Tan, Lim & Lee Chapter 3 © 2015 1

1.
Understand the difference between investor’s separate financial statements and the consolidated statements;
2.
Understand the differences and similarities in various mode of business combinations;
3.
Appreciate the acquisition method and its implications;
4.
Know how to determine the amount of consideration transferred;
5.
Understand the identification of the acquirer;
6.
Know how to recognize and measure identifiable net assets, liabilities and goodwill in accordance to IFRS 3; and
7.
Understand the nature of goodwill.
© 2015 Tan, Lim & Lee Chapter 3 2

1.
Introduction
2.
Overview of the consolidation process
3.
Business combinations
4.
Determining the amount of consideration transferred
5.
Recognition and measurement of identifiable assets, liabilities and goodwill
6.
Conclusion
© 2015 Tan, Lim & Lee Chapter 3 3

Governing rules and regulations
Separate financial statements
(Legal entity)
In accordance with corporate regulations
Possible exemptions for presentation
Tan, Lim & Lee Chapter 3
No exemption
© 2015
Consolidated financial statements
(Economic entity)
In accordance with IFRS 10
IFRS 10 allowed for exemptions by a parent if it’s :
 A wholly owned or partially owned subsidiary;

Debt or equity instruments not traded in public;
 Did not file financial statements for purpose of issuing instruments to public; and
 Ultimate parent produces consolidated financial statements.
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Separate financial statements
(Legal entity)
Income recognition Dividends
Investment in a subsidiary carried at:
• Cost (IAS 27) or
• As a financial instrument
(IFRS 9)
Asset recognition
Consolidated financial statements
(Economic entity)
Share of profits
Investment in a subsidiary:
• Investment is eliminated and subsidiary’s net assets are added to the parent (IFRS 10)
Investment in an associate carried at:
• Cost (IAS 28) or
• As a financial instrument
(IFRS 9)
Investment in an associate:
• Equity method (IAS 28)
© 2015 Tan, Lim & Lee Chapter 3 5

1.
Introduction
2.
Overview of the consolidation process
3.
Business combinations
4.
Determining the amount of consideration transferred
5.
Recognition and measurement of identifiable assets, liabilities and goodwill
6.
Conclusion
© 2015 Tan, Lim & Lee Chapter 3 6

Legal entities Economic entity
Parent’s
Financial
Statements
+
Subsidiaries'
Financial
Statements
+/-
Consolidation adjustments and eliminations
=
Consolidated financial statements
• Consolidation is the process of preparing and presenting the financial statements of a group as an economic entity
• No ledgers for group entity
• Consolidation worksheets are prepared to:
– Combine parent’s and subsidiaries financial statements
– Adjust or eliminate effects of intra-group transactions and balances
– Allocate profit to non-controlling interests
Tan, Lim & Lee Chapter 3 © 2015 7

• Intragroup transactions are eliminated to:
– Show the financial position, performance and cash flows of the economic (not legal) entity.
– Avoid double counting of transactions within the economic entity.
Example:
• Parent sold inventory to subsidiary for $2M
• The original cost of inventory is $1M
• Subsidiary eventually sold the inventory to external parties for $3M
Q: What is the journal entry to eliminate intragroup sales transaction?
Consolidation adjustment
Dr
Cr
Sales
Cost of sales
2,000,000
2,000,000
© 2015 Tan, Lim & Lee Chapter 3 8

Extract of consolidated worksheet
Sales
Cost of sales
Gross profit
Parent's
Income
Statement
$2,000,000
(1,000,000)
$1,000,000
Subsidiary's
Income
Statement
(2,000,000)
Consolidation elimination entries and adjustment
Dr
$3,000,000 2,000,000
Cr
2,000,000
Consolidated income statement
$3,000,000
Without elimination
$5,000,000
(1,000,000)
($3,000,000
)
$1,000,000 $2,000,000 $2,000,000
Note: Without elimination the consolidated sales and cost of sales figures will be overstated by $2 M.
* The consolidation process will be discussed in greater detail in Chap 4.
Tan, Lim & Lee Chapter 3 © 2015 9

1.
Introduction
2.
Overview of the consolidation process
3.
The acquisition method
4.
Determining the amount of consideration transferred
5.
Recognition and measurement of identifiable assets, liabilities and goodwill
6.
Conclusion
© 2015 Tan, Lim & Lee Chapter 3 10

