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well i just want a reasssurance on this… fair adj at DOA are recognised as a pre acq res and shown in post acq as reserves have increased… so they will not be included in statement of p n l and other comp income if acq is done say 2 years ago right?
Any POST ACQUISITION movement WILL be reflected in the consolidated financial statements. For example, a revaluation reserve that existed at DOA is used in the goodwill calculation and is not reflected (except by its inclusion in the calculation of the goodwill figure) in the consolidated financial statements
But and post-acquisition movement in the revaluation reserve IS reflected, just the same as a post acquisition movement in retained earnings is reflected
Ok?
statement of profit and loss is for the year so it won’t include fv adj if acq is in prior accounting period right?
There may be a notional additional depreciation charge to be included within the year’s figures
At DOA there was a fair value adjustment to PPE of $2 million. The plant had a remaining estimated useful life of 5 years (so $400,000 additional depreciation for each of the next 5 years)
Although the increase in the value of the plant doesn’t go through PorL the additional notional depreciation must be included as a deduction in PorL
Ok?
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