What is a step acquisition?
A step acquisition occurs when a shareholder obtains control over an entity by acquiring an additional interest in that entity. If that entity is a business (whether a VIE or not), the acquirer’s previously held equity interest is remeasured to fair value at the date the controlling interest is acquired.
What are the types of combinations according to IFRS 3?
In addition, IFRS 3 provides guidance on some specific aspects of business combinations including:
- business combinations achieved without the transfer of consideration, e.g. ‘dual listed’ and ‘stapled’ arrangements [IFRS 3.43-44]
- reverse acquisitions [IFRS 3. B19]
- identifying intangible assets acquired [IFRS 3. B31-34]
How do you calculate goodwill in step acquisition?
To calculate goodwill, the fair value of the assets and liabilities of the acquired business is added to the fair value of business’ assets and liabilities. The excess of price over the fair value of net identifiable assets is called goodwill.
What is a partial acquisition?
Partial acquisitions represent M&A transactions where less than 100% of a target entity is acquired. Partial acquisitions may allow entry to a new geographic market or product line without assuming total control of the business, thus limiting the acquirer’s exposure.
What IFRS is goodwill?
IFRS 3
Goodwill acquired in a business combination is accounted for in accordance with IFRS 3 and is outside the scope of IAS 38. Internally generated goodwill is within the scope of IAS 38 but is not recognised as an asset because it is not an identifiable resource.
What is purchase goodwill?
Purchased goodwill is the difference between the value paid for an enterprise as a going concern and the sum of its assets less the sum of its liabilities, each item of which has been separately identified and valued.
How is the acquisition method different from the purchase method?
Under the purchase method, the difference between the acquired company’s fair value and its purchase price would be accounted for as negative goodwill on the balance sheet. Under the acquisition method, however, the negative goodwill is treated as a gain on the income statement immediately with the acquisition.
What are the different types of acquisitions?
Top 4 Types of Acquisition
- Horizontal Acquisition. This is when a company acquires another company in the same business, or industry or sector, that is, a competitor.
- Vertical Acquisition.
- Conglomerate Acquisition.
- Congeneric Acquisition.
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