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When consolidating a subsidiary, why is it important to consolidate fair values at the date of acquisition. I can calculate this but unaware of the theory attached.
Thanks
From IFRS 3:
paragraph IN5 Core principle: “An acquirer of a business recognises the assets acquired and liabilities assumed at their acquisition-date FAIR VALUES and discloses information that enables users to evaluate the nature and financial effects of the acquisition.”.paragraph IN8 “Each identifiable asset and liability is measured at its acquisition-date fair value…”.
Hope it helps.
Thanks for the reply.
I assume therefore that the financial effects of the acquisition such as the possibility of goodwill etc can be accurately calculated as a result of consolidating at the date of acquisition fair values. This in turn should allow for a more accurate presentation of the consolidated financial statements.
Thanks
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