Reacquired rights

Learning objectives

• Calculate the amortisation of a reacquired right over its remaining contractual period, without taking renewals into account.L3, L4
• Record the reacquired right as an intangible asset and its subsequent amortisation.L3, L4

Normative references

• IFRS 3 §29A reacquired right recognised as an intangible asset is measured on the basis of the remaining contractual term of the related contract, regardless of whether market participants would consider potential contractual renewals when measuring its fair value.
• IFRS 3 §B35A reacquired right is a right that the acquirer had previously granted to the acquiree to use one or more of its assets, recognised or unrecognised (for example its trade name under a franchise agreement or its technology under a licensing agreement); it is an identifiable intangible asset recognised separately from goodwill (measurement in para. 29, subsequent accounting in para. 55; settlement gain or loss if the terms are favourable or unfavourable, B36 and B52).
• IFRS 3 §55A reacquired right recognised as an intangible asset is amortised over the remaining contractual period of the contract in which the right was granted; if it is subsequently sold to a third party, its carrying amount is included in determining the gain or loss on the sale.

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

1 question

• On acquiring Brie SA, a reacquired right (a technology licence that the acquirer had granted to Brie) is recognised as an intangible asset for 480,000. It is amortised over the remaining contractual term of the contract, 4 years, i.e. an annual charge of {annual_charge}. Case convention: straight-line amortisation; under IFRS 3, probable renewals of the contract do not extend this term. Calculate the amortisation for the first {months} months after the acquisition date.L3