IFRS 3 · Workpapers (Step 4 of 5)
Workpaper assignment
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Purchase price allocation: consideration transferred, fair values, deferred tax, non-controlling interest (two methods), goodwill or gain on a bargain purchase and allocation of goodwill: Tessaly — 80% of the shares
Purchase price allocation: fair values, deferred tax, non-controlling interest (fair value or proportionate share), goodwill, gain on a bargain purchase and acquisition costs
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IFRS 3 workpaper
- Level
- Intermediate
- Estimated time
- ≈ 90 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Orvane Industries SA (fictitious entity) acquired 80 % of Tessaly Composants SAS and then 100 % of Calnor Plastiques SARL during the year 20X6. You prepare the purchase price allocation of each combination, with the goodwill or the gain on a bargain purchase, the deferred tax and the treatment of the fees, and the illustrative entries.
Assignment
Purchase price allocation of Tessaly and Calnor
Purpose of the workpaper
List the consideration transferred, the fair values of the identifiable assets and liabilities assumed, the deferred tax on the fair value uplift, the non-controlling interest under both methods and the previously held interest; compute the goodwill or the excess to reassess, record the combination and allocate the goodwill to the cash-generating units. Fair values, rates, percentages and allocation keys are case data; the method chosen for the non-controlling interest is a choice of the acquirer, never imposed by the standard.
Questions of the file covered by this workpaper
- Among the items of Tessaly, which are recognised separately from goodwill? What should be done with the goodwill already carried by Tessaly?
- Compute the deferred tax liability on the fair value difference of the building.
- Compute the identifiable net assets of Tessaly (before and after deferred tax) and of Calnor.
- Compute the consideration transferred for Tessaly and for Calnor.
- Which method for measuring the non-controlling interest did Orvane choose for Tessaly, and is that choice imposed by the standard?
- Compute the non-controlling interest of Tessaly at the proportionate share of the identifiable net assets.
- Compute the goodwill of Tessaly before and after deferred tax, the goodwill with the interest at fair value, and the excess of Calnor before reassessment.
- Compute the part of the goodwill attributable to the non-controlling interest under the fair value method.
- Calnor: what must Orvane do before recognising a gain on a bargain purchase?
- How should the fees of EUR 90,000 related to the acquisition of Tessaly be treated?
- Record the combination with Tessaly (main entry, excluding deferred tax).
- Record the deferred tax on the fair value difference against goodwill.
- Record the fees related to the acquisition of Tessaly.
- Record the combination with Calnor after reassessment.
Documents in the file
Open the documents to pick out the relevant information.