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On 1 July 20X7, Lime Co acquired 90% of Soda Co’s equity share capital. On this date, Soda Co had an internally generated customer list which was valued at $35m by an independent team of experts. At 1 July 20X7, Soda Co was also in negotiations with a potential new major customer. If the negotiations are successful, the new customer will sign the contract on 15 July 20X7 and the value of the total customer base would then be worth $45m.
What amount would be recognised for the customer list in the consolidated statement of financial position of Lime Co as at 1 July 20X7?
The answer is 35m.
Cn you explain why we record the internally generated customer list when we are not supposed to record internally generated customer list as intangible NCA in the SOFP.
Hi,
As part of IFRS 3 we include all assets and liabilities of the subsidiary acquired at fair value. This is done to more faithfully represent the amounts paid as part of the consideration on acquisition.
The customer list has a fair value of $35m at the acquisition date and so will be recognised in the group accounts at this value. It will still remain unrecognised in the individual accounts of the subsidiary as the rules being followed here would be under IAS 38.
Thanks
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