Popular Courses. Login Advisor Login Newsletters. What is Acquisition Accounting? Tangible assets and liabilities : Assets that have a physical form, including machinery, buildings, and land. Intangible assets and liabilities : Nonphysical assets, such as patents, trademarks, copyrights, goodwill, and brand recognition. If possible, the fair value of non-controlling interest can be derived from the share price of the acquiree.
IFRS Standard: IFRS 3 Business Combinations
Calculations must be provided for any future payment obligations. Goodwill : Once all those steps have been taken, the purchaser must then calculate if there is any goodwill. There is a presumption that where goodwill is present in an acquisition, a business is being acquired. All business combinations are treated using the acquisition method. There are 4 key elements of applying the acquisition method:. Though it is not usually difficult to find who is the acquirer in a business combination, difficulties may arise in case of merger of equals, or reverse mergers. Paras B14 to B18 provide guidance.
Primarily, the entity that either pays, or the one that issues equity shares for acquiring net assets is the acquirer. Other than these, there are several indicators mentioned in Para B However, many acquisitions state the date from which the acquisition will be operative. For instance, in India, it is common practice for courts to order a merger to take effect from a retrospective date.
There might be assets that the acquirer may recognize, but which the acquiree had not recognized — for example, patents or intangible assets that were self-developed by the acquiree. The IFRS permits acquisition of such assets.
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