assume for simplification purposes that it is acceptable to use an average exchange 613361

Replacement award requiring no post-combination service replacing vested acquiree award

Entity A acquires Entity B and issues replacement awards with a fair value at the acquisition date of €1.1 million for awards of Entity B with a fair value at the acquisition date of €1.0 million. No post-combination services are required for the replacement awards and Entity B’s employees had rendered all of the required service for the acquiree awards as of the acquisition date.

The amount attributable to pre-combination service, and therefore included in the consideration transferred in the business combination, is the fair value of Entity B’s awards at the acquisition date (€1.0 million). The amount attributable to post-combination service is €0.1 million, the difference between the total value of the replacement awards (€1.1 million) and the portion attributable to pre-combination service (€1.0 million). Because no post-combination service is required for the replacement awards, Entity A immediately recognises €0.1 million as remuneration cost in its post-combination financial statements.