IFRS 3 Business Combinations (ASC 805 according to US GAAP) requires an extensive analysis to be performed in order to accurately find out, recognise and measure at fair value6 the tangible and intangible assets (including intellectual properties) and liabilities acquired in a business combination. This process is also known as a purchase price allocation (PPA) whereby one company (the acquirer), when purchasing a second company (the target), allocates
the purchase price into various assets and liabilities from the transactions.

The accounting for intangible assets acquired in a business combination is particularly challenging. They are by nature less noticeable than tangible ones. Many intangible assets are not recognised in the acquiree’s pre-PPA financial statements. Estimating their fair value usually involves valuation techniques as quoted prices are rarely available.

Where an ‘intangible resource’ (see 3.1 Intangible resources) is not recognised as an intangible asset, it is included in goodwill. Some acquirers might be motivated to report fewer intangibles, and higher goodwill, because most intangible assets must be amortised whereas goodwill is measured under an impairment only approach. However, a high goodwill figure can create the impression that the acquirer overpaid for the acquired business. It also raises questions as to whether IFRS 3 has been applied correctly. Acquirers can expect reported amounts of intangible assets and goodwill to be closely studied by investors, analysts and regulators. Accounting for intangible assets in PPA is therefore an important area of financial reporting. Acquired assets and liabilities are valued as at the date of acquisition, which is considered to be the date at which effective control of the target is obtained. An acquiring company must disclose not only assets already recognised on the target’s balance sheet, but also previously unrecognised intangible assets acquired as part of the transaction, such as company and product brands, patents, technologies or research and development projects, which have to be fair valued for the first time.

Table of contents

About the series

Letters from practitioners
1. Joanna Jabłczyńska
2. Marek Tarko
List of abbreviations
Introduction

Part I A perfect valuation story

1. Several remarks on the rewarding of authors over the course of the centuries
Grzegorz Nancka

2. The black hole of technology in the innovative economy and intellectual property assets
Marlena Jankowska, Mirosław Pawełczyk

3. The black hole of ip valuation
Vinay Sharma

Part II Constellation of valuation methods

4. Principles of discounted cash flow method (dcf)
Maciej Stamirski

5. Intangible assets in intellectual property – examples, similarities and differences in valuation
Maciej Stamirski

6. Methodology of property valuation
Agnieszka Bieda

7. Business combination (ifrs 3) – recognition and valuation of intangible assets
Marek Panfil

Part III Legal horizon – monetization of intangible goods

Copyright
8. Circumstances affecting the amount of the respective remuneration for infringement of author’s economic rights in the jurisprudence  of Polish courts
Łukasz Maryniak

fashion & style
9. Wizerunek – co trzeba o nim wiedzieć w świecie modelingu
Paweł Biały

10. Factors influencing the assessment of models’ remuneration
Ewa Pietrzak

Patents & Innovations
11. Increase in efficiency as a measure of patent, value – an analysis based on the example of energy industry
Dominik Kurczab

12. Cost estimation of research and development projects in the implementation of innovative technologies
Sławomir Augustyn

data & personal data
13. Valuation of data – the gold of the 21 st century
Marek Porzeżyński

14. Data controller’s liability for infringing provisions of regulation (eu) 2016/679
Agnieszka Stępień-Banach

Bibliography
Editors authors
Reviews
Recommendations

książka znaczenie wyceny własności intelektualnej marek panfil

Publication details

Proving the worth. Putting a value on intellectual property

  • Authors: Marlena Jankowska, Mirosław Pawełczyk, Sławomir Augustyn, Marek Panfil
  • Publisher: Difin, Warszawa
  • Year:2019
  • Pages:  1-652
  • Website: Difin, Warszawa

Marek`s part

  • Chapter 7: Business combination (IFRS 3)

Download

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