Acquisition of an entity that owns mineral reserves
Entity A acquires Entity B for €27 million at 31 October 2012. At the time it assigned the following fair values to the acquired net assets:
|
€ million |
|
|
Mineral reserves (assuming reserves of 10 million barrels) |
10 |
|
Other net assets acquired |
5 |
|
Goodwill |
12 |
|
Consideration transferred |
27 |
At 30 June 2013, after conducting a drilling programme which commenced in March 2013, Entity A obtains information about the reserves (as at 30 June 2013), which when added to the production for the period (i.e. from 31 October 2012 to 30 June 2013) reveals that the mineral reserves at the date of acquisition were not 10 million barrels, as previously thought, but were only 8 million barrels.
Can Entity A revise its initial acquisition accounting to reflect the fact that the mineral reserves are only 8 million barrels, rather than 10 million?