91
Straco Corporation Limited • Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
27
Acquisition of business (cont’d)
Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Assets required
Valuation technique
Property plant and equipment
Investment property
Market comparison technique and cost technique:
The valuation model considers quoted market prices
for similar items when available, and depreciated replacement cost when appropriate. Depreciated
replacement cost reflects adjustments for physical deterioration as well as functional and economic
obsolescence.
Intangible assets
Relief-from-royalty method and multi-period excess earnings method:
The relief-from-royalty method
considers the discounted estimated royalty payments that are expected to be avoided as a result of the
patents or trademarks being owned. The multi-period excess earnings method considers the present value
of net cash flows related to contributory assets.
Fair values measured on a provisional basis
The following amounts have been determined on a provisional basis, having considered:
•
The fair value of intangible assets (brand, trademarks and others)
•
The deferred tax liabilities arising from the acquisition
•
The goodwill arising from the acquisition
Negative goodwill
Negative goodwill arising from the acquisition has been recognised as follows:
$
Total consideration paid
140,000,000
Fair value of identifiable net assets
(140,113,546)
Negative goodwill recognised
(113,546)
Negative goodwill arising from the acquisition was recognised directly in profit & loss.
