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When an acquirer measures fair value of an acquired customer-related intangible (e.g. a customer list with expectations of renewals), it should:
ADisregard renewals because they fail the identifiability test
BTake into account market-participant assumptions including expectations of future contract renewals — these renewals themselves do not need to meet the identifiability criteria
CUse only contractually committed revenues and ignore renewal expectations
DUse carrying value in the acquiree's books regardless of FV
Answer & Solution
Correct answer: B. Take into account market-participant assumptions including expectations of future contract renewals — these renewals themselves do not need to meet the identifiability criteria
The identifiability criteria determine WHETHER an intangible is recognised separately; they do not constrain HOW its FV is measured. Market-participant assumptions, including renewal expectations, inform FV. Renewals themselves need not be separately identifiable to inform the measurement.
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