Legal merger of net assets of acquired businesses into acquirer’s books
Tan, Lim & Lee Chapter 3
Business combinations
Examples: IFRS 3 App B:B6
Where an acquirer obtains control of one or more businesses (IFRS 3
App A)
Businesses become subsidiaries of acquirer
© 2015
Net assets of combining entities transferred to a newly-formed entity
Former owners of a combining entity obtains control of combined entity
11

• Business combinations may take different forms ; however two characteristics are present:
•
3 main attributes of control
• Power over acquiree
• Exposure or rights to variable returns of acquiree
• Ability to use power to affect acquiree’s returns.
•
2 vital characteristics of a business
(IFRS 3)
• Integrated set of activities and assets
• Capable of being conducted and managed to provide returns (i.e. dividends) to investors and other stakeholders.
Business combinations involving entities under common control is outside of scope of
IFRS 3
Tan, Lim & Lee Chapter 3 © 2015 12

• IFRS 3 requires all business combinations to be accounted for using the acquisition method from the perspective of an acquirer.
• An acquirer can obtain control in an acquiree through:
1. Acquisition of assets and assumption of liabilities of acquiree
 Include assets and liabilities not previously recognised by acquiree: contingent liabilities, brand name, in-process R&D etc.
2. Acquisition of controlling interest in the equity of acquiree
 Deemed to be effective acquisition of assets and assumption of liabilities of acquiree
 Control over an acquiree in substance means that acquirer has control over net assets of acquiree
 Effects: (2) accounted for as if they are effects of (1)
3. Combination of (1) and (2)*
 Effects: Accounted for as if they are effects of (1)
Tan, Lim & Lee Chapter 3 © 2015 13

• The procedures:
Identify the acquirer
Determine the acquisition date
Group financial statements if acquire subsidiaries
Recognize and measure the identifiable assets acquired the liabilities assumed and any non-controlling interest in the acquiree; and
Recognize and measure goodwill or a gain from a bargain purchase
4-step approach:
IFRS 3:5
© 2015 Tan, Lim & Lee Chapter 3 14

• IFRS 3 requires the identification of the acquirer in all circumstances
– Acquirer is the entity that obtains control of another combining entities
– Concept of control is based on IFRS 10 but the standard may not always conclusively determine the identity of the acquirer.
– IFRS 3 Appendix B provides additional criteria to identify controlling acquirer.
Tan, Lim & Lee Chapter 3 © 2015 15

Additional control criteria under IFRS 3 Appendix B
Based on consideration transferred
Acquirer is the entity that:
• Transfers cash or other assets or incurs liabilities to acquire another entity
 Issues shares as consideration to acquire shares of another entity
 Pays a premium over the fair value of the equity interest
Tan, Lim & Lee Chapter 3
Based on entity size Based on dominance
Acquirer is the entity:
• Whose owners hold the largest relative voting rights in a combined entity
• Whose owners hold the largest minority voting interest in the combined entity (if no other entity has significant voting interest)
• Which is larger in size
© 2015
Acquirer is the entity:
• Whose owners have the ability to elect, appoint or remove a majority of directors
• Whose management is dominant in the combined entity
•Who initiates the business combination
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• Reverse acquisition
– Legal parent is the acquiree and legal subsidiary is the acquirer
– Often initiated by the legal subsidiary
– Motive for entering into such an arrangement often to seek a backdoor listing
• Exchange of shares in a reverse acquisition
1. Company A (Legal parent) takes over shares of Company B from owners
Company A
(Legal parent)
Owners of Company B
(Legal subsidiary)
2. Company A issues own shares to owners of Company B as purchase consideration
Company B
(Legal subsidiary)
Tan, Lim & Lee Chapter 3
3. Company B has the power and ability to affect the returns of the legal parent after the share exchange
© 2015 17

Example
On 1 July 20x5, P (private), arranged to have all its shares acquired by L
(public listed). The arrangement required L to issue 20 million shares to P’s shareholders in exchange for the existing 6 million shares of P . Existing shareholders of L owned 5 million of L.
After the issue of 20 million L shares, P’s shareholders now owned 80% (20 million shares out of a total of 25 million shares) of the issued shares of the combined entity. L’s shareholders owned 20% of the shares in the combined entity after the share issue. P’s shareholder act in concert to exercise control over the combined entity.
L’s shareholders
(5 million shares)
20% 80%
P
’s shareholders
(20 million shares)
L
100%
P
© 2015 Tan, Lim & Lee Chapter 3 18

