CERTYNEX IFRS ACADEMY

The Teodor group has owned for twenty years a confectionery brand that it created and developed itself. This year, it acquires Mielina in a business combination; Mielina's brand is measured at 1,800,000 at the acquisition date, and an expert estimates that Teodor's historical brand would be worth 5,000,000. The finance director wishes to present both brands consistently. Which treatment should be adopted in the consolidated financial statements?

Recognise both brands at fair value, i.e. 6,800,000, to ensure consistency

Recognise Mielina's brand at 1,800,000; do not recognise the brand created by Teodor

Recognise neither brand, since one of them is internally generated

Recognise Teodor's brand at its cumulative advertising expenditure and Mielina's at 1,800,000