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Ifrs 3a

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    Ifrs 3a Ifrs 3a Presentation Transcript

    •  COACHING CLASSES FOR COMMERCE STUDENTS: INTER COMMERCE 1ST YEAR 2ND YEAR ACCOUNTING BUSINESS MATHS STATISTICS ECONOMICS BANKING B.COM classes PART 1 ACCOUNTING, ECONOMICS & STATISTICS . PART 2 ADVANCED ACCOUNTING O LEVELS ACCOUNTS, ECONOMICS, BUSINESS STUDIES, PAKISTAN STUDIES & URDU. ICMAP STAGE 1,2,3,4 PIPFA ICAP MODULE B & D CAT T1-T8 ACCA F1,F2,F3,F5,F8,P1,P7 MA-ECONOMICS 100 % RESULT IN 2011-2012 KHALID AZIZ 0322-3385752 R1173, ALNOOR SOCIETY, BLOCK 19, POWER HOUSE, F.B.AREA, KARACHI.
    •  ───────▄▀▀▀▄▄▄▄▄▄▄▀▀▀▄─── ───────█▒▒░░░░░░░░░▒▒█─── ────────█░░█░░░░░█░░█──── ─────▄▄──█░░░▀█▀░░░█──▄▄─ ────█░░█─▀▄░░░░░░░▄▀─█░░█ ►►⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙◄ ░█░░░█░█░▄▀░█▀▀░░░░▀█▀░█░█░█░▄▀▀ ░█░░░█░█▀░░░█▀░░▄▄░░█░░█▀█░█░░▀▄ ░█▄▄░█░█░▀▄░█▄▄░░░░░█░░█░█░█░▄▄▀ ►►⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙⊙◄ ░░░░█▀█░█░░░█▀▀░█▀█░█▀▀░█▀▀░░░█░ ░░░░█▀▀░█░░░█▀░░█▀█░▀▀█░█▀░░░░▀░ ░░░░█░░░█▄▄░█▄▄░█░█░▄▄█░█▄▄░░░▄ --- http://www.facebook.com/pages/Educationsports- Entertainment/277401785692107
    •  JOIN SIR KHALID (CMA & MA-ECONOMICS) EXPERIENCE OF OVER 12 YEARS COACHING CLASSES FOR O/As/A LEVELs ACCOUNTS, COMMERCE,BUSINESS STUDIES, ECONOMICS,URDU & PAK.STUDIES. CONCEPTUAL LEARNING COMPLETE PAST PAPERS CONTACT NOW: 0322-3385752 KARACHI http://o-levels-pk.blogspot.com/
    •  Scope Application of the Purchase Method Revised IAS 38 Revised IAS 36 Valuation Considerations Transition Questions and Answers
    •  Business Combination  Transaction where two or more entities or businesses are brought together to form a single reporting entity Business  Integrated set of activities and assets conducted and managed for the purposes of providing  A return to investors; or  Lower costs or other economic benefits directly and proportionately to shareholders.
    •  Scope Exemptions  Business combinations in which separate entities or businesses form a joint venture  Business Combinations involving entities or businesses under common control  Business Combinations involving two or more mutual entities  Business Combinations in which separate entities or businesses are brought together by contract alone without the obtaining of an ownership interest
    • Identify an AcquirerDetermine the cost of the business combination Allocate the cost of the business combination
    •  Consider  Respective sizes of entities prior to the combination  Power to govern financial and operating policies of combined entity  Voting rights in combined entity Acquirer for accounting may be different than legal acquirer (a „reverse acquisition‟) Where a new entity is formed one of the pre-existing entities must be identified as the acquirer
    •  Equity instruments issued as purchase consideration measured at market price Include  Cash consideration  Equity instruments issues to effect the transaction  Expenses incurred by the acquirer solely for purpose of business combination (e.g. legal fees)  Contingent payments to the extent they are probable and can be reliably measured Costs of arranging finance for the acquisition and costs of issuing equity instruments are not recognised as an asset – they are accounted for in accordance with IAS 39 (i.e. initial cost to treated as either liability or offering costs)
    •  Assets are recognized at fair value if it can be measured reliably and it is probable that the economic benefit will flow to the acquirer Liabilities, other than contingent liabilities are recognized at fair value only if it can be measures reliably and it is probable that there would be an outflow of economic benefit to settle obligation Only allocate to those assets, liabilities and contingent liabilities of the acquiree that exist at the date of acquisition (i.e. restructuring) Measure contingent liabilities if reliably measurable – base on the amount a third party would charge to assume the liability
    •  Traded financial instruments (eg. investments) at market values Unquoted financial instruments based on estimated values such as price-earning ratio, dividend yield, growth rates of similar traded instruments Long-term receivables and other long-term assets at present values determined at appropriate current interest rates less allowances for doubtful receivables and collection costs Inventories- Finished goods at selling price less sum of cost of disposal and profit allowance for acquirer‟s effort Work-in-progress at selling price of finished goods less sum of cost to complete, cost of disposal and profit allowance for acquirer‟s effort Raw materials at replacement cost Land and building at market values Plant and equipment at market values determined by an appraiser. In absence of market value depreciated replacement cost Net employee defined benefit asset or liability at present value less fair value of plan assets Long-term liability at present values at appropriate interest rates
    • Fair Value ofCost of assets,Business - liabilities and >0 GoodwillCombination contingent liabilities assumedRecognise as an asset at date of transactionDo not amortiseTest for impairment at least annually
    • Fair Value ofCost of assets,Business - liabilities and <0 NegativeCombination contingent Goodwill liabilities assumed  Reassess the fair values originally determined  Any remaining excess is recognised in profit and loss immediately
    •  Identification and recognition of certain intangible assets Finite useful life – amortise Indefinite useful life – Assess annually for impairment Reassess the useful life of intangible assets at least annually
    •  Cash-generating units (CGUs)  The smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets Allocate acquired goodwill amongst CGUs expected to benefit from the synergies of the combination CGUs (or groups of CGUs) to which goodwill is allocated for impairment testing must be  Lowest level at which management monitor goodwill  No larger than a segment (in accordance with IAS 14)
