Business combinations – Dealing with practical challenges (Part B)
As we had seen in the previous blog, that mergers and acquisitions are becoming more and more common as entities aim to achieve their growth objectives. IFRS 3 / Ind AS 103 provides a detailed guidance on accounting for business combinations. Upon recognising identifiable net assets acquired in business combination, their measurement is critical issue which shall be based on the purchase price allocation. Few practical challenges in measuring the net assets are discussed below: Measurement of acquired net assets IFRS 3 / Ind AS 103 requires identifiable assets acquired and liabilities assumed to be measured at their acquisition-date fair values. The acquisition date fair value will be deemed as cost. Fair value is defined as the amount that would be received to sale an asset or would be paid to transfer a liability, in an orderly transaction between market participants on a measurement date. The fair value of identifiable assets acquired and liabilities assumed in a business comb