Business combinations
As described above, we acquired NPTI in two separate transactions. Part of the business was acquired in June 2017 when we acquired the NPTI Acquisition Vessels, and the other part was acquired at the September Closing.
We have accounted for these transactions as business combinations using the acquisition method of accounting as set forth in IFRS 3 Business Combinations, with the Company determined as the accounting acquirer under this guidance. Accordingly, we have measured the identifiable assets acquired and the liabilities assumed at their acquisition date fair values. The consideration transferred has been measured at fair value, with the fair value of the approximately 55 million common shares issued in September 2017 based on the price of such shares on the date of acquisition. The difference between the fair value of the net assets acquired and the fair value of the consideration transferred has been recorded as a bargain purchase gain with respect to the acquisition of the four LR1 tankers in June 2017 and goodwill with respect to the acquisition of the remaining fleet in September 2017. Acquisition related costs have been expensed as incurred. This transaction is further described in Note 2.
Purchase price allocation and goodwill
As of December 31, 2017, goodwill arising from the Merger was provisional on the basis that we are still evaluating the quality and performance characteristics of the vessels acquired. Therefore, as of December 31, 2017 provisional goodwill had not been allocated to a cash generating unit. Once the purchase price allocation is finalized, goodwill arising from the Merger will be allocated to the cash generating units within each of the respective operating segments (LR2s and LR1s) and tested for impairment accordingly.
