Goodwill recognition in IFRS 3

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. According to IFRS 3 Business Combinations, how should intangible assets in the acquired business currently be recognised?

  2. Which intangible assets are the focus of further research from the IASB going forward -

  3. Which of the following is one of the reasons that users suggested the current policy regarding intangible assets acquired in business combinations did not produce useful information?

  4. If some intangible assets were subsumed into goodwill, which of the following impacts is unlikely?

  5. What is the aim of the suggested move towards referring to customer data rather than customer lists?

  6. To which model of impairment is the pre-acquisition headroom being applied?

  7. What is the aim of the PH approach?

  8. Which of the following statements is correct regarding the proposed PH approach? Statement 1 - the headroom should be measured at acquisition; Statement 2 - the headroom should be remeasured at the date of each impairment review; Statement 3 - the headroom should be remeasured at the date of subsequent acquisitions of subsidiaries

  9. At acquisition of an 80 percent owned subsidiary, a company calculates the following items in respect of a CGU - Carrying amount of CGU net assets at acquisition - $1,000; Recoverable amount of CGU at acquisition - $1,400; Allocated net assets of subsidiary - $700; Allocated goodwill of subsidiary - $500. At the date of the impairment review, the recoverable amount of the CGU is deemed to be $2.3 million. Under the PH model, what should be recognised in respect of goodwill at the date of the impairment review?

  10. Which, if any, of the following statements regarding the PH approach proposed by the IASB is correct? Statement 1 – The PH approach will lead to an increase in net assets at acquisition; Statement 2 – The PH approach will lead to a decrease in goodwill at acquisition