Consolidating at date of acquisition

This topic has 2 replies, 2 voices, and was last updated 12 years ago by rabmccann.

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October 13, 2013 at 10:37 pm #142721
rabmccann
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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
October 14, 2013 at 1:54 pm #142747
Sangria9
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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.
October 14, 2013 at 2:24 pm #142750
rabmccann
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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.

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