Hello,
I'm wondering whether the following treatment is actually permitted under IFRS.
Quote from the notes to the 2009 consolidated financial statements of an Italian public company:
"The difference between the acquisition cost [...] and the book value of the acquired companies' equities [...] led to a decrease [...] in consolidated equity."
The mentioned difference was recorded as a negative "consolidation reserve" under Equity.
This is the first time I see such a treatment of what appears as goodwill to me: it is as though the company recorded a goodwill, immediately impaired 100% of it and took the impairment directly to equity without impacting the P&L.
All that Google found on this topic is that under old Italian GAAP, negative goodwill was accounted for as "riserva di consolidamento" but this treatment disappeared with the introduction of IFRS (see www (dot) proz (dot) com/kudoz/italian_to_english/economics/2875369-riserva_di_consolidamento.html). Nothing about positive goodwill (and hence a negative "consolidation reserve") nor about "consolidation reserve" under IFRS.
Could please anyone explain to me in which cases this treatment can be used and if it is frequently to be found?
Thx
I'm wondering whether the following treatment is actually permitted under IFRS.
Quote from the notes to the 2009 consolidated financial statements of an Italian public company:
"The difference between the acquisition cost [...] and the book value of the acquired companies' equities [...] led to a decrease [...] in consolidated equity."
The mentioned difference was recorded as a negative "consolidation reserve" under Equity.
This is the first time I see such a treatment of what appears as goodwill to me: it is as though the company recorded a goodwill, immediately impaired 100% of it and took the impairment directly to equity without impacting the P&L.
All that Google found on this topic is that under old Italian GAAP, negative goodwill was accounted for as "riserva di consolidamento" but this treatment disappeared with the introduction of IFRS (see www (dot) proz (dot) com/kudoz/italian_to_english/economics/2875369-riserva_di_consolidamento.html). Nothing about positive goodwill (and hence a negative "consolidation reserve") nor about "consolidation reserve" under IFRS.
Could please anyone explain to me in which cases this treatment can be used and if it is frequently to be found?
Thx