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Consolidation – IFRS

15 May 2009 2,521 views 3 Comments

Dear All,

Please let me know the treatment of Existing negative goodwill incase of first time adoption of IFRS

Regards

Chirag

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3 Comments »

  • ifrsexpert said:

    IFRS 1 does not refer specifically to existing negative goodwill at first time adoption, but the wording of Appendix C.(c)(i):

    “the first-time adopter may have classified a past business
    combination as an acquisition and recognised as an intangible asset
    an item that does not qualify for recognition as an asset in
    accordance with IAS 38 Intangible Assets. It shall reclassify that item
    (and, if any, the related deferred tax and non-controlling interests)
    as part of goodwill (unless it deducted goodwill directly from equity
    in accordance with previous GAAP, see(g)(i)below)”

    plus the basis for conclusions BC.38 lead one to conclude that any existing negative goodwill does not qualify for exempt treatment, and should be written off. Logically, however, it would not appear in the income statement but be credited to retained income as part of the adjustment for prior years’ GAAP differences.

    # 15 May 2009 at 11:01 pm
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    # 17 June 2009 at 3:24 am

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