Goodwill

This topic contains 2 replies, has 2 voices, and was last updated by avatar anna1023 1 month ago. This post has been viewed 103 times

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    watersheep
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    Is it possible to have indefinte goodwill, and if so how do you treat it?


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    anna1023
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    Yes. But Indefinite doesnt mean infinite. It just means no forseeable limit to the period over which the asset is expecetd to generate net cash inflows.

    For industries with rapid changes in technology the useful life might be short so look out for these. It is not correct to identify these and indefinite.

    IAS 38 says for indefinite asstets you need to do:

    Test for impairment by comparying the recoverable amount to the carrying amonunt either annualy or whenewer there is indication for impairment ( eg: loss generating operations, damage to the asset)


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    anna1023
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    But if you are an SME and you use the IFRS for SME’s then the Goodwill have to be amortised over 10 years. Look out for this little trap.

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