Purchase Power Agreements Acquired In A Business Combination

The completion of the acquisition of an operational activity, including due diligence, negotiations and final procedures, often takes many months. In the midst of closing a transaction and navigating the operational logistics of the merger of two companies, accounting for the acquisition is often the last thought for the purchaser. International Financial Reporting Standards (IFRS) 3 Business Combinations and Accounting Standards for Private Enterprises (ASPE) 1582 Business Combinations, require that once a business combination has been completed, the transferred consideration and acquired assets and liabilities are accounted for on the acquisition date.1 The next step in concluding an AEA is to ensure that all identifiable intangible assets acquired through the business combination are accounted for separately from the corporate good. Ifrs 3 and ASPE 1582 state that an intangible asset is considered identifiable when it arises from a contractual or legal right or is dissociable. In other words, an intangible asset is considered separable when it is separated or separated from the entity and is sold, transferred, leased, leased or exchanged, either individually or in association with a contract, asset or related liability, regardless of whether the entity intends to do so. An intangible asset is contractual where it arises from a contractual or other right, whether those rights are transferable or dissociable from the entity. To determine the purchaser and the date of acquisition, business combinations are accounted for by the establishment of a purchase price allowance (AAE). The following five steps should be taken into account when filling out an AEA: Step 1: Determining the fair value of the consideration paid; Step 2: revaluation of all existing assets and liabilities (excluding intangible and acting assets listed in stages 3 to 5) on the date of acquisition of fair value; Step 3: Identification of acquired intangible assets; Step 4: Determining the fair value of acquired identifiable intangible assets; and, Step 5: Assign the remaining consideration to the value and assess the adequacy of the overall conclusion. In accordance with the requirements of IFRS 3 and ASPE 1582, assets and liabilities acquired within a business combination must be accounted for at fair value on the date of acquisition.