How do you measure reacquired rights in a business combination at acquisition date?
Reacquired rights
All Replies
Viewing 1 replies (of 1 total)
- You must be logged in to reply to this topic.
How do you measure reacquired rights in a business combination at acquisition date?
Viewing 1 replies (of 1 total)
Pursuant to ASC 805, any reacquired rights should be measured using a valuation technique that considers cash flow payments after a royalty to the acquirer for the right that is being reacquired, as the acquirer is already entitled to this royalty. The reacquired rights are typically valued using the excess earnings method based on the remaining contractual term of the franchise agreement. In accordance with ASC 805-20-30-20, the value of the reacquired right is based on the estimated cash flows over the remaining contractual life, even if market participants would reflect expected renewals.