Amber Ltd.acquired Luna Ltd.in a business combination.One of the main reasons for the acquisition is that Amber wanted access to Luna's extensive customer list.The list is not recorded on Luna's books and has an estimated value of $100,000 and an estimated life of 7 years.On Amber's consolidated statement of financial position,what value should be shown for Luna's customer list?

Question

Quizplus · Accepted Answer

According to IFRS 3 (Business Combinations), intangible assets that are acquired in a business combination should be recognized separately from goodwill if they meet the definition of an intangible asset and their fair value can be measured reliably. Luna's customer list meets these criteria and has an estimated fair value of $100,000 with an estimated life of 7 years. Therefore, the value of the customer list should be recognized on Amber's consolidated statement of financial position as $100,000 less any accumulated amortization (calculated over 7 years) and any impairment losses. Option A is incorrect because even though the customer list was not recorded on Luna's books, it is still an identifiable intangible asset that should be recognized on Amber's consolidated statement of financial position. Option B is incorrect because it does not take into account any amortization or impairment losses. Option C is incorrect because the estimated life of the customer list is 7 years, not 5 years.

Amber LtdAcquired Luna Ltd