Samenvatting
Summary Lectures Advanced Financial Accounting
- Instelling
- Tilburg University (UVT)
This document is a summary of all the Advanced Financial Accounting lectures.
[Meer zien]Voorbeeld 4 van de 40 pagina's
Voorbeeld 4 van de 40 pagina's
In winkelwagengesponsord bericht van onze partner
Verkoper
Volgen
Voorbeeld van de inhoud
Advanced Financial Accoun.ng (Spring 2023)Summary
Note that Lectures 4 and 11 are not included, as these were tutorials.
Lecture 1 – Se+ng the Scene
1
,Lecture 2 - Business Combina9ons (IFRS 3)
Disclosure requirements:
• The impact on revenue and income in the year of acquisi@on
• Currently no requirement to disclose the impact in later years; under discussion with
IASB
Business combina-on = a transac@on or other event in which an acquirer obtains control of
one or more businesses
• Control = the investor is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through
its power over the investee:
E.g.,
o Majority of vo@ng rights
o Nomina@on of majority of members of decision-making body
o Contractual right to determine most relevant decisions, etc.
• Business = Integrated set of ac@vi@es and assets that is capable of being
conducted and managed for the purpose of providing a return in the form of
dividends, lower costs or other economic benefits directly to investors or other
owners, members or par@cipant
o At least an input and one substan@ve process
o Op@onal concentra@on test = If substan@ally all of the fair value of the
gross assets acquired is concentrated in a single asset or group of similar
iden@fiable assets, it is not a business combina@on. If not, further analysis
required
• Types:
o Acquisi@on of shares in another en@ty
o Acquisi@on of a business without acquiring shares; certain liabili@es and
assets can remain with the acquiree
o Combina@on of both
Scenarios:
• From NCI to business combina@on: Sell NCI at fair value -> book gain or loss -> buy
new stake at fair value
• From control to addi@onal interest: Reclassifica@on in equity -> no P&L effect
• Sell interest but s@ll hold > 50%: Reclassifica@on in equity -> no P&L effect
• Sell interest and hold < 50%: Book gain or loss on total % owned before -> buy NCI
at fair value
Acquirer = the combining en@ty that obtains control of the other combining en@@es or
businesses, usually the parent except in reverse acquisi@ons
• Reverse acquisi-on = acquisi@on in which the legal acquiror is the accoun@ng
acquiree and the legal acquiree is the accoun@ng acquiror. Scoped within IFRS 3 if
the accoun@ng acquiree contains a business
o E.g., Shareholders of A offer their shares to B in return for which they get
shares in B, such that they control B. Here A is the accoun@ng acquiror and
B the accoun@ng acquiree
2
, § E.g., Large unlisted en@ty is being taken over by dormant listed
en@ty; if A would be private and B public -> Purchase accoun@ng is
done by the legal acquiree
Date of business combina-on = date when control is transferred, i.e., date when
management of acquiror can take decisions in respect of acquiree
-> Relevant for determining fair value of business and net assets acquired
Value of business acquired = fair value at exchange date of:
• Assets given up
• Liabili@es incurred or assumed
• Equity instruments issued
By the acquiror + fair value of exis@ng interest in the acquiree owned by the acquiror
o Not including:
§ Costs of legal, tax and accoun@ng advice (expensed as incurred)
§ Costs of issuing shares (deducted from equity)
§ Costs of issuing bonds and loans (included in carrying amount of
financial liability)
-> Reason: acquired business must be recognized at fair value
Con-ngent considera-on = the es@mated amount of any adjustment that is probable and
can be measured reliably
• If the considera@on given up is subject to adjustment depending on the outcome
of future events
• Subsequent adjustments if actuals deviate from es@mates:
o If considera@on is paid in cash or other assets: adjustments recognized as
gain/loss in P&L
o If considera@on is secled in shares of the acquiror: no adjustment
(because the shares that would be addi@onally issued are in fact not)
• Note: if it is linked with employee services, it is expensed and not con@ngent
liability
Iden@fica@on net assets acquired = recognize all iden@fiable assets and liabili@es of the
acquiree that existed at the date of acquisi@on at their fair values, even if they had not been
recognized by the acquiree yet
• Con-ngent liabili-es = the higher of
o The amount that would be recognized under IAS 37 Provisions, and
o The ini@al amount
-> If chance increases, CL increases ; If chance decreases, CL remains
o Ouelow of future economic benefits need not be probable, but fair value
of CL must be reliably measurable
• Provisions = liabili@es that were exis@ng obliga@ons of the acquiree at acquisi@on
date can be recognized by acquiror
o Restructuring provisions can only be recognized if they were already a
liability of the acquiree
3
, • Intangible assets = fair value must be reliably measurable, but inflow of future
economic benefits need not be probable + meet defini@on of intangible asset
under IAS 38:
o Iden@fiable non-monetary asset without physical substance
o Separable from the en@ty, or arise from contractual or other legal rights
-> Internally generated intangibles are usually not in acquiree’s books, but
need to be recognized by acquiror -> Oien high increase in recognized
amount
• Provisional alloca-ons = provisional values in ini@al accoun@ng for the business
combina@on can be adjusted retroperspec@vely to reflect addi@onal informa@on
that becomes available within 12 months aier the combina@on
Goodwill = fair value of the business – fair value of net assets
o E.g., supplier/customer rela@onships, knowledge, synergies, brand name
• Net assets = assets – liabili@es = shareholders equity
->
• Posi-ve goodwill: annual impairment test, and with indicators of impairment
o Cri@cism: goodwill impairment recognized too licle too late; internally
generated goodwill cannot be capitalized, but acquired goodwill can be
and stays on BS
• Nega-ve goodwill: probably due to error -> redo assessment -> book as gain
-> Companies oien start restructuring soon aier acquisi@on, to match gain on
goodwill and restructuring expense in the same period
Calcula@ng goodwill:
1. Full goodwill method = the difference between fair value of the business and fair
value of the net assets acquired; alloca@ng part to NCI
2. Par-al goodwill method = the difference between the actual considera@on given up
and the propor@onate share in net assets of the acquiree
-> Op@on 1 leads to higher goodwill, because it includes goodwill allocable to NCI
-> Companies are free to choose which method to use; usually consider consequences for
financial ra@os
Control premium = the premium you are willing to pay to gain control
-> ! Take into account difference between goodwill and control premium in journal entries
4
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper ahultermans. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €4,48. Je zit daarna nergens aan vast.
Is Stuvia te vertrouwen?
4,6 sterren op Google & Trustpilot (+1000 reviews)
Afgelopen 30 dagen zijn er 53340 samenvattingen verkocht
Opgericht in 2010, al 14 jaar dé plek om samenvattingen te kopen