IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

Chapter 35 / Business Combinations (IFRS 3)

411

tional information about fa cts and circumstances that existed at the date of business combination. All other changes (say, change s resulting from postacquisition events such as the acquiree meeting a certain earnings target, or achieving a milestone such as on postacquisition significant cost reduction) are recognized in profit or loss, (Under the existing version of [FRS 3 subsequent adj ustments resulting fro m contingent con– sideration are possible and are adj usted against goodwill or equity.) 5. Preexisting r elati onships and r eacquired ri gh ts. If the parties to the business com– bination had a preexisting relationship (say, the acquiree had contracted with the ac– quirer to use certain intellectual property rights owned by the acquirer on the date of the business combination), this must be accounted for separately from the accounting for the business combination. The accounting treatment of such a preexisting relation– ship would depend upon a. Whether the preexisting relationship arose from a contractual right, in which case the gain or loss is measured at the lesser of (I ) the favorable/unfavorable contract position and (2) any stated settlement provis ions in the contract available to the counterparty to whom the contract is unfavorab le; or b. Whether the preexisting relationship arose from a noncontractual right (say a law- suit), in which case, by reference to fair value. If the transaction effectively represents a reacquired right, an intangible asset is recog– nized and measured on the basis of the remaining contractual term of the related con– tract (excluding any renewals). The asset is subsequently amortized over the remain– ing contractual term, excl uding any renewa ls. 6. Goodwill: The acquirer accounts for goodwill at the date of acquisition measured as a differenc e between a. The aggregate of (3) In case of a "business combination achieved in stages," the acquisition-date fair value of the acquiree' s previously held equity interest in the acquiree; and b. The net of the acquisition-date amounts of the identifiable assets acquired and the acquired liabilities assumed, both measured in accordanc e with the provisions of IFRS 3 (revised). EFFECTIVE DATE AND TRANS ITIONAL REQUIREMENTS The recently promulgated IFRS 3 (revised 2008) and lAS 27 (revised 2008 ) must be applied to annual periods beginn ing on or after Jul y I, 2009. Early adopti on is permitted provided • Both Standards are applied together; • The revised IFRS 3 is not applied in an accounting period begin ning before June 30, 2007; and • Early adopt ion of the Standards is disclosed. 12. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS 12.1 AHOLD Annual Report 2006 Notes to the Consolidated Financial Statements ( I) The fair value on the acquisition date of the consideration transferred ; (2) The amount of any noncontrollin g interest (NCI) in the acquiree; and

11.

Note 4. Acquisition 2006 Acquisitions Clemens

On October 30, 2006, Ahold completed the acquisition of 14 stores from Clemen s Market Inc., of which 13 were subsequently converted to Giant Food Stores while one store continued to be op– erated under the existing Foodsource banner.