Question

WHAT IF A ACQUIRED ENTITY IS NOT A BUSINESS?

Answer 1

In case the acquired entity is not a business, then the acquired assets are treated as:

1) Long term assets and put under the head "Non operating Long Term Assets" in the Financial Position.

2) These assets are acquired under a defined agreement, which does not have current benefits to the company's business, but can be of value in the future.

3) The non-operative assets are acquired to observe some tax benefits.

4) The non-operative assets can provide certain social benefits which would result in enhencement of the goodwill. Thus,the acquired value of the non-business entity can be treated as Goodwill and scheduled amortisation of the same.

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