Question
2. Suppose that in 2021, Coach bought 100% of Kate Spade for a consideration of $7 million. The fair value of Kate Spade in 2021
2. Suppose that in 2021, Coach bought 100% of Kate Spade for a consideration of $7 million. The fair value of Kate Spade in 2021 was $6 million. Coach believes that some of the difference can be accounted for on Coachs 2021 balance sheet as Kate Spade brand under Coachs intangible assets. Based on IAS 38, can Coach capitalize Kate Spades brand?
A. Coach should capitalize all of $1 million as goodwill because the brand was not recorded on Kate Spades balance sheet prior to acquisition
B. Coach should record a negative goodwill of $1 million as income
C. Coach may be able to allocate $500,000 as Kate Spade brand on its balance sheet, but it will have to amortize it
D. Coach may be able to allocate $500,000 as Kate Spade ward brand on its balance sheet without having to amortize it
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