Researched by Milan Choo
Main features of the FRS:
IN8 Each identifiable asset and liability is measured at its acquisition-date fair value. Any non-controlling interests in an acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation is are measured at either fair value or as the present ownership instruments’ non-controlling interest’s proportionate share in the recognised amounts of the acquiree’s net identifiable assets. All other components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by FRSs.
The acquisition method:
Measurement principle
19 For each business combination, the acquirer shall measure at the acquisition date components of any non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation at either: at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets
(a) fair value; or
(b) the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets.
All other components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by FRSs.
Exceptions to the recognition or measurement principles
Exceptions to the measurement principle
Share-based payment awards transactions
30 The acquirer shall measure a liability or an equity instrument related to share-based payment transactions of the acquiree or the replacement of an acquiree’s share-based payment awards transactions with share-based payment awards transactions of the acquirer in accordance with the method in FRS 2 Share-based Payment at the acquisition
Effective date and transition
Effective date
64B Improvements to FRSs issued in November 2010 amended paragraphs 19, 30 and B56 and added paragraphs B62A and B62B. An entity shall apply those amendments for annual periods beginning on or after 1 January 2011. Earlier application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact. Application should be prospective from the date when the entity first applied this FRS.
64C Paragraphs 65A–65E were added by Improvements to FRSs issued in November 2010. An entity shall apply those amendments for annual periods beginning on or after 1 January 2011. Earlier application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact. The amendments shall be applied to contingent consideration balances arising from combinations with an acquisition date prior to the application of this FRS, as issued in 2010.
Transition
65A Contingent consideration balances arising from business combinations whose acquisition dates preceded the date when an entity first applied this FRS as issued in 2010 shall not be adjusted upon first application of this FRS. Paragraphs 65B–65E shall be applied in the subsequent accounting for those balances. Paragraphs 65B–65E shall not apply to the accounting for contingent consideration balances arising from business combinations with acquisition dates on or after the date when the entity first applied this FRS as issued in 2010. In paragraphs 65B–65E business combination refers exclusively to business combinations whose acquisition date preceded the application of this FRS as issued in 2010.
65B If a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the acquirer shall include the amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.
65C A business combination agreement may allow for adjustments to the cost of the combination that are contingent on one or more future events. The adjustment might, for example, be contingent on a specified level of profit being maintained or achieved in future periods, or on the market price of the instruments issued being maintained. It is usually possible to estimate the amount of any such adjustment at the time of initially accounting for the combination without impairing the reliability of the information, even though some uncertainty exists. If the future events do not occur or the estimate needs to be revised, the cost of the business combination shall be adjusted accordingly.
65D However, when a business combination agreement provides for such an adjustment, that adjustment is not included in the cost of the combination at the time of initially accounting for the combination if it either is not probable or cannot be measured reliably. If that adjustment subsequently becomes
probable and can be measured reliably, the additional consideration shall be treated as an adjustment to the cost of the combination.
65E In some circumstances, the acquirer may be required to make a subsequent payment to the seller as compensation for a reduction in the value of the assets given, equity instruments issued or liabilities incurred or assumed by the acquirer in exchange for control of the acquiree. This is the case, for example, when the acquirer guarantees the market price of equity or debt instruments issued as part of the cost of the business combination and is required to issue additional equity or debt instruments to restore the originally determined cost. In such cases, no increase in the cost of the business combination is recognised. In the case of equity instruments, the fair value of the additional payment is offset by an equal reduction in the value attributed to the instruments initially issued. In the case of debt instruments, the additional payment is regarded as a reduction in the premium or an increase in the discount on the initial issue.
(Source: http://www.masb.org.my/images/stories/3011/2Amend_FRS3_26Oct2010.pdf)
How can Beyond Solution Malaysia assist you? Speak to us if you require outsourced accounting services. Visit us at www.beyondsolutionmalaysia.com!
Hiç yorum yok:
Yorum Gönder