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== If restructuring costs are committed by subsidiary itself BEFORE acquisition , provision is recognized. otherwise NOT.
==Can parent recognize restructuring provision after acquisition if it satisfies the strict criteria of ias 37 for restructuring provision?
(without starting another topic )
Is decommissioning cost or measurement for other provisions is different for IFRS 3 and in IAS 37.
if yes-How?
So There are two questions:
1-Restructuring Provision Recognition
2-Measurement of provisionsThe issue of provisioning before or after acquisition is covered in the course notes (Valdez and Venantas) and it comes down to a period apportionment issue
If I have interpreted your question correctly, it seems that you MAY be referring to the inconsistency in the treatment of CONTINGENCIES (I could have misinterpreted that and, if so, I apologise)
Yes, there appears to me also an inconsistency in that we DO account for contingent consideration on an acquisition whereas we merely disclose a contingency under 37
Did I answer / interpret you correctly?
Yes . What i asked is answered in the course notes you referred .But there is still confusion.
If any provision satisfies recognition criteria the provision or restructuring provision(as applicable) at acquisition , that will be recognized in consolidated accounts .(No addition or deletion in recognition criteria? )
Is it possible that any Provision/Restructuring provision not recognized according to ias 37 can be recognized while consolidation (say at acquisition) ?
Again, Valdez and Venantas! The issue of recognition of a provision as either pre or post acquisition is important for determining the net assets / retained earnings as at date of acquisition.
As you correctly state, if it’s a pre-acquisition provision, it shall still be included within the consolidated statement of financial position. Incidentally, if the provision is increased or decreased in the post-acquisition period, that adjustment will affect the post-acquisition retained earnings / profit for the year
A provision created after acquisition will affect the apportionment of the profits in the year of acquisition (Valdez and Venantas)
I’m not sure that I understand your question “Is it possible that any Provision/Restructuring provision not recognized according to ias 37 can be recognized while consolidation (say at acquisition) ?”
If it wasn’t recognised as at date of acquisition and there has been no provision created since acquisition, there’s no provision to consolidate. If it wasn’t recognised at date of acquisition, but has subsequently been created, then it will appear in the consolidated statement of financial position and will be deducted from the post-acquisition retained earnings / profit for the year.
Does that clear it up for you?
(Actually i am focussing over classification,recognition difference in business combination being different to normal restructuring provision]
if it wasn’t recognised as at date of acquisition and there has been no provision created since acquisition, there’s no provision to consolidate. If it wasn’t recognised at date of acquisition, but has subsequently been created, then it will appear in the consolidated statement of financial position and will be deducted from the post-acquisition retained earnings / profit for the year
Allright [ So you explained me that ONLY Restructuring provision that satisfies restructuring provision criteria- Will be restructuring provision for consolidation. IF it is not a restructuring provision, it will not be restructuring provision for consolidation even.There is NO SUCH THING as some Exemption or Addition in recognition criteria of restructuring provision for consolidation]
Is there a question in the above post? I can’t find one!
If not, then we’ll leave the thread with this, my reply. If there IS a question, please identify it
Thanks
There is NO SUCH THING as some Exemption or Addition in recognition criteria (provided by ias 37) of restructuring provision for consolidation ?
if this is right. We can leave the thread with this.
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