Purchase of intangible fixed assets through enterprise merger

Purchase of intangible fixed assets through enterprise merger

accounting-services-in-vietnam223. The historical cost of an intangible fixed asset formed from the process of enterprise merger of re-purchase character is the reasonable value of such asset on the date of purchase (the date of enterprise merger).

24. The enterprises must determine the historical cost of intangible fixed assets in a reliable way for separate recognition of these assets.

The reasonable value may be:

– The price posted up on the operating market;

– The price of the operation of trading in similar intangible fixed assets.

25. If the operating market for assets does not exist, the historical costs of intangible fixed assets shall be equal to the amounts the enterprises should have paid on the date of purchase of the fixed assets under the condition that such operation is carried out objectively on the basis of available reliable information. In this case, the enterprises should consider carefully the results of these operations in correlation with similar assets.

26. Upon enterprise merger, intangible fixed assets shall be recognized as follows:

Tax-consulting-services 1a/ The purchaser shall recognize assets as intangible fixed assets if they meet the intangible fixed asset definition and recognition criteria specified in paragraphs 16 and 17, even if such intangible fixed assets were not recognized in the financial statements of the asset seller;

b/ If an intangible asset is purchased through enterprise merger of re-purchase character but its historical cost cannot be determined reliably, the asset shall not be recognized as a separate intangible fixed asset but accounted as goodwill (under the regulations in paragraph 46).

27. Where no operating market exists for intangible fixed assets purchased through enterprise merger of re-purchase character, the historical cost of intangible fixed assets shall be the value at which they do not create negative-value goodwill which arises on the date of enterprise merger.