-

Commission Regulation (EC) No 2236/2004 of 29 December 2004 amending Regulation (EC) No 1725/2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standards (IFRSs) Nos 1, 3 to 5, International Accounting Standards (IASs) Nos 1, 10, 12, 14, 16 to 19, 22, 27, 28, 31 to 41 and the interpretations by the Standard Interpretation Committee (SIC) Nos 9, 22, 28 and 32.

Content

-

Transitional Provisions and Effective Date

78. Except as provided in paragraph 85, this IFRS shall apply to the accounting for business combinations for which the agreement date is on or after 31 March 2004. This IFRS shall also apply to the accounting for:

(a) goodwill arising from a business combination for which the agreement date is on or after 31 March 2004;

or

(b) any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of a business combination for which the agreement date is on or after 31 March 2004.

Previously recognised goodwill

79. An entity shall apply this IFRS prospectively, from the beginning of the first annual period beginning on or after 31 March 2004, to goodwill acquired in a business combination for which the agreement date was before 31 March
2004, and to goodwill arising from an interest in a jointly controlled entity obtained before 31 March 2004 and accounted for by applying proportionate consolidation. Therefore, an entity shall:

(a) from the beginning of the first annual period beginning on or after 31 March 2004, discontinue amortising such goodwill;

(b) at the beginning of the first annual period beginning on or after 31 March 2004, eliminate the carrying amount of the related accumulated amortisation with a corresponding decrease in goodwill;

and

(c) from the beginning of the first annual period beginning on or after 31 March 2004, test the goodwill for impairment in accordance with IAS 36 (as revised in 2004).

80. If an entity previously recognised goodwill as a deduction from equity, it shall not recognise that goodwill in profit or loss when it disposes of all or part of the business to which that goodwill relates or when a cashgenerating unit to which the goodwill relates becomes impaired.

Previously recognised negative goodwill

81. The carrying amount of negative goodwill at the beginning of the first annual period beginning on or after 31 March 2004 that arose from either

(a) a business combination for which the agreement date was before 31 March 2004 or

(b) an interest in a jointly controlled entity obtained before 31 March 2004 and accounted for by applying proportionate consolidation

shall be derecognised at the beginning of that period, with a corresponding adjustment to the opening balance of retained earnings.

Previously recognised intangible assets

82. The carrying amount of an item classified as an intangible asset that either

(a) was acquired in a business combination for which the agreement date was before 31 March 2004 or

(b) arises from an interest in a jointly controlled entity obtained before 31 March 2004 and accounted for by applying proportionate consolidation

shall be reclassified as goodwill at the beginning of the first annual period beginning on or after 31 March 2004, if that intangible asset does not at that date meet the identifiability criterion in IAS 38 (as revised in 2004).

Equity accounted investments

83. For investments accounted for by applying the equity method and acquired on or after 31 March 2004, an entity shall apply this IFRS in the accounting for:

(a) any acquired goodwill included in the carrying amount of that investment. Therefore, amortisation of that notional goodwill shall not be included in the determination of the entity’s share of the investee’s profits or losses.

(b) any excess included in the carrying amount of the investment of the entity’s interest in the net fair value of the investee’s identifiable assets, liabilities and contingent liabilities over the cost of the investment. Therefore, an entity shall include that excess as income in the determination of the entity’s share of the investee’s profits or losses in the period in which the investment is acquired.

84. For investments accounted for by applying the equity method and acquired before 31 March 2004:

(a) an entity shall apply this IFRS on a prospective basis, from the beginning of the first annual period beginning on or after 31 March 2004, to any acquired goodwill included in the carrying amount of that investment. Therefore, an entity shall, from that date, discontinue including the amortisation of that goodwill in the determination of the entity’s share of the investee’s profits or losses.

(b) an entity shall derecognise any negative goodwill included in the carrying amount of that investment at the beginning of the first annual period beginning on or after 31 March 2004, with a corresponding adjustment to the opening balance of retained earnings.

Limited retrospective application

85. An entity is permitted to apply the requirements of this IFRS to goodwill existing at or acquired after, and to business combinations occurring from, any date before the effective dates outlined in paragraphs 78-84, provided:

(a) the valuations and other information needed to apply the IFRS to past business combinations were obtained at the time those combinations were initially accounted for;

and

(b) the entity also applies IAS 36 (as revised in 2004) and IAS 38 (as revised in 2004) prospectively from that same date, and the valuations and other information needed to apply those Standards from that date were previously obtained by the entity so that there is no need to determine estimates that would need to have been made at a prior date.

Withdrawal of other pronouncements

86. This IFRS supersedes IAS 22 Business Combinations (as issued in 1998).

87. This IFRS supersedes the following Interpretations:

(a) SIC-9 Business Combinations — Classification either as Acquisitions or Unitings of Interests;

(b) SIC-22 Business Combinations — Subsequent Adjustment of Fair Values and Goodwill Initially Reported;

and

(c) SIC-28 Business Combinations —‘Date of Exchange’ and Fair Value of Equity Instruments.

 

Previous | Index | Next