How do you value reacquired rights?

It is not treated as a settlement of a pre-existing relationship because it continues to exist. In valuing the right, no value is attributed to the possibility of contract renewals (unlike many other contract-based intangibles). The reacquired right must be amortised over the remaining 4 year term.

What are the exceptions to the recognition principles in business combination?

The date which the acquirer obtains control of the acquiree. ► There are certain exceptions to the recognition and/or measurement principles which cover contingent liabilities, income taxes, employee benefits, indemnification assets, reacquired rights, share-based payments and assets held for sale.

What are business combinations?

A business combination is a transaction in which the acquirer obtains control of another business (the acquiree). Business combinations are a common way for companies to grow in size, rather than growing through organic (internal) activities.

What is a business combination and how is it relevant in company accounting?

What are reacquired rights?

A reacquired right is an identifiable intangible asset that the acquirer recognises separately from goodwill. (i) the amount by which the contract is favourable or unfavourable from the perspective of the acquirer when compared with terms for current market transactions for the same or similar items.

What is a combination business?

What is the difference between IFRS 3 and IFRS 10?

Both standards deal with business combinations and their financial statements. But while IFRS 10 defines a control and prescribes specific consolidation procedures, IFRS 3 is more about the measurement of the items in the consolidated financial statements, such as goodwill, non-controlling interest, etc.

How are reacquired rights accounted for in IFRS 3?

B53 states that the in the case of the pre-existing relationship being a reacquired right, the gain/loss must be accounted separately from the the business combination. In terms of IFRS 3 the intangible asset recognized must simply be amortised over the remaining contractual period.

What are the principles of IFRS 3 business combinations?

IFRS 3 establishes the following principles in relation to the recognition and measurement of items arising in a business combination: Recognition principle. Identifiable assets acquired, liabilities assumed, and non-controlling interests in the acquiree, are recognised separately from goodwill [IFRS 3.10]

How are assets acquired in a business combination recognised?

Certain assets acquired and liabilities assumed in connection with a business combination may not be considered part of the assets and liabilities exchanged in the business combination and will be recognized as separate transactions in accordance with other IFRS. IFRS 3 Recognising what you acquired in a business combination

What are not assumed liabilities under IFRS 3 11?

For example, costs that an acquirer expects to incur but is not obligated to incur at the acquisition date (e.g., restructuring costs) are not liabilities assumed under IFRS 3 11.