Asset acquired and classified at acquisition

Learning objectives

• Calculate the initial measurement of an asset acquired and classified as held for sale on acquisition.L3, L4

Normative references

• IFRS 5 §16Newly acquired asset meeting the criteria (para. 11): initially measured at the lower of the carrying amount it would have had without that classification (for example, cost) and fair value less costs to sell; if acquired in a business combination, it is therefore measured at fair value less costs to sell.

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

2 questions

• As part of a business combination, Ostrel acquires a site that it classifies as held for sale from acquisition. Case assumption: its fair value at the acquisition date is {fair_value_at_acquisition} and the costs to sell are estimated at {costs_to_sell}. Calculate the amount of the initial measurement.L3
• Belcor acquires in a business combination a group of assets that it intends to resell and classifies as held for sale from acquisition. The seller carried it at €900,000. Case assumption: its fair value at the acquisition date is €1,000,000 and the costs to sell are €40,000. At what amount is it initially measured?L4