Question
The consideration transferred in a business combination was 84,000. Transaction costs amount to 1,800. The fair value of the acquirees net assets at the acquisition
The consideration transferred in a business combination was 84,000. Transaction costs amount to 1,800. The fair value of the acquirees net assets at the acquisition date was 97,000. The acquirer has not yet decided whether to measure the 25% non-controlling interest (NCI) in the acquiree at the NCI interest holders proportionate share of the fair value of the acquirees net assets, which is 24,250, or at the NCIs fair value, which is 26,000. The acquirer entered into another business combination in the prior year and measured NCI at fair value in that instance. Is the amount of goodwill recognized by the acquirer on the acquisition date for the business combination executed in the current year impacted by its choice of measurement method for NCI?
Yes, it is. The measurement method is elected on a transaction-by-transaction basis. Therefore, if the acquirer values the NCI at its proportionate share of the fair value of the acquired business, the goodwill amounts to 11,250; if the acquirer values the NCI at its fair value, then the goodwill amounts to 13,000.
Yes, it is. The measurement method is elected on a transaction-by-transaction basis. Therefore, if the acquirer values the NCI at its proportionate share of the fair value of the acquired business, the goodwill amounts to 13,050; if the acquirer values the NCI at its fair value, then the goodwill amounts to 14,800.
Yes it is. The selection of a measurement method is a one-time accounting policy choice that must be consistently applied to all business combinations that occur on and after the date of election. If the acquirer wishes to change its policy election, it is required to comply with the reporting requirements of IAS 8 Accounting policies, Changes in Accounting Estimates and Errors.
No, goodwill recognized at the acquisition date is not impacted by the choice of measurement method for NCI because goodwill reflects the synergies expected to be realized from the acquisition by the controlling parent and the non-controlling interest holder does not participate in such synergies.
Which of the following items is an acquirer not required to disclose to enable users of the financial statements to evaluate the nature and financial effect of a business combination?
All of the options are required disclosures
The amount of acquisition-related costs, including separate disclosure of the amount of those costs recognized as an expense and the line item in the statement of comprehensive income in which those expenses are recognized, and the amount of any issue costs not recognized as an expense and how they were recognized.
The acquisition-date fair value of the total consideration transferred with a breakdown of its components into each major class.
The amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed.
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