ACCT 001 Lecture Notes - Lecture 6: Contingent Liability
21 Jun 2020
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Aasb 3 prescribes the acquisition method in accounting for a business combination. Key steps: identify an acquirer, determine the acquisition date, recognise and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest* in the acquiree, recognise and measure goodwill or gain from bargain purchase. * non-controlling interest you do not have to purchase all the shares in b ltd to obtain control. Eg a ltd acquires 60% of shares in b ltd; the other 40% b ltd shares are held by the nci. The business combination is viewed from the perspective of the acquirer. The acquirer is the entity that obtains control of the acquiree. In most cases this step is straight forward, and in other cases judgement may be required. We discuss control in detail, in ch 18. Acquisition date is the date on which the acquirer obtains control of the acquiree. Determining the correct acquisition date is important as the following are affected:
