Business Combinations

Question 1

What is Method 1 in the 2013 EU Accounting Directive?

Answer 1

Good-will needs to be amortised over its useful life, with impairment reviews to be made when indications of impairment could exist.

Question 2

What is good will on acquisition?

Answer 2

The excess cost over fair value of identifiable assets

Question 3

What does IFRS 3 require in relation to goodwill?

Answer 3

After initial recognition, the business combination of goodwill should be measured at cost less any accumulated impairment loss.

Question 4

What does IAS 36 Impairment of Assets prescribe?

Answer 4

That goodwill should be tested for impairment annually, or more frequently if events of changes dictate this.

Question 5

IFRS 3 states in the case of negative goodwill that:

Answer 5

• ## the acquirer should reassess the identification and measurement of the acquires identifiable assets liabilities and contingent liabilities and the measurement of the cost of the combination.