Bargain Purchase

The total consideration transferred by the acquirer to obtain control of a target business in a merger or acquisition. The purchase price encompasses cash, shares, assumed liabilities, and contingent consideration, and forms the basis for purchase price allocation under IFRS 3 and ASC 805, where it is allocated across identified tangible assets, intangible assets, and goodwill.

The process of allocating the total consideration paid in a business combination to the identifiable tangible and intangible assets acquired and liabilities assumed, with any residual assigned to goodwill. PPA is required under IFRS 3 and ASC 805 and is the primary mechanism through which acquired intangible assets are recognised on the balance sheet.

The excess of the fair value of identifiable net assets acquired over the purchase consideration in a business combination, now termed a bargain purchase gain under current standards. Under IFRS 3, negative goodwill is recognised immediately in profit or loss after the acquirer reassesses the identification and measurement of all assets and liabilities.

A business combination achieved in stages, where the acquirer held a previously existing equity interest in the acquiree before obtaining control. Under IFRS 3 and ASC 805, the acquirer must remeasure its previously held equity interest at fair value at the acquisition date and recognise any resulting gain or loss in profit or loss.

The required accounting method for business combinations under IFRS 3 and ASC 805, which involves identifying the acquirer, determining the acquisition date, recognising and measuring the identifiable assets acquired and liabilities assumed at fair value, and recognising goodwill or a gain from a bargain purchase. The acquisition method replaced the previously permitted pooling of interests method and ensures that all identifiable intangible assets are separately recognised at fair value on the acquirer's balance sheet.

An initial estimate recognised in a purchase price allocation when the accounting for a business combination is incomplete at the end of the reporting period in which the acquisition occurs. Under IFRS 3 and ASC 805, the acquirer has a measurement period of up to 12 months from the acquisition date to finalise the fair values of identifiable assets, liabilities, and consideration.

The equity in a subsidiary not attributable to the parent company, representing the ownership stake held by minority shareholders. Under IFRS 3 and ASC 805, non-controlling interests in a business combination are measured either at fair value (which results in full goodwill) or at the NCI's proportionate share of the acquiree's identifiable net assets (which results in partial goodwill).

A portion of the purchase price in an acquisition that is payable at a future date, either as a fixed amount or contingent on the achievement of specified milestones. Deferred consideration must be recognised at fair value at the acquisition date under IFRS 3 and ASC 805, with subsequent changes in value typically recorded through profit or loss.