    •  Determine carrying amount of the CGU (including allocated goodwill) Determine fair value less costs to sell and/or value in use Compare higher of the two with carrying amount Any shortfall must be recognised as a recoverable amount write-down
    •  All write-downs are recognised immediately Where a write-down is required in relation to a CGU with allocated goodwill, the goodwill is first written down Any remaining write down is taken proportionately against the non-monetary assets Write-downs of goodwill may not be reversed in future reporting periods
    •  A CGU must be assessed at the same time each year Where an indicator of impairment exists, the asset concerned must be tested for impairment before testing the CGU Detailed calculations may be carried forward from prior reporting periods providing certain conditions are met
    •  Overview – Cash Generating Unit Valuations – Identifiable Intangible Asset Valuations – Documentation Guidelines
    •  Assessing the Recoverable Amount of a CGU  IAS 36 (18) defines recoverable amount as the HIGHER of:  Fair value less costs to sell; and  Value in Use  Best evidence of an asset‟s FAIR VALUE (less costs to sell) is a price in a binding sale in an arm‟s length transaction, adjusted incremental costs that would be directly attributable to the disposal of the asset. Consider:  Binding sales agreement; or  Comparable companies and Transactions involving similar companies (MARKET APPROACH)  The expected present value of the future cash flows derived from the asset (DCF APPROACH) should be used in assessing the VALUE IN USE
    •  MARKET APPROACH – Key Elements and Considerations  Typical methodologies  Comparable public companies  Comparable transactions  Valuation multiples  Market value of “Invested Capital” to revenue, EBITDA, or EBIT  Market value of “Equity” to net income, or BV of tangible net equity
    •  Recognition as part of a business combination  Recognised separately if it meets the following criteria:  Separately identifiable (i.e. capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged – either individually or together with a related contract, asset or liability)  Controlled by the entity (arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations)  A source of future economic benefits  Fair value can be measured reliably  Useful list of “Illustrative Examples” of types intangibles is provided with IFRS 3 – similar to SFAS 141  Determination will ultimately be based on the facts and circumstances of each individual business combination
    •  Intangible Asset Valuations  Market Approach  Comparable transaction  Income Approach  Relief-from-royalty  Discounted cash flow  Cost-savings  Cost Approach  Replacement cost
    •  Key Elements of Valuation Documentation  Description of the CGU  Nature of operations  Consider value drivers  Financial analysis with respect to the CGU  Financial condition  Profitability and earnings capacity  Available documentation regarding forecasts
    •  Key Elements of Valuation Documentation (cont.)  Supporting calculations consistent with generally accepted valuation procedures for each valuation method adopted  Sufficient documentation of key assumptions and sources of data  Rationale for conclusion and rationalisation of various indications of value – global sense check
    •  Appropriate valuation methodologies should be carefully selected and consistently applied over time Whether a particular fair value measurement is prepared internally or with the assistance of a third-party specialist, the level of documentation to support the conclusions of the entity is expected to be similar It‟s a subjective and difficult area – so please consult with the appropriate specialists
    •  Fair value of assets and liabilities may result in deferred tax asset or liability If asset or liability is not recognized which subsequently is incurred or realized then: recognize benefit expense in P&L adjust carrying value of goodwill through P&L
    •  Applies to transactions for which agreement date is on or after 31 March 2004 In the first reporting period beginning on or after 31 March 2004  Discontinue amortisation of goodwill in first reporting period after  Eliminate carrying amount of goodwill amortisation against goodwill  Test carrying amount of goodwill for impairment  Reclassify intangibles recognised in previous business combinations that do not meet the recognition criteria to goodwill Early adoption can only be achieved in conjunction with early adoption of revised IAS 36 and IAS 38 Transitional requirements should be applied in respect of goodwill arising from joint ventures and associates
    •  Not required to restate prior business combinations accounted for under a standard different from the IFRS applicable at the date of reporting. Still need to eliminate assets and liabilities that do not meet the recognition criteria under IFRS outside of a business combination (adjustment to goodwill). If subsidiary has not been consolidated under previous GAAP, restate assets and liabilities in accordance with IFRS Test goodwill in opening IFRS balance sheet for impairment. Must account for all business combinations after date of transition in accordance with IFRS 3
    •  COACHING CLASSES FOR COMMERCE STUDENTS: INTER COMMERCE 1ST YEAR 2ND YEAR ACCOUNTING BUSINESS MATHS STATISTICS ECONOMICS BANKING B.COM PART 1 ACCOUNTING, ECONOMICS & STATISTICS . PART 2 ADVANCED ACCOUNTING O LEVELS ACCOUNTS, ECONOMICS, BUSINESS STUDIES, PAKISTAN STUDIES & URDU. ICMAP STAGE 1,2,3,4 PIPFA ICAP MODULE B & D CAT T1-T8 ACCA F1,F2,F3,F5,F8,P1,P7 MA-ECONOMICS 100 % RESULT IN 2011-2012 KHALID AZIZ 0322-3385752 R1173, ALNOOR SOCIETY, BLOCK 19, POWER HOUSE, F.B.AREA, KARACHI.