Explain why IFRS 3 Business Combinations requires an acquirer to consolidate the fair values of the assets and liabilities of an acquired subsidiary, at the acquisition date. (3 marks)
View Solution
- So that goodwill is reliably and consistently measured from acquisition to acquisition and in the same consistent way from company to company.
- By attributing fair values to the assets and liabilities of the subsidiary, values which relate to specific assets/liabilities are not, by default, attributed, wrongly, to the (intangible) goodwill.
- Post-acquisition profits will be more reliably reported