that has or will have a material effect on our operations or financial results. Prior to the sale, the Rockies operations were included in our Midstream segment.

Sale of Interest in Ethanol Joint Venture

On July 31, 2025, MPC sold its 49.9 percent interest in The Andersons Marathon Holdings LLC (“TAMH”) to The Andersons Ethanol LLC, in exchange for cash proceeds of $ 427 million. MPC’s equity method investment in TAMH was previously reported in the Refining & Marketing segment. Upon closing, MPC derecognized the carrying value of the equity method investment of $ 173 million and recorded a gain of $ 254 million, which is included in income from equity method investments on the accompanying consolidated statements of income.

BANGL, LLC Acquisitions

The company is currently evaluating the purchase price allocation for the transaction. Given the limited time since the acquisition date, it is not practicable to disclose the initial accounting, including the purchase price allocation, or unaudited pro forma combined financial information for this transaction at the time of this filing.

Operating Leases

As set forth in Note 11, “Commitments and Contingencies,” in February 2026, the Company entered into agreements for new office facilities located in the United States and Germany, with a total commitment of $ 85 million, net of tenant incentives expected to be received. These leases will commence on various dates starting in fiscal 2027 with lease terms ranging from 7.2 years to 12.3 years. The Company will recognize the related right-of-use assets and lease liabilities, which have not yet been determined, at the respective lease commencement dates.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of January 31, 2026. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of January 31, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

We allocate the purchase price of acquired companies to tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The amount of purchase price which is in excess of the fair values of assets acquired and liabilities assumed is recognized as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets. Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies, and are inherently uncertain.

The following are critical estimates in valuing intangible assets we have acquired or may acquire in the future and include but are not limited to:

• forecasted earnings before interest, taxes, depreciation, and amortization;

• forecasted net sales;

• customer attrition rates;

• royalty rates; and

• discount rates.

Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results. Different assumptions may result in materially different values for assets acquired and liabilities assumed, which may impact our financial position and future results of operations.

Goodwill

We account for goodwill acquired in a business combination in conformity with current accounting guidance, which does not allow for goodwill to be amortized. We review goodwill for impairment annually in the fourth quarter or when events and circumstances indicate an impairment may have occurred. The impairment assessment for goodwill is performed at the reporting unit level. The Company’s five reporting units are comprised of the Americas; Greater China; India; Asia; and Europe, Middle East & Africa. For segment reporting Greater China, India and Asia are aggregated into one reportable business segment, refer to “Note 13 — Segment Information” of the accompanying consolidated financial statements for more information.

We base the fair value of identifiable intangible assets acquired in a business combination, including in-process research and development (IPR&D), on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. We allocate any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination to goodwill. Further, for those arrangements that involve potential future contingent consideration, we record on the date of acquisition a liability equal to the fair value of the estimated additional consideration we may be obligated to pay in the future. We re-measure this liability each reporting period and record changes in the fair value through a separate line item within our consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount rates, periods, timing and amount of projected revenue or timing or likelihood of achieving regulatory, revenue or commercialization-based milestones. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, cash flows, discount rates, useful life or probability of achieving clinical, regulatory or revenue-based milestones could result in different purchase price allocations and recognized amortization expense and contingent consideration expense or benefit in current and future periods.

We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or adjustment to the remaining useful life. If we determine it is more likely than not that the asset is impaired based on our qualitative assessment of impairment indicators, we test the intangible asset for recoverability. If the carrying value of the intangible asset is determined not recoverable , we will write the carrying value down to fair value in the period the impairment is identified. We calculate fair value of our intangible assets as the present value of estimated future cash flows we expect to generate from the asset using a risk-adjusted discount rate. The use of alternative assumptions, including estimated cash flows, discount rates and alternative estimated remaining useful lives could result in different calculations of impairment.

The allocation is subject to revision, as certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, the final valuation of property, plant and equipment and intangible assets acquired, which may impact the amount of goodwill recognized. The final valuation will be completed no later than one year from the acquisition date. The results for the acquired business are reported within our Natural Gas and NGL Services segment.

The purchase price allocation resulted in the recognition of $ 379 million in goodwill by our Natural Gas and NGL Services segment, all of which is deductible for tax purposes. Goodwill represents the accelerated growth opportunities in the Permian using Northwind Midstream's asset base, which is complementary and adjacent to MPLX's existing Delaware basin natural gas system and offers optionality to direct volumes through our integrated system.

