StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES) - Essay Example

Cite this document
Summary
To fulfill the property of identifiable, an asset must be separable or it should arise from any contractual obligation or other legal right…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95% of users find it useful
Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES)
Read Text Preview

Extract of sample "Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES)"

Download file to see previous pages

Goodwill is recognized under AASB 3 and it arises when a business combines with another business or one of the businesses acquires a controlling interest in any other business. It is recognized by the acquirer as an asset at the date of acquisition. Goodwill is measured as an excess of the cost of business over the net fair value of assets, liabilities and contingent liabilities incurred or assumed at the acquisition date. There could have been several reasons for writing down the goodwill related to New Plan Shopping Portfolio.

It might be due to the deteriorating economic environment or faltering acquired business. It can also be true that Centro Group had overestimated the worth of New Plan Shopping and thus overpaid for it during the time it was acquired and that’s why it is writing down the goodwill. Furthermore, there can be several other reasons leading to write down of the goodwill such as a significant decrease in the market value of the assets or a business climate that adversely affects the value of the assets of the acquired company. d) Prior to adoption of the International Accounting Standards, the accounting treatment was to amortize goodwill.

Contrast this previous accounting treatment of amortization with the current accounting treatment, and explain on behalf of the AASB why the current treatment is superior? Initially goodwill was amortized over a range of period which resulted in financial discrepancies. However, the recent financial standards prohibit the amortization of goodwill but rather they want businesses to check goodwill for impairment at least annually. Amortization of goodwill has serious drawbacks. Firstly, it is difficult to measure the life of a goodwill in which it will be amortized.

Secondly, it assigns a specific amount to be amortized which does not represent the reality of

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES) Essay”, n.d.)
Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES) Essay. Retrieved from https://studentshare.org/miscellaneous/1571597-financial-accounting-business-combinationsintangible-assetsleases
(Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES) Essay)
Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES) Essay. https://studentshare.org/miscellaneous/1571597-financial-accounting-business-combinationsintangible-assetsleases.
“Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES) Essay”, n.d. https://studentshare.org/miscellaneous/1571597-financial-accounting-business-combinationsintangible-assetsleases.
  • Cited: 0 times

CHECK THESE SAMPLES OF Financial Accounting (BUSINESS COMBINATIONS/INTANGIBLE ASSETS/LEASES)

Islamic Accounting - Ijarah Contract

10 Pages (2500 words) Essay

Accounting for Goodwill and Intangibles : Impact of convergence from US GAAP to IFRS

Consequently, the errant acts of financial executives as evidenced in the Enron and WorldCom scandals in 2001 and the subprime mortgage crisis from 2008 confirmed that financial accounting exercise must be strongly scrutinized globally to steer clear of any such recurrence.... The study mainly focuses on accounting for goodwill and intangibles.... The study mainly focuses on accounting for goodwill and intangibles as espoused in the new rules propagated by the IASB/IFRS whereby goodwill gained from busi¬ness combi¬nations ceases to be amortized but is rather tested for impair¬ment costs annually....
17 Pages (4250 words) Research Paper

Financial Accounting Analysis of Pearson Group

This report discusses financial accounting practices of the Pearson Group ("Company") related to the topics covered in Accounting 205.... he plan assets for the UK Group plan are held by a trust independently of the Company and hence are accounted for at their net value in the balance sheet as per IAS 19 (European Financial Reporting Advisory Group, 2008).... 0%), present value of this obligation was 1,682m (FY06: 1,683m) and the fair value of plan assets were 1,744m (FY06: 1,528)....
11 Pages (2750 words) Case Study

Corporate Reporting and Balance Sheet Financing

Creation of off balance sheet entities, joint ventures, research and development partnerships and operating leases are some of the ways in which the off balance sheet financing method can be employed by a firm.... While the paper analyses the effect of the international standards for leasing and financial instruments as avenues of OBSF, it also reflects some views on the regulatory provisions on impairment of the non-current assets of listed companies and the inadequacies of the financial ratios in bringing out the correct financial strength of the companies adopting techniques of OBSF....
12 Pages (3000 words) Essay

Accounting of Intangible Assets

The paper "Accounting of intangible assets" highlights that as the nature of intangible assets evolves, and whether or not it stabilizes, formulators of accounting standards will keep in pace with the changing business and financial environments worldwide.... It prescribes that the nature of intangible assets is such that, there are no additions or replacements of part of it.... This paper introduces the concepts of assets with particular emphasis on intangible assets....
9 Pages (2250 words) Essay

IFRS 3 and IAS 17

Hence the cost of acquisition is the fair value of net assets assumed (that is the fair value of identified assets including intangible assets reduced by identified liabilities including contingent liabilities) and equity instruments issued by the acquirer in exchange of control of acquiree plus the cost directly attributable to the acquisition.... From this paper, it is clear that IFRS 3 (after revision in January 2008) has become a standard that deals comprehensively with accounting and reporting matters relating to business combinations....
9 Pages (2250 words) Coursework

Intangible Assets

The paper "intangible assets" focuses on main kinds and characteristics of intangible assets which have no physical reality but are an important consideration in the preparation of financial statements.... intangible assets is a term used to describe the assets that are used in the operation of the business but have no physical substance and are non-current (Meigs et al.... he basis of valuation of intangible assets is a cost, and it does so appear in the Balance Sheet....
11 Pages (2750 words) Term Paper

Intangible Assets Management and Evaluation

Most of the costs associated with most internally generated intangible assets face exposure to profit.... intangible assets that meet the relevant criteria are measurable at cost, subsequently measured at cost or using the revaluation model and amortized on a systematic basis over their useful lives.... However, intangible assets with indefinite useful life are not amortized.... Most often, it is confused how intangible assets can be classified as non-monetary when valuing them in the financial statements....
13 Pages (3250 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us