Audit and Technical Partner
Leavitt Walmsley Associates Ltd
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Steve Collings outlines the fundamental principles of accounting for goodwill and intangible assets and assess the differences between current UK GAAP, IFRS and the proposed IFRS for SMEs.
As accountants we are all aware that an intangible asset does not have any physical form, which makes accounting for them a major issue. Below is a summary of some of the main problem areas.
The issue of goodwill has always posed problems for accountants. Goodwill can primarily take two forms - purchased goodwill and internally generated goodwill. It's accounted for under the provisions in FRS 10 ‘Goodwill and Intangible Assets’ and IFRS 3 ‘Business Combinations’.
Under IFRS 3, internally generated goodwill cannot be capitalised. This also appl...
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