1.
Introduction
2.
Overview of the consolidation process
3.
Business combinations
4.
Determining the amount of consideration transferred
5.
Recognition and measurement of identifiable assets, liabilities and goodwill
6.
Conclusion
© 2015 Tan, Lim & Lee Chapter 3 19

Consideration transferred*
=
Fair value of assets transferred
+ Fair value of liabilities incurred
+ Fair value of equity interests issued by acquirer to former owners
+
Fair value of contingent consideration
• *Fair value (FV) of the consideration transferred:
– Determined on the acquisition date
– Acquisition date is the date when the acquirer obtains control and not the date when consideration is transferred
– Acquisition-related costs are not included
© 2015 Tan, Lim & Lee Chapter 3 20

• If assets transferred or liabilities assumed are not carried at fair value in the acquirer’s separate financial statements:
– Remeasure in fair value and recognize gain or loss in the acquirer’s separate financial statements
– Remeasured gain or loss is not recognized if the asset or liabilities remain in the combined entity’s financial statements
• If transfer of monetary assets or liabilities are deferred, the time value of money should be recognized:
– The fair value will be the present value of the future cash outflows
– Eg. Future cash settlement of $1,000,000 is due 3 years later and 3% interest is levied
Present value to be recognised = $1,000,000/ (1+0.03)^3
= $915,142
Tan, Lim & Lee Chapter 3 © 2015 21

• Fair value of equity interests issued is measured:
– (1) By market price (e.g. published quoted prices of shares)
– (2) With reference to either the acquisition date fair value of the acquirer
OR acquiree, whichever is more reliable. (For example, if market price is not available or not reliable for the acquiree, use the fair value of the acquirer)
•
Illustration of (2)
Acquirer
Issues X number of shares
Owners of Acquiree
Conveys A number of shares to acquirer
Total number of shares after issue: Y
FV of acquirer’s equity: $Z
Gains control over acquiree
Acquiree
FV of equity issued is either:
• X/Y multiplied by $Z; or
• A/B multiplied by $C
Tan, Lim & Lee Chapter 3 © 2015 22

P Ltd acquires 100% of S Co through an issue of 5,000,000 shares to the owners of S Co.
Number of existing shares
Number of new shares issued
Market price per share
Fair value of equity
P Ltd
10,000,000
5,000,000
$2.00
30,000,000
S Co
2,000,000
-
-
9,000,000
Tan, Lim & Lee Chapter 3 © 2015 23

Situation 1: P Ltd’s market price is a reliable indicator
Consideration transferred = 5,000,000 shares x $ 2.00
= $10,000,000
Situation 2: Fair value of S Co is a better estimate
Consideration transferred = $9,000,000
Explanation: Since P Ltd is acquiring 100% of S Co, the fair value of the equity (FV of S Co. as a whole including the implicit goodwill) acquired by P is $9 million.
© 2015 Tan, Lim & Lee Chapter 3 24

Q1: P Ltd’s market price is a reliable indicator
Consideration transferred = 5,000,000 shares x $ 2.00
= $10,000,000
Q2: P Ltd’s market price is not a reliable indicator; a proportional interest in the fair value of P Ltd is a better estimate
Consideration transferred = (5,000,000/15,000,000) x $30,000,000
= $9,000,000
Q3: Fair value of S Co is a better estimate
Consideration transferred = $9,000,000
© 2009 Tan & Lee Chapter 3 25

• Contingent consideration
– Obligation (right) of the acquirer to transfer (receive) additional assets or equity interests to (from) acquiree’s former owner if specific event occurs
• Eg. Event A : acquirer gets a refund of part of the consideration transferred if the acquiree does not achieve the target profit
• Fair value of contingent consideration or refund will change as new information arises
– Fair value of the contingent consideration has to be estimated ( For event A ) is deducted from consideration transferred
– Fair value of contingent consideration is adjusted retrospectively as a correction of error if events after acquisition reveal information that was missed or misapplied during the acquisition date
Tan, Lim & Lee Chapter 3 © 2015 26