Pro forma financial information assuming the Northwind Midstream Acquisition had occurred as of the beginning of the calendar year prior to the year of the acquisition, as well as the revenues and earnings generated during the period since the acquisition date, were not material for disclosure purposes.

Divestiture of Rockies Operations

On November 12, 2025, MPLX completed the sale of its Rockies gathering and processing operations (the “Rockies”) to a subsidiary of Harvest Midstream (“Harvest”) for $ 980 million in cash. The transaction resulted in a gain of $ 159 million, which is included in Other income on the accompanying Consolidated Statements of Income. The sale of these non-core gathering and processing assets did not represent a strategic shift that has or will have a material effect on our operations or financial results. Prior to the sale, the Rockies operations were reported within the Natural Gas and NGL Services segment.

BANGL, LLC Acquisitions

The TRP Exchange has been accounted for under the acquisition method of accounting for business combinations in accordance with ASC Topic 805, “Business Combinations.” The following table represents the allocation of the total consideration transferred in the TRP Exchange to the identifiable assets acquired and the liabilities assumed based on the fair values at the acquisition date. The purchase price allocation was completed in December 2025.

The following table sets forth the Company’s purchase price allocation (in millions):

Total consideration	1,345
Fair value of liabilities assumed:
Suspense liabilities	( 8 )
Fair value of assets acquired:
Oil and natural gas properties	1,353
Net assets acquired and liabilities assumed	1,345

With the completion of the TRP Exchange, the Company acquired proved properties of $ 851 million and unproved properties of $ 502 million.

The results of operations attributable to the TRP Exchange since the acquisition date have been included in the consolidated statements of operations and were insignificant for the year ended December 31, 2024.

Endeavor Acquisition

On September 10, 2024, the Company completed its acquisition of Endeavor Parent, LLC (“Endeavor”) (the “Endeavor Acquisition”) for consideration consisting of (i) $ 7.1 billion in cash paid to the Endeavor equityholders, (ii) $ 238 million for the repayment of Endeavor’s net debt, which included the $ 219 million net debt position and the associated $ 19 million make-whole premium paid upon redemption of the senior notes and costs incurred to terminate Endeavor’s revolving credit facility, and (iii) approximately 117.27 million shares of the Company’s common stock. The Endeavor Acquisition included approximately 500,849 gross ( 361,927 net) acres, which are primarily located in the Permian Basin. Following the Endeavor Acquisition, the Company believes its inventory has industry-leading depth and quality that will be converted into cash flow with the industry’s lowest cost structure, creating a differentiated value proposition for Diamondback stockholders.

The cash consideration for the Endeavor Acquisition was funded through a combination of cash on hand, the net proceeds from the Company’s April 2024 Notes offering and borrowings under the Tranche A Loans. Immediately following the close of the Endeavor Acquisition, Endeavor equityholders held approximately 39.8 % of Diamondback’s common stock. As of December 31, 2025, Endeavor’s equityholders held approximately 35.8 % of the Company’s common stock.

In October 2023, we acquired Clearpath Robotics, Inc., including its industrial division OTTO Motors (Clearpath), a company that specializes in autonomous robotics for industrial applications, headquartered in Ontario, Canada. We recorded assets acquired and liabilities assumed in connection with this acquisition based on their estimated fair values as of the acquisition date of October 2, 2023. The aggregate purchase price allocation is as follows (in millions):

Purchase Price Allocation
Receivables	8
Inventory	22
Goodwill	283
Intangible assets	313
All other assets	11
Total assets acquired	637
Less: Deferred tax liability	( 9 )
Less: Liabilities assumed	( 19 )
Net assets acquired	609
Purchase Consideration
Cash consideration, net of cash acquired	566
Contingent consideration	43
Total purchase consideration, net of cash acquired	609

