CERTYNEX IFRS ACADEMY

The non-controlling interest in Garrigue SA comprises ordinary shares, which entitle holders to a proportionate share of net assets on liquidation, and share options, which do not. The acquirer elects the proportionate share for the business combination. How does it measure each component?

Each component is measured at the proportionate share of identifiable net assets, whatever its nature.

The options are measured at the proportionate share and the ordinary shares at fair value, because the latter are more liquid on the market.

The proportionate share elected for the whole extends to the options for simplicity, as long as the difference from their fair value remains small.

The proportionate share applies to the ordinary shares; the options are measured at fair value, unless another basis is required by IFRSs.