ii and iii will affect calculations only where the acquirer obtains control by

Ii and iii will affect calculations only where the

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(ii) and (iii) will affect calculations only where the acquirer obtains control by acquiring shares in the acquiree. for business combinations discussed in this chapter, goodwill is determined by comparing the consideration transferred by the acquirer with the net fair value of the identifiable assets and liabilities acquired. Consideration transferred = is measured at fair value at acquisition date is calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree, and the equity interest issued by the acquirer . In a specific exchange, the consideration transferred to the acquiree could include just one form of consideration, such as cash, but could equally well consist of a number of forms such as cash, other assets, shares and contingent consideration. These are considered in the following:
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Non-monetary assets. Non-monetary assets (property, plant and equipment, investments, licences and patents); Chapter 3 discusses how fair values are determined . The acquirer is effectively selling the non-monetary asset to the acquiree. Hence, it is earning income equal to the fair value on the sale of the asset. Where the carrying amount of the asset in the records of the acquirer is different from fair value, a gain or loss on the asset is recognised at acquisition date. This principle is explained in paragraph 38 of IFRS 3: ‘the acquirer shall remeasure the transferred assets or liabilities to their fair values as of the acquisition date and recognise the resulting gains or losses, if any, in profit or loss’. Use of a non- monetary asset such as plant as part of the consideration to acquire net assets results in the acquirer recording the following entries (assume a cost of plant of $180, a carrying amount of $150 and fair value of $155):. (p.380)
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  • Fall '17
  • Balance Sheet, Generally Accepted Accounting Principles, acquiree

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