ADVANCED FINANCIAL ACCOUNTING & REPORTING (AFAR, Study notes of Advanced Accounting

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© IFRS 3 defines Business Combination as "Acquirer (parent) obtains (CONTROL over the acquiree (subsidiary)” * use ACQUISITION METHOD ONLY * Steps to consider under acquisition method: 1. Identify the ACQUIRER 2. Determine the ACQUISITION DATE 3. Determine the Consideration 4. Recognize & Measure the identifiable assets acquired, fiabilities assumed, any NCI in the acquiree 5. Recognize & Measure any resulting Goodwill or Gain on Bargain Purchase on business combination © FV of Consideration & Net Assets acquired shall be measured @ their ACQUISITION DATE FAIR VALUES * Such Fair Values are subject to ONE (1) - YR MEASUREMENT PERIOD from Acquisition Date. Changes in Values within that period are called MEASUREMENT PERIOD ADJUSTMENTS affecting ‘GW (GBP). Thus, generally, shall be accounted for RETROSPECTIVELY © BASIC FORMULA FY of Consideration Given Up 3000 note! (+) Non- Controlling Interest (NCI) 300K nate? (+) FV of Previously Held Interest 200 note? Initial Carrying Amount 2000 (-) FV of Net Assets Acquired (xxx) noted Goodwill (Gain on Barg. Purc.) 3000 nates Additional Notes * Asset Acquisition (a) Merger: A+B=Aord (0) Consolidation; A+B=€ *Stock Acquisition (a) wholly owned (100%) (b) partially owned (< 100% but > 50%)