can i recognise intangible assets in (wholly owned) subsidiary after a spin-off in common control

Question

Dear collegues,

We are planning to spin-off a division. A valuation report of an external auditor showed us that our client book has a substant value. Well we are planning to spin-off the division to a NewCo which will be 100% owned by us, so it stays in common control. We are planning to spin it off against the book value, which is the same as the fair value (following a recent impairment). the question is wether it is allowed, after spinning it off to a subsidiary and recognision of the assets and outstanding shares, to recognise also (an extra value) for the intangible assets?

my considerations are:

- you can only recognise intangible assets whenever there is goodwill

- you can only recognise intangible assets whenever the transaction is not in common control

- how should i measure the raise in value (following the recognision of the asset)? in equity? but how to solve the problem that the company value then will exceed the fair value (impairment?)?

Answer 1

As per my understanding, any intangible asset resulting as a result of fair valuation on the DATE OF ACQUISITION of the subsidiary company, which it has not previously recognized, can be recognized by the parent company.

However this can be done only once i.e. on date of acquisition.

As spin-off of ownership will be treated as transaction between owners of the company, therefore no additional asset can be recognized at that date.