Preference is given to the closing date nevertheless

This preview shows page 3 - 6 out of 9 pages.

preference is given to the closing date nevertheless if the situation supports any other date, the same will be taken as an acquisition date. The date will oblige the acquirer and acquiree to settle the asset and liabilities that are being legally written
Image of page 3
down for business combination and to be recorded at fair value. The same is considered after taking care of every possible situation in an agreement such as economical, operational, contingent, etc. The conditions which have been identified and decided by the acquirer and acquiree for operating and economic conditions including accounting policies at the date of acquisition such as: a) The value of a financial instrument is measured at fair value. The financial instrument includes financial assets and financial liabilities which are measured and recognized at the cost of amortization or through profit and loss account, AASB 9 [ CITATION AAS15 \l 16393 ]. Now, a possibility could also come into force where the fair value of financial assets is a route through other comprehensive income. b) Additionally, instruments of derivative also known as a hedging instrument are recognized as per AASB 9 [ CITATION AAS15 \l 16393 ] There is a component that also plays an important role in deciding the acquisition date that is non-controlling interest. If a cut off date is not decided, it is impossible to close the interest of the minority and decide the fair value as the same is considered for the basis of measurement. To define the impact on a larger scale, the contingent liability also comes into consideration to decide the date of acquisition. Contingent Liability is a liability as a result of a past event, an obligation is created for a future outflow of embodying economic benefits. Therefore, the same is valued at fair value only if the same can be measured reliably to record the transaction in the books of the business combination. As a result, the obligation is settled on the acquisition date by recording the transaction when there is an outflow of resources embodying the economic benefits. Additionally, the Acquisition Date also important to calculate the potential tax effects on transactions taken place for calculating the fair value. The difference arises due to temporary differences prior to the date of acquisition and on the date of acquisition which is being carried forward on the date of acquisition (AASB 112). Additionally, the date of acquisition is also decided to look into the aspects of indemnification of asset and liability which is measured at fair value on the acquisition date. So, the new point which is noted down in the discussion is that consideration that is received due to the effect of uncertainty in the collection of future cash flows is measured at fair value. Relatively, it allows acquiring to not measure it separately. Further, AASB 2 Share-Based Payment which arises on the acquisition date to assume the liability by acquirer which is related to equity instrument and payment transaction (AASB, 2015).
Image of page 4
Additionally, the Acquisition date for calculating the fair value of Assets held for sale is also considered to be important. The same is in accordance with AASB 5,
Image of page 5
Image of page 6

You've reached the end of your free preview.

Want to read all 9 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors