Recognition of other costs

Under Thai Financial Reporting Standards, how do you account for the other costs associated with acquiring property, plant and equipment in a business transfer agreement?

Keywords: Mazars, Thailand, Accounting, TFRS, TFRS 3, Business Combinations, Property, Plant and Equipment, TFRS for NPAEs

14 September 2020


Company A is an overseas manufacturer of spare parts.

During 2020, Company A entered into a business transfer agreement with a company in Thailand to acquire a facility consisting of a building, a factory, and equipment.

Company A paid various other associated costs of THB 15 million for things such as legal advisory, valuation, and consulting fees.


How should these transactions be treated in the financial statements for the year ending 31 December 2020?


Paragraph 53 of Thai Financial Reporting Standard 3, “Business Combinations”, states as follows:

  • All other costs associated with an acquisition must be expensed, including reimbursements to the acquiree for bearing some of the acquisition costs. Examples of costs to be expensed include finder’s fees, legal advisory, accounting, valuation, and other professional or consulting fees, as well as general administrative costs, including the costs of maintenance and an internal acquisitions department.

Paragraph 27.2 of the Thai Financial Reporting Standards for Non-publicly Accountable Entities (TFRS for NPAEs) states as follows:

  • Expenses are recognized when a decrease in future economic benefits related to a decrease in assets or an increase in liabilities has arisen that can be measured reliably.

As a result, Company A must recognize the other costs of THB 15 million associated with the acquisition as expenses in the statement of income in the financial statements for the year ending 31 December 2020.

References: TFRS 3 and TFRS for NPAEs