CERTYNEX IFRS ACADEMY

Cobalt SA acquires Pistil SA, a biotechnology company in development: laboratories, patents and an organised team of researchers that develops the products. No product is sold yet. Case assumption: the team is critical to the ability to turn the acquired patents into outputs. What does Cobalt conclude about the process?

The process is not substantive: a substantive process presupposes that outputs already exist at the acquisition date, which is not the case for Pistil, whose products are still in development.

The process can be substantive: without outputs, it is so if it is critical to turn an acquired input into outputs and the inputs include an organised workforce.

The process is substantive because Pistil keeps structured accounting records and pays its researchers.

The process is substantive because Cobalt holds the patents and the laboratories, even if the researchers do not form an organised team.