Intangible assets identified include $ 270 million of technology, $ 41 million of trademarks, and $ 2 million of customer relationships. We assigned the full amount of goodwill and all other assets acquired to our Intelligent Devices segment. The goodwill recorded represents intangible assets that do not qualify for separate recognition. This goodwill arises because the purchase price for Clearpath reflects a number of factors including the future earnings and cash flow potential for the business and resulting synergies from the business portfolio and industry expertise. We do not expect the goodwill to be deductible for tax purposes. The intangible assets were valued using an income approach, specifically the relief from royalty method and multi-period excess earnings method. The relief from royalty method calculates value based on hypothetical payments that would be saved by owning an asset rather than licensing it. The multi-period excess earnings method is the isolation of cash flows from a single intangible asset and measures fair value by discounting them to present value. These values are considered level 3 measurements under the U.S. GAAP fair value hierarchy. Refer to Note 1 for further information regarding levels in the fair value hierarchy. The key assumption requiring the use of judgement in the valuation of the technology asset was the obsolescence factor, where we estimated a phase out over 12 years; other assumptions included forecasted revenue growth rates and margin and the discount rate. The key assumption requiring the use of judgement in the valuation of the trademarks asset was the weighted average royalty rate of 2.05 percent; other assumptions included forecasted revenue growth rates and the discount rate.

The Company accounted for the Paycor acquisition as a business combination using the acquisition method of accounting in accordance with ASC 805. The assets acquired and liabilities assumed in the acquisition of Paycor were recorded at their respective fair values as of the acquisition date. Estimates of fair value represent management’s best estimate and require a complex series of judgments about future events and uncertainties. Third-party valuation specialists were engaged to assist in the valuation of certain assets and liabilities. The purchase price allocation as of the acquisition date was subject to change as additional information about the fair values of assets acquired and liabilities assumed became available. Measurement period adjustments were finalized within one year from the acquisition date.

The following table summarizes the components of the purchase consideration:

In millions, except per share amounts
Number of shares of Paycor common stock outstanding (1)	180.5
Cash consideration (per share of common stock)	22.50
Total cash consideration	4,060.6
Fair value of Paycor equity awards replaced by Paychex for pre-combination services (2)	25.1
Total equity consideration	25.1
Total purchase consideration	4,085.7

Represents outstanding shares of Paycor common stock as of April 11, 2025.

Represents the fair value of Paycor's stock-based compensation awards attributable to pre-combination services. ASC 805 requires that the fair value of replacements awards attributable to pre-combination service be included in consideration transferred.

Purchase Price Allocation

During fiscal 2026, the Company adjusted its purchase price allocation, which increased goodwill $ 4.2 million, primarily resulting from the write-down of a building by $ 4.9 million, net of deferred taxes of $ 1.9 million as a result of an updated valuation, offset by a reduction due to a change in deferred tax liability of $ 3.9 million primarily related to return-to-provision adjustments from the predecessor's final tax return. The impact of these changes on previously reported earnings was not material.

The acquired assets and assumed liabilities of Pearce were recorded at their estimated fair values. The purchase price allocation for the business combination is primarily for intangible assets acquired, and subject to change within the respective measurement period, which will not extend beyond one year from the acquisition date. Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined. Any such adjustments may be material.

CBRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the fair values assigned to the identified assets acquired and liabilities assumed at the acquisition date on November 4, 2025 (dollars in millions):

Assets Acquired:
Current assets	193
Property, plant & equipment	16
Intangible assets	600
Goodwill	608
Right-of-use and other assets	46
Total assets acquired	1,463
Liabilities Assumed:
Current liabilities	126
Deferred tax and other liabilities	149
Total liabilities assumed	275
Estimated Fair Value of Net Assets Acquired	1,188

In connection with the Pearce acquisition, below is a summary of the value allocated to the intangible assets acquired (dollars in millions):

IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable intangible asset and amortized over the asset’s estimated useful life. The functional currency of the acquired business is Canadian dollars, and the assets and liabilities are translated into U.S. dollars at each fiscal quarter-end period. The differences for goodwill and intangible asset between purchase price allocation and balance sheet result from currency translation rate changes.

The purchase price allocation is as follows (in thousands):

Cash and other assets	11,084
Goodwill	69,134
Intangible asset	17,200
Deferred tax liabilities	( 4,558 )
Other current liabilities and non-current operating lease liabilities	( 843 )
92,017

Comira

On February 25, 2026, the Company acquired 100 % of the equity interest of CoMira Solutions, Inc. (Comira), a high-speed connectivity IP innovator, for a total cash consideration of $ 35.1 million. This acquisition was primarily intended to bring specialized link layer, error correction and security semiconductor IP to support the development of new and advanced system-level solutions for scale-up and scale-out AI architectures.

The factors contributing to the recognition of goodwill were based upon the Company’s conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition. Goodwill recorded for the Comira acquisition is not expected to be deductible for tax purposes.

The following table summarizes the total purchase consideration (in thousands):