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Hi,
1.What is the accounting treatment of pre-acquisition dividend?Should the cost of investment be reduced or the dividend be recognised as an income?
2. Impairment loss of goodwill can be reversed ?Thank you very much!
1 According to what I have always believed, and according to the BPP study text, the pre-acq element of a dividend should be deducted from cost of investment. However, i’m not 100% sure that this is still the case – maybe IFRS3 revised has amended it. Certainly there was some discussion about how can we assume that profits accrue evenly through the year and that the dividend is an appropriation evenly attributable to those assumed evenly accruing profits?
2 Where goodwill has been impaired as a result of some external event and then subsequently the same external party eg issues an apology and says they were wrong to criticise our products, then it is available to restore the goodwill – but not to an amount greater than it would have been had we not impaired it.
If however the goodwill is restored after impairment by our own efforts to regenerate the goodwill, that regeneration cannot be recognised – because that would be internally generated goodwill – not recognisable
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