Research-Thesis: A review of intangible assets recognized in the context of acquisitions under IFRS 3.

Abstract

This thesis aims to examine the theoretical framework that regulates the recognition of intangible assets under business combinations, where we find the intersection of three main standards: IFRS 3, IFRS 13, and IAS 38. The objective is to identify how these current IFRS requirements are applied in practice, and the main challenges encountered in the recognition and valuation of these intangibles. The research adopts a mixed-method approach by combining documentary analysis, empirical study, and qualitative perspectives with practitioners. The empirical study is based on a sample of 132 European acquisition deals, extracted initially from the database Refinitiv Eikon between 2020 and 2024, then the data was manually collected from the annual reports and acquisitions notes, including information about the acquisition date, the consideration transferred, the net identifiable assets, goodwill amount, the total intangible assets, the intangibles categories, and the valuation approach under IFRS 13. The qualitative study relies on a sample of 7 highly experienced practitioners, including valuation and IFRS experts, financial analysts, and auditor, through semi-structured interviews based on interview guide questions.

The main findings show that the customer relationships, trademarks, technology related assets are the most frequently recognized intangible assets in acquisitions. Also, the study reveals the predominance of the income-based valuation approaches, particularly discounted cash flow techniques such as the multi-period excess earnings method, and the relief-from-royalty method, in addition to the fact that the large majority of intangible assets are valued under the fair value level 3 in the absence of active markets, and unobservable inputs.

The research further highlighted practical challenges regarding the distinction between goodwill and intangible assets and the high degree of involvement of professional judgment in the valuation process. Although the current conceptual framework provides strong requirements for accounting for this type of intangibles, the study concludes that a significant conceptual point is still ambiguous for practitioners, regarding the interpretability of the substance of certain identifiable intangibles, especially in modern business models and complex acquisition deals.