Abstract:

In this paper a problem of asset initial valuation as business combination under IFRS 3 is investigated. Research in accounting are mainly concentrated on goodwill: its recognition, goodwill as an asset, subsequent measurement and applying goodwill to earnings smoothing. However, the allocation matter of assets valued at negative fair value was not considered. Therefore the aim is an analysis of such cases and development of allocation models which enable to measure the initial value of business assets if some CGU are measured at negative fair value. It is argued that basic models: Individual Adjusting Factor Model and Structure Factor Model need arbitrary assumption of adjusting factors as equal to zero. Therefore alternative allocation models are developed. In Overall Adjusting Factor Model for the sum of assets is assigned the overall adjusting factor as to account for total fair value of CGU. In Decreasing Adjusting Factor Model every CGU is assigned and sorted decreasingly according to its fair value. In Sum of Years Digits Model total fair value of business assets is accounted for initial values of CGU according to SYD method in which the participation in total amount of positive fair value is based on the number of the units.