ACCA SBR ^UK Syllabus D. Financial Statements of Groups entities - Recognition and Measurement of Net Assets Acquired - Notes ^{4 / 34}

Acquired Assets And Liabilities

1. Recognition Principle 

   Identifiable Assets (& Liabs) and NCI are recognised separately from goodwill

2. Measurement Principle 

   All assets and liabilities are measured at acquisition-date FAIR VALUE

The acquirer looks at the contractual terms, economic conditions, operating and accounting policies at the acquisition date

For example, this might mean separating embedded derivatives from host contracts (See later in the course!)

However, Leases & Insurance contracts are classified on the basis of conditions in place at the inception of the contract.

Intangible Assets Acquired

• These must be recognised and measured at fair value even if the acquiree didn't recognise them before 

  This is because there is always sufficient information to reliably measure the fair value of these assets on acquisition

Contingent Liabilities

• Until settled, these are measured at the higher of:

  1)  The amount that would be recognised under IAS 37 Provisions
  2)  The amount less accumulated amortisation under IFRS 15 Revenue.