• All acquisition-related costs are expensed off
• Costs of issuing debt are recognized in accordance with IAS 39
– As yield adjustment to the cost of borrowing and are amortized over the tenure of the loan
– Journal entry for the payment of debt issuance cost
• Costs of issuing equity are recognized in accordance with IAS 32
– A reduction against equity
– Journal entry to record the payment of cost of issuing equity
© 2015 Tan, Lim & Lee Chapter 3 27

1.
Introduction
2.
Overview of the consolidation process
3.
Business combinations
4.
Determining the amount of consideration transferred
5.
Recognition and measurement of identifiable assets, liabilities and
6.
Conclusion
© 2015 Tan, Lim & Lee Chapter 3 28

Business Combinations are accounted under the acquisition method
Requirement: At acquisition date, the acquirer will recognize acquiree’s net assets at fair value
Underlying assumption:
There has been an exchange transaction at arm-length pricing
There is an effective ”acquisition” of the subsidiary’s identifiable assets and liabilities at fair value
© 2015 Tan, Lim & Lee Chapter 3 29

• Identifiable net assets (INA) must comply with two conditions to qualify for recognition:
– (1) INA must meet the definition of an asset or a liability
– (2) INA must be priced into the consideration transferred and not a separate stand-alone transactions
• Concept of separate transactions:
– Transaction that is entered into for the benefit of acquirer rather than acquiree
– Pre-existing relationship with acquiree – for e.g. as a supplier – the payment for the goods is separate from the consideration transferred
– However, certain pre-existing relationship can be classified as
“reacquired rights” and should be recognized as an intangible asset on the basis of the remaining contractual term of the contract
– for e.g.
Reacquiring franchised rights granted to acquiree
Tan, Lim & Lee Chapter 3 © 2015 30

Book value of subsidiary’s identifiable net assets
Tan, Lim & Lee Chapter 3
Fair value differential
Fair value of subsidiary’s identifiable net assets
© 2015
At acquisition date:
• Fair value differential will be recognized in the consolidation worksheet
In subsequent years:
• Depreciation/amortization/ cost of sale of asset will be based on the fair value recognized at the acquisition date
These entries have to be reenacted every year until the disposal of investment
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• Classification of identifiable assets or liabilities is made with respect to:
1. Information;
2. Conditions; and
3. Corporate policies existing as at acquisition date
Example: Bond investment
Classified as Availablefor-sale securities
Reclassified as held-tomaturity according to acquirer’s group policy
Under a cquiree’s financial statements
Under consolidated financial statements
Tan, Lim & Lee Chapter 3 © 2015 32

• IFRS 3 requires the acquirer to recognize the fair value of an acquiree’s unrecognized identifiable asset (e.g. intangible asset) in the consolidated financial statements
– Rationale: the acquisition event justifies recognition of intangible assets
– Do not provide guidance on measurement of fair value of the recognized intangible asset
• To qualify for recognition, the intangible asset must either:
1.
Be Separable (“Separability criterion”)
OR
2.
Arises from contractual or other legal rights (“Contractual-legal criterion”)
Example of intangible assets: Brand names and customer relationships – When Heineken acquired APB; it acquired the iconic
Tiger Beer Brand.
Tan, Lim & Lee Chapter 3 © 2015 33

Are these considered intangible assets?
Assembled workforce with specialized knowledge
Potential contracts or contracts under negotiation
× No: Firm-specific and integrated with acquiree
× (Fails separability criterion)
× No: Fails separability or contractual-legal criterion
Opportunity gains from an operating lease in favorable market conditions
Customer and subscriber lists of acquiree
 Yes: Meets the contractual-legal criterion
 Yes: Meets the separability criterion
(show evidence of exchange transactions for similar types of lists)
Tan, Lim & Lee Chapter 3 © 2015 34

• Contingent liabilities are recognized by acquirer if they are:
– Present obligations arising from past events and
– Reliably measurable, even if outcome is not probable (IFRS 3:23)
• Example: Provisions for restructuring & termination costs are recognized if they are:
Probable outflow of economic resources
Reliably measurable
Present constructive or legal obligations arising from past events
© 2015 Tan, Lim & Lee Chapter 3 35

• Contractual indemnity
– Provided by the former owners of the acquiree to the acquirer to make good any subsequent loss arising from contingency or an asset or a liability
• Treatment for indemnity
– The acquirer has to recognize an “indemnification asset” at the same time the indemnified asset or liability is recognized
– The indemnification asset is measured on the same basis as the indemnified asset or liability
• Example: An acquiree is exposed to a contingent liability. Based on probabilistic estimation, the FV of the contingent liability is $100,000. The former owners provide a contractual guarantee to indemnify the acquirer of the loss.
– In the consolidated balance sheet, the acquirer recognizes contingent liabilities and an indemnification asset of $100,000 at FV
Tan, Lim & Lee Chapter 3 © 2015 36

