Analysis of Acquisition of Remit Pty by ONYA Group

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student
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CORPORATE ACCOUNTING1
Abstract
This document contains an analysis of the acquisition of Remit Pty by the ONYA group. It
includes the calculation of the amount of goodwill arising from the acquisition and the treatment
of the intangible assets arising from the same. This is done with reference to the relevant
accounting standards issued by the AASB and also by referring to various sources of literature.
The knowledge acquired is used in knowing the impact of the acquisition on the acquiring
company. A consolidated financial statement of the company after acquisition is prepared to
make the users understand the impact of the acquisition on the company. It ends with providing a
set of recommendations to be followed by the company in implementing the acquisition process
in a smooth manner.

CORPORATE ACCOUNTING2
Table of Contents
Introduction..................................................................................................................................2
Acquisition Analysis....................................................................................................................2
Treatment of Intangible Assets acquired by ONYA Ltd.............................................................5
Consolidated Financial Statements of ONYA Group..................................................................6
Report to the CFO........................................................................................................................8
Recommendations........................................................................................................................9
References..................................................................................................................................10
Appendix....................................................................................................................................11

CORPORATE ACCOUNTING3
Introduction
According to paragraph 3 of AASB 3 that deals with business combinations, the company
acquiring the business of another company acquires the assets and liabilities of another business
that constitute the entire business. If the assets do not constitute the complete business, then it
will be considered only to be an asset acquisition (AASB 2014). In the given situation, ONYA
Ltd. is the acquiring company and it is acquiring the business of Remit Pty Ltd for a purchase
consideration of $120 million cash. However, the value of the net assets of the company is much
less than this and is valued at $8.2 million. The CFO of ONYA Ltd., Wendy Patton suggested
that Remit has a large amount of intangible assets and hence the amount being paid by ONYA
Ltd. is justified as it would allow ONYA Ltd. to access major markets that would be extremely
helpful to the company (AASB 2014).
Acquisition Analysis
In a business acquisition, goodwill is defined as an intangible asset that cannot directly be
identified with a particular business but is helpful in identifying the overall value of the business.
According to paragraph 10 of AASB 3, the acquirer company shall recognise the identifiable
assets and liabilities of the acquiring company, separately from the goodwill and any non-
controlling interest in the acquiree company. In order to meet the definition of identifiable assets
and liabilities, the assets and liabilities should meet their definitions as mentioned in AASB 1048
(Standard 2015). The paragraph 18 of AASB 3 suggests that the measurement of these assets
and liabilities should take place at their acquisition date fair values. To measure the amount of
goodwill arising from a particular transaction, the paragraph 32 of AASB 3 suggests that an
acquirer can recognise goodwill from an acquisition only if the consideration transferred by the
acquirer on the date of acquisition exceeds the net of the acquisition-date amounts of the