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Dear Sara,
As requested, I have prepared a report outlining the following main points:
How a purchase price must be determined according to IFRS.
An evaluation of whether the purchase price assigned by Diginet to the Interwip acquisition
is in accordance with IFRS.
a) An evaluation of the Diginet purchase price allocation assumptions.
b) The final purchase price allocation is said to be subject to further refinement. What is
implied by this statement?
c) What is the impact of the current allocation on Diginet’s and Telnet’s future
consolidated financial statements
How the transaction affected Interwip and Telnet.
I have made an in depth analysis based on these requests and have provided my
recommendation to adjust the transaction in question. In order to identify the correct and
incorrect details of the preliminary financial statements submitted by Diginet, we must first
assess the acquisition of Interwip. Interwip has agreed to transfer full control of operations to
Diginet and henceforth become a wholly owned subsidiary. This acquisition was accomplished
through a complete 100% share purchase. In the process, the company Telnet (which
previously owned 51% of Diginet) had its shares diluted to a non-controlling interest of 41%.
You will find below my findings to your requests.
Sincerely,
Sam
Staff Accountant - OSC