Professional Documents
Culture Documents
2 conditions: Control & future economic benefits think in training cost & market share and customer
loyalty
IFRS 3 GOODWILL
Purchased Goodwill: is shown in the SOFP as an intangible non-current asset because it has been paid for.
It should be reviewed annually for impairment.
How to be calculated: it is the difference between the purchase consideration and the value of identifiable
net assets.
Negative Goodwill:
- Results from a bargain purchase or from errors in accounting for purchase cost or assets.
- Arises when the cost of purchase is less than the identifiable net assets. It should be recorded
immediately in Profit or Loss.
HSCS Training & Consulting
IAS 37 Provisions
Costs of restructuring are to be recognized as a provision only when the entity has an obligation to carry
out the restructuring.
To have an obligation: the entity must have a detailed formal plan for restructuring and communicating
this plan with the effected parties.
Note: a decision only is not sufficient as the entity can change its decision easily..Question P155
Contingent Liabilities
It is a present obligation but not recognized because: Not probable cash outflow No reliable
measurement for the amount of cash outflow.
It should only be disclosed in the financial statements.
Contingent Assets
Entities should not recognize contingent assets it could result in the recognition of profits which may
never be realized. But is should only be disclosed ( only if probable )
However, if realization of profit is virtually certain, then the asset is no longer contingent and should be
recognized.
Liability (outflow) Asset (inflow)
Probable Provide Disclose
Possible Disclose Ignore
Remote ( un likely ) Ignore Ignore