- 5 Marks
CR – Nov 2020 – L3 – Q4b – Fair Value in Consolidation
Explain why a fair value exercise is performed when a parent acquires a controlling stake in a subsidiary.
Question
Under IFRS 3: Business Combinations, the identifiable assets, liabilities, and contingent liabilities of subsidiaries are required to be brought into the consolidated financial statements at their fair value rather than their book value.
Required:
Explain the justification for undertaking a fair value exercise when a parent acquires a controlling stake in a subsidiary company.
Find Related Questions by Tags, levels, etc.
- Tags: Business Combinations, Consolidation, Fair Value, IFRS 3, Subsidiary valuation
- Level: Level 3
- Topic: Business combinations and consolidation
- Series: NOV 2020
