AASB 3 requires all the identifiable net assets of the parent to be at fair value at the date of acquisition.

Question

BlackTom AI · Accepted Answer

The statement as given says: 'AASB 3 requires all the identifiable net assets of the parent to be at fair value at the date of acquisition.'

First, it's important to restate the core requirement of AASB 3 (Business Combinations): when a business combination occurs, the acquirer recognizes the identifiable assets acquired and liabilities assumed of the acquiree at their fair values as of the acquisition date. This is a fundamental aspect of the purchase accounting process and determines the goodwill or gain from a bargain purchase.

Why this makes the statement false: the standard does not require the identifiable net assets of the parent (the acquirer) to be measured at fair value as of the acquisition date. Instead, it requires measurement of the identifiable assets and liabilities of the acquiree (the entity being acquired) at fair value. The parent’s own assets and liabilities are not the subject of this fair value measurement in the context of recognizing the acquiree’s identifiable net assets.

Additionally, the phrase 'identifiable net assets' is typically discussed in relation to the acquiree's identifiable assets and liabilities netted against each other, not the parent. In a business combination, you would measure identifiable assets acquired and liabilities assumed of the acquiree, and the difference between those fair values and the consideration transferred leads to goodwill or a gain from a bargain purchase, not the fair value of the parent’s net assets.

In summary, the assertion misstates who is measured at fair value under AASB 3: it is the identifiable assets acquired and liabilities assumed of the acquiree, not the identifiable net assets of the parent. Therefore, the statement is incorrect.

Note: Since no answer options were provided beyond the correct false indication, this explanation focuses on clarifying the standard's principle and why the described statement does not align with AASB 3 requirements.

22754 Corporate Accounting - Autumn 2025 Autumn 2025 Quiz 2-DO NOT ATTEMPT UNTIL INSTRUCTED TO DO SO

AASB 3 requires all the identifiable net assets of the parent to be at fair value at the date of acquisition.

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