Acquisition-related costs

Learning objectives

• Record acquisition-related costs as expenses of the period, not in the consideration or in goodwill.L1, L2
• Identify the acquisition-related costs (advisory fees, legal fees) among the items in a case.L1, L2

Normative references

• IFRS 3 §53Acquisition-related costs (finder's fees, advisory, legal, accounting, valuation and other professional or consulting fees, general administrative costs including the costs of an internal acquisitions department) are recognised as expenses in the periods in which the costs are incurred and the services are received; the only exception: the costs to issue debt or equity securities follow IAS 32 and IFRS 9.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

5 questions

• Which formula gives the goodwill of a business combination?L1
• To acquire Verger SA, Colline SA pays {cash_paid} in cash, issues shares with a total nominal value of {shares_nominal} and a fair value at the acquisition date of {shares_fair_value}, and undertakes to pay {liability_to_owners} to the former owners in one year (fair value of that undertaking at the acquisition date). It also pays {acquisition_costs} of advisory fees. Calculate the consideration transferred.L2
• The legal advisory fees paid by the acquirer to carry out the business combination are part of the consideration transferred and are therefore included in goodwill.L1
• To acquire Bruyère SA, Sapin SA pays {fees} of fees to an investment bank and to lawyers, in cash. The acquisition price itself is recorded separately. Record the entry for the fees.L2
• To acquire Rocaille SA, Hêtraie SA pays 5,000,000 to the former owners, plus 60,000 to an investment bank for transaction advice and 40,000 of legal fees. How does it treat these 100,000 of costs?L2