• The recognition of fair value differential may give rise to future tax payable or future tax deduction
– tax effects need to be accounted for because the basis for taxation does not change in a business combination
– i.e. The excess of fair value over book value of identifiable net assets will give rise to a taxable temporary difference and vice versa.
FV > Book value of identifiable assets Deferred tax liabilities
FV < Book value of identifiable assets Deferred tax assets
FV < Book value of identifiable liabilities Deferred tax liabilities
FV > Book value of identifiable liabilities Deferred tax assets
• No deferred tax liability is recognized on goodwill as goodwill is a residual
Tan, Lim & Lee Chapter 3 © 2015 37

• Non-controlling interests (NCI) arises when acquirer obtains control of a subsidiary but does not have full ownership of voting rights.
• In a business combination, NCI are recognized by the acquirer as equity based on the following equation
– Rationale: To represent outside interests’ share in the net assets of the acquiree
= Equity Assets
Carrying amount of acquirer’s assets +
Acq date FV of acquiree’s identifiable assets +
Goodwill
Tan, Lim & Lee Chapter 3
Liabilities
Carrying amount of acquirer’s liabilities +
Acq date of
FV of acquiree’s identifiable liabilities
© 2015
Acquirer’s equity + NCI share of equity of acquiree
38

• IFRS 3 allows NCI at acquisition date to be measured at either:
– Fair value; or
– The present ownership instruments’ proportionate share in the recognized amount of identifiable assets
Fair value method
• Obtain a reliable measure of fair value of NCI (e.g. quoted price in active market)
Proportionate share of identifiable assets method
• Applies present ownership interests held by NCI to the recognized amounts of identifiable net assets to determine initial amount of NCI
• In absence of quoted price, use valuation techniques to value
NCI (e.g. peer companies’ valuation or appropriate assumptions)
• If NCI have potential ordinary shares, they should be measured at fair value
Tan, Lim & Lee Chapter 3 © 2015 39

• A premium that an acquirer pays to achieve synergies from business combination
– Must be recognized separately as an asset
– Determined as a residual
• IFRS 3 allows 2 ways of determining goodwill:
Goodwill
= -
Fair value of consideration transferred
+
Fair value of non-controlling interests
+
Fair value of the acquirer’s previously held interest in the acquiree
Acquiree’s recognized net identifiable assets measured in accordance with
IFRS 3
Fair value of noncontrolling interests
Measured at fair value at acquisition date
(include goodwill)
Tan, Lim & Lee Chapter 3 © 2015
Measured as a proportion of identifiable assets as at acquisition date
40

Depends on reliable measurement of consideration transferred,
NCI, previously held equity interests and identifiable net assets
Integral to the entity as
An expectation of future economic benefits arising from acquisition as a standalone asset
Integral to the entity as a a whole, not individually identifiable or severable as a standalone asset
Tan, Lim & Lee Chapter 3 © 2015 41

• The “top-down approach” (Johnson and Petrone, 1998) results in measurement errors in goodwill
Consideration transferred +
Fair value of non-controlling interests
Overpayment for an acquisition or overvaluation of consideration transferred
Identifiable net assets
Measurement and recognition errors
The above errors should not be included as part of “goodwill”
Tan, Lim & Lee Chapter 3 © 2015
Goodwill
IFRS 3 suggests that the “one-year
“measurement period” is important to rectify measurement and recognition errors to ensure the accuracy and
“purity” of goodwill
42

• In a “bottom-up” approach (Johnson and Petrone, 1998):
Goodwill
Internally-generated
Goodwill
(Core Goodwill)
Fair value of synergies
(Combination goodwill)
• “Going concern element” and represent the ability of acquiree to generate higher rate of return than from its individual assets
Tan, Lim & Lee Chapter 3
•
Generated from the unique combination of the acquirer and acquiree
• FV of the group > than sum of FV of individual entities
© 2015 43

