[armen]

Dear Tutor,
Let me explain two approaches for my earlier example :
1 calculation is:
The deferred consideration that must be transferred plus liabilities that obtained during acquisition i.e :
KUSD 584,000 -(-KUSD 366,000) =KUSD 950,000 Goodwill or

2 calculation is
The deferred consideration that must be transferred plus liabilities that obtained during acquisition i.e :
KUSD 584,000 -(KUSD 366,000) =KUSD 288,000 Goodwill

In my opinion there may be 3-rd treatment as such:
3 .Deferred consideration + new (obtained as result of acquisition) liabilities = Loss recognised in parent’s PL&OCI .
KUSD 584,000 -(-KUSD 366,000) =KUSD 950,000 Loss

In case if other treatment according to IFRS 3: Business acquisition is applicable please provide.

Thanks for your time and effort.
Armen

[armen]

Hi,

Thanks for your prompt reply.

From the context of your answer it is apparent to me that for case mentioned earlier company A should treat this transaction as a business combination, but calculation of goodwill is possible in two ways :

1. In amount of 950 KUSD (950K =584K – (366K)) or

2. In amount of 218K USD (218 K= 584K-366K).

Which calculation comply with IFRS 3 Business combination requirements?

Could you please clarify?

Thanks in advance.

[Author]

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