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I am the accountant for a company whose ownership changed in a stock purchase on Jan 1 2015.  The ownership of the common stock of the company is all that changed.  Hypothethically, I have an asset purchased on Jan 1 2013 for $10,000 (5 year useful life) and had accumulated depreciation of $4000 at Jan 1 2015.  What do I need to do to properly record the value, the acquisition date and the useful life of my asset?
in IFRS 3 - Business Combinations by

1 Answer

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According to the IFRS 3, 

Acquisition Date

Acquisition date is the date at which the acquirer started to control the assets of the acquiree. In this scenario, Jan 1, 2015, the date of stock purchase, is the acquisition date.

Value of the asset

The value asset must be moved from the carrying value to the fair value. Let us consider the fair value of the asset is $8000, so the value of must be moved from the book value [10,000-4000=6000 (10,000/5 x 2years) ]to the fair value ($8000).

Useful life

The useful life of the asset remains the same if no indication for change in life mentioned by the acquirer ie 3 years in the scenario. So the next year depreciation will be calculated as ; $8000/3= $2666.67.

by Level 2 Member (3.8k points)