Illustration 1
On 1 July 20x1, P purchased 1.5 million shares from S Co’s existing owners.
Total number of shares issued by S Co was 2 million. A reliable FV of S Co’s share was $10/share. P Co was obligated to pay an additional $1 million to vendors of S Co if S Co maintained existing profitability over the subsequent two years from 1 July 20x1. It was highly likely that S Co would achieve this expectation and the fair value of the contingent consideration was assessed at
$1 million. FV of NCI as at 1 July 20x1 was $5 million. Assume a tax rate of
20%
Additional information of S Co.
• Book value of net assets: $3,650,000
• FV of net assets : $14,350,000
• FV less book value (net assets): $10,700,000
• Share capital: $2,000,000
• Retained earnings: $1,650,000
Tan, Lim & Lee Chapter 3 © 2015 44

Determine the acquirer's interest in the acquiree:
Percentage ownership =
1,500,000
2,000,000
(75%)
Consideration transferred: = ($1,500,000 x $10) + $1,000,000 [FV of contingent consideration]
= $16,000,000
Determine goodwill: Consideration transferred + FV of NCI – FV of identifiable net assets at acquisition date
Determine deferred tax liability of (20% x $10,700,000) = $2,140,000
Determine FV of identifiable net assets = $14,350,000 - $2,140,000 = $12,210,000
Goodwill = $16,000,000 + $5,000,000 - $12,210,000 = $8,790,000
© 2015 Tan, Lim & Lee Chapter 3 45

• A gain from bargain purchase arises when:
Fair value of consideration transferred
+
Fair value of non-controlling interests
+
Fair value of the acquirer’s previously held interest in the acquiree
<
Acquiree’s net identifiable assets measured in accordance with
IFRS 3
• In essence, a windfall gain to acquirer
• The acquirer must re-assess the fair value of identifiable net assets, consideration transferred and non-controlling interests. If there is no measurement error:
– The gain will be recognized immediately in the income statement
© 2015 Tan, Lim & Lee Chapter 3 46

• IFRS 3 allows adjustments to be made retrospectively to “provisional amounts” relating to goodwill, fair value of identifiable net assets and consideration transferred if:
– New information about facts and circumstances existing at acquisition date arises,
– Within 1 year of acquisition date (“Measurement period”)
• Events and circumstances arising after acquisition date does not lead to measurement period adjustments
• Adjustments only allowed because of incorrect or incomplete information available as at acquisition date but was missed or misapplied
• After measurement period (1 year), any correction of errors will be deemed as a prior - period adjustment (IAS 8)
• Exception: Any change in estimate arising from information on new events and circumstances arising after acquisition date will be recognized in the current period
• Example: acquirer may fail to obtain information on all contracts of acquiree as at acquisition date
Tan, Lim & Lee Chapter 3 © 2015 47

Error: Discovery of info on facts and circumstances existing as of acquisition date
Acquisition date
Change in estimate:
Circumstances arising after acquisition date
Tan, Lim & Lee Chapter 3
Retrospective change: Adjust goodwill, fair value of identifiable net assets, fair value of NCI as if the accounting was completed on acquisition date
Any correction of error after end of measurement period requires prior period item disclosures
12 months
End of measurement period
Prospective change: no correction of goodwill, fair value of identifiable net assets or fair value of NCI
© 2015 48

• All business combinations are characterized by three conditions:
1. Existence of acquirer
2. Acquirer has control over an acquiree
3. Acquiree is a business
• Many modes of business combinations:
– Acquirers acquires net assets of the business
(Consequence: Assets and liabilities acquired recognized in the acquirer’s legal entity financial statements)
– Acquirer acquires control over the equity of the acquiree
(Consequence: acquirer and acquiree retain separate legal identities but economically, these entities belong to same group)
– Regardless of form, economic substance of combination is the same and acquisition method should be applied
Tan, Lim & Lee Chapter 3 © 2015 49

• Acquisition method
– Identify acquirer with reference to the control criteria of IFRS 10
– Recognize and measure identifiable net assets at fair value at acquisition date
– Goodwill is a residual figure and is determined on a “top-down” approach
 May include recognition and measurement errors and identifiable elements
• Measurement period
– Acquirers are allowed a 12 month measurement period to correct and revise the following on a retrospectively basis:
1. Provisional amounts of goodwill
2. Fair value of identifiable net assets
3. Fair value of Non-controlling interests
4. Fair value of previously held interests
Tan, Lim & Lee Chapter 3 © 2015 50