Novartis

Novartis - Novartis : Experiences of Acquisition Accounting...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Novartis : Experiences of Acquisition Accounting under IFRS 3 Malcolm Cheetham Novartis Group Chief Accounting Officer Heidelberg – April 20, 2007
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 GCPAS Heidelberg 20.04.2007 Agenda ± Introduction to Novartis ± IFRS 3 ± IFRS vs US GAAP
Background image of page 2
3 GCPAS Heidelberg 20.04.2007 Novartis Group Key Figures - 2006 USD Sales 37.0 bn Operating income 8.2 bn Net income 7.2 bn Headcount 100,735 ± Quoted on the Swiss Exchange and NYSE (2000) ± Utilized IAS (now IFRS) as its primary reporting framework since 1993
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 GCPAS Heidelberg 20.04.2007 1 Sale to Nestlé due to be finalized in 2007 Our key divisions Pharmaceuticals ± ± ± Neuroscience ± ± Arthritis/Bone/Gastrointestinal/ Urology (ABGU) ± Infectious Diseases, Transplantation ± Ophthalmics ± Generics Sandoz ± Novel vaccines ± Diagnostics Consumer Health ± OTC (Over The Counter) ± Animal Health ± Medical Nutrition 1 ± Gerber ± CIBA Vision
Background image of page 4
5 GCPAS Heidelberg 20.04.2007 IFRS 3 – Business Combinations ± Replaces the old IAS 22 – Business Combinations ± Significant changes Method of accounting – Must use purchase method. Pooling of interests prohibited Assets & liabilities acquired – All identifiable assets, liabilities and contingent liabilities acquired are measured at 100% of fair value Goodwill - Not amortized but tested for impairment annually Negative Goodwill – Recognized in profit and loss immediately Restructuring costs – Only recognized to the extent that a liability exists at the acquisition date
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 GCPAS Heidelberg 20.04.2007 Key objectives of a purchase price allocation (PPA) ± The purchase method of accounting for a business combination consists of: separate recognition and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities at full fair value identification of goodwill if the purchase price exceeds the net assets acquired. Goodwill has to be justified by buyer specific synergies, acquired growth platform or acquired intangible assets (e.g. assembled workforce) not separately recorded ± The final result of the purchase price allocation is the opening balance sheet for the acquisition ± The PPA forms the basis for future amortization charges and for asset impairment tests
Background image of page 6
7 GCPAS Heidelberg 20.04.2007 Key types of identified assets Intangible Assets Property, Plant & Equipment Inventory Revaluation is always required since book value does not include a margin on the manufacturing activity and the use of intellectual property rights The revalued inventory is expensed to COGS over the period in which the acquired inventory is sold Revaluation is only needed, if the value of an item has increased substantially since it was acquired (e.g. land) Except for any land, the revalued PP&E is depreciated over the life of the asset Normally substantial gaps between book and fair values
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 32

Novartis - Novartis : Experiences of Acquisition Accounting...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online