Question
QUESTION 17 (IFRS 3) (a) Negative Goodwill is based on the accounting concept of Goodwill, an intangible asset that represents the worth of a company's
QUESTION 17 (IFRS 3) (a) Negative Goodwill is based on the accounting concept of Goodwill, an intangible asset that represents the worth of a company's brand name, patents and other intellectual 19 property, customer base, licenses, and other items that are difficult to put an amount on but help to make a company valuable. When the price paid is less than the actual value of the company's net tangible assets, negative Goodwill results. Required: In accordance with IFRS 3: Business Combinations, Identify THREE (3) factors that account for a negative Goodwill and indicate its accounting treatment when it occurs in the preparation of consolidated financial statements. (b) Explain the accounting treatment for deferred consideration and contingent consideration in the context of the acquisition of a subsidiary by a parent entity (c) Explain why IFRS 3 Business Combinations requires an acquirer to consolidate the fair values of the assets and liabilities of an acquired subsidiary, at the acquisition date.
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