Aasb 3 Essay
Case Study 1: Applying AASB 3
Issue 1: How to account for the original 30% investment in Blacks Ltd
- initially recorded at fair value plus transactions cost, based on para 43 of AASB 139
- subsequently accounted for under IAS 39 eg could be measured at fair value with changes in value included in profit or loss or changes recognised directly in equity.
- On formation of the business combination, para. 42 of AASB 3 requires that the acquirer remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resultant gain/loss in profit or loss. Where the investment had been measured at fair value with increments recognised directly in equity, these amounts are transferred at acquisition
Issue 1: How to account for the original 30% investment in Blacks Ltd
- initially recorded at fair value plus transactions cost, based on para 43 of AASB 139
- subsequently accounted for under IAS 39 eg could be measured at fair value with changes in value included in profit or loss or changes recognised directly in equity.
- On formation of the business combination, para. 42 of AASB 3 requires that the acquirer remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resultant gain/loss in profit or loss. Where the investment had been measured at fair value with increments recognised directly in equity, these amounts are transferred at acquisition