Face Value

what are the rationale behind fair value adjustments?

I have been told that the net assets of newly-acquired subsidiaries need to be revalued to fair value at the date of acquisition. I don't see how this can produce sensible results unless the net assets of other group members are revalued at the same time?

Public Comments

1. It's so that the results reflect the true value of what was acquired for the amount spent on acquiring it. However the results of the other group companies should also be reflecting fair values ( stock at lower of cost and NRV, debtors having bad debts written off etc, etc).