IFRS 3 – Business Combination

Dear All, My question is that, in a situation of merger or business combination, where the structure is such that a new company A is formed to take over the businesses of B and C. The question is whether IFRS 3 Business Combinations is applicable in this case as practically the entire IFRS 3 is [...]

By |May 18th, 2009|BUSINESS COMBINATION|4 Comments

Consolidation – Goodwill related questions

Hi all, Can you please help me with the following queries. Thanks in advance! 1. Goodwill - On consolidation, is it possible to actually increase goodwill figures or can goodwill only be reduced/impaired? 2. IFRS 3 states that negative goodwill is to be credited to the income statement. So if we CR Income, what's the [...]

By |May 14th, 2009|CONSOLIDATION|3 Comments

How to account intragroup trading under Business combination

Dear all, I need clarification with regard to how to treat an intra group trading b/n parent and subsidiaries group accounts during preparation of consolidated statement of financial position as well as income statement. I always confuse and need a clear guideline on how to treat it. For instance the subsidiary sold to the parent [...]

By |March 10th, 2009|BUSINESS COMBINATION|5 Comments

Preliminery expenses

Dear All, The Company was incorporated in Oct 2007.Could you please give your expert opinion on the treatment of preliminary expenses (Revenue generation is not yet started) e.g. rent, salary, traveling etc. incurred during Oct 2007- Aug 2008. Please reply in reference to IFRS. Revenue is expected in Sept 2008. In my view, preliminary expenses [...]

By |December 15th, 2008|IFRS|0 Comments

Effective date of business combination

Suppose Entity A acquires Entity B in a business combination and all the considerations have been completed by 31 December 2007 except that government approval which was still pending as at year end. Should entity A consolidate Entity B as at 31 December 2007? Regards, Nyasha I believe the answer lies in the issue of [...]

By |August 28th, 2008|BUSINESS COMBINATION|0 Comments

IFRS 3 Business Combination

Dear All, one of our Client has purchased a 100 % interest in a Subsidiarywhich is loss Making…   He has passed the following entry in their own books   Goodwill DR                120,000 Investment CR                          20,000       (Equity of subsidiary) Payable to subsidiary              100,000        (purchase price)   My question is can Investment AC be -VE at initiation. and as far as i remember the initial recognition of an asset should be at its cost.and my plea to the Client is that the entry should be   Investment DR 100,000                  Payable           100,000 and goodwill be shown in Consolidated ACs.   Kindly comment….and correct me if i am wrong.   Regards I think the entry you proposed is correct as goodwill from acquisition would only be shown in consolidated a/c.  […]

By |August 28th, 2008|BUSINESS COMBINATION|0 Comments


Hey ya'll,   I need some guidance with the following issue:   In August 2000, Company A bought Company B.   Company A hired an Advisor to help it in obtaining financial resources to buy Company B. The advisor fees will be paid by Company A with a 3% of the future dividends to be distributed by [...]

By |August 27th, 2008|IFRS|0 Comments