SECTION A

Which of the following statements regarding the calculation of Non-Controlling Interest (NCI) at the acquisition date is correct under IFRS 3 Business Combinations?

Answer options:

NCI must always be measured at fair value.

NCI must always be measured at its proportionate share of the acquiree's identifiable net assets.

NCI can be measured either at fair value or at its proportionate share of the acquiree's identifiable net assets.

NCI is measured at the fair value of the consideration transferred by the parent.

How to approach this question

Recall the measurement options provided by IFRS 3 for Non-Controlling Interests at the acquisition date.

Full Answer

C.NCI can be measured either at fair value or at its proportionate share of the acquiree's identifiable net assets.✓ Correct

IFRS 3 Business Combinations allows an entity to choose, on a transaction-by-transaction basis, to measure NCI at the acquisition date either at fair value (resulting in 'full goodwill') or at the NCI's proportionate share of the recognized amounts of the acquiree's identifiable net assets (resulting in 'partial goodwill').

Common mistakes

Believing that only one method is permitted by IFRS.

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Practice the full ACCA FR — Financial Reporting Practice Exam 1

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