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Where a subsidiary is acquired, “Intangible assets” of the subsidiary should be recognized by the parent regardless whether or not those intangible assets were recognized in the subsidiary’s individual accounts. In addition, those intangible assets should be recognized once it is separately identifiable, even if its value is difficult to reliably measure.
My question sir, doesn’t this goes against the recognition criteria outlined in the conceptual framework?
The intangible asset will be controlled by the acquirer following the acquisition which is one criteria but the framework also says that its cost must be reliably measured.
Kindly provide insight sir.
Hi,
It is deemed that the amount that we are paying to acquire the subsidiary is reflecting the value of the assets within the subsidiary, and therefore the intangible can now be measured (fair value). It was previously unrecognised as it wasn’t able to be measure reliably but our transaction price allows us to gain a measurement (of sorts?!?!?!).
Just remember that the intangible is only recognised in the group accounts at fair value and amortised/impaired and not in the individual accounts of the subsidiary.
Thanks
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