While fair value is the standard valuation basis for the measurement of assets and liabilities in the preparation of balance sheet following an acquisition, the new IFRS 3 (IFRS 3 revised or IFRS 3R) requests an even wider use of the notion of fair value. Moreover, IFRS 3R requires the amount of goodwill to be fixed at the date at which the control is obtained.
Consequently, a change in fair value subsequent to the acquisition date will not result in an adjustment to goodwill as with the current version of IFRS 3, even in a buyout context (subject to a 12-month period allowed for finalising the business combination accounting).
Another impact of IFRS 3R will be the rise in number and complexity of valuations to be performed when acquiring new businesses. Indeed, the fair value measurement has been expanded to include contingent considerations (e.g. earn-out clauses), whether probable at the acquisition date or not. The fair value measurement has also been expanded to include re-assessment and potential reclassification of some financial instruments.
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