when should we recognize intellectual property? Is it after it is developed or while it is being developed we can recognize provided we can reliably measure it? I came across a question where on acquisition a parent recognizes subsidiary’s intellectual property in fair value adjustments even though it was still not developed? Please explain……..
All assets of a subsidiary should be accounted for at fair value as at date of acquisition. If development expenditure has been incurred but not recognised as an asset, it should be included at fair value.
Which is the question?
should i even recognise it at fair value even if it is being developed? Ok now the question is very huge its a consolidation one… The book value at the date of acquisition was 18m and the fair value at the date of acquisition is $22m for intellectual property and the description said currently being developed, the answer is $4m why? please explain………
Because the shareholders’ funds at date of acq already represent 18m ( plus all the other net assets ) at book value. what we need to find id the FAIR value of the assets at date of acqn
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