116 / 143
NOTES
114 • Consolidated financial statements
PANDORA ANNUAL REPORT 2016
BUSINESS COMBINATIONS, CONTINUED
5.1
For the purpose of impairment testing, goodwill acquired in
a business combination is allocated to those of PANDORA’s
CGUs that are expected to benefit from the combination.
Where goodwill forms part of a CGU and part of the
operation within that unit is disposed of, the goodwill
associated with the operation disposed of is recognised in
the carrying amount of the operation when determining the
gain or loss on disposal of the operation. Goodwill disposed
of in these circumstances is measured based on the relative
value of the operation disposed of and the portion of the
CGU retained.
If any part of the cost of an acquisition is contingent on
future events or achievements, the cost is recognised at fair
value at the time of acquisition. Changes to the fair value
of the contingent payment is recognised in net financials in
the income statement.
Any changes to the fair value of obligations to acquire
non-controlling interests (put options) are recognised
directly in equity.
Acquisition after the reporting period
In January 2017, PANDORA acquired 18 concept stores
in US, 9 concept stores in the UK and 1 concept store in
Australia in three business combinations. The total purchase
price was DKK 230 million. Assets acquired are mainly
non-current assets relating to the stores and inventory.
Expected goodwill from the acquisition, based on the
preliminary purchase price allocation was DKK 130 million.
Accounting policies
Business combinations are accounted for using the
acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred, measured
at acquisition date fair value and the amount of any non-
controlling interests in the acquiree.
For each business combination, the acquirer measures
the non-controlling interests in the acquiree either at
fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition costs incurred are
expensed. Subsequent to initial recognition, goodwill is
measured at cost less any accumulated impairment losses.
SECTION 5: OTHER DISCLOSURES, CONTINUED