02-16-2009, 07:37 PM
Dear Brothers,
Revised IFRS 3 Stated that Fair Value Takes care of Probabilty and no need to take the Present value and to charge interest each year to P&L.
We just have to concentrate on Fair Value, if it increases it'll causes to increase the Deffered consideration payable, whereas in case of Decrease in fair value the Deffered Consideration payable will also decreases.
Entries.
In the Year of Acquisition,
Dr- COI ( Cost of Investment )
Cr- DCP ( Deffered Consideration payable )
In subsequest years
If FV Increases,
Dr- Consolidated Reserve
Cr- DCP
If FV Decreases
Dr-DCP
Cr-C.Reserves
Revised IFRS 3 Stated that Fair Value Takes care of Probabilty and no need to take the Present value and to charge interest each year to P&L.
We just have to concentrate on Fair Value, if it increases it'll causes to increase the Deffered consideration payable, whereas in case of Decrease in fair value the Deffered Consideration payable will also decreases.
Entries.
In the Year of Acquisition,
Dr- COI ( Cost of Investment )
Cr- DCP ( Deffered Consideration payable )
In subsequest years
If FV Increases,
Dr- Consolidated Reserve
Cr- DCP
If FV Decreases
Dr-DCP
Cr-C.Reserves
