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ACCA Strategic Professional · Strategic Business Reporting (International) · Non-current assets

Which statement about goodwill and other intangible assets in the consolidated financial statements is correct under IFRS Accounting Standards?

Goodwill is tested for impairment at least annually and any impairment loss on it is never reversed in later periods. It is not amortised, and internally generated goodwill cannot be recognised as an asset under IAS 38.

  1. AGoodwill arising on acquisition is amortised over a maximum of 20 years
  2. BAn impairment loss recognised on goodwill may be reversed if the recoverable amount later increases
  3. CGoodwill must be tested for impairment annually, and an impairment loss on it is not reversed in later periodsCorrect
  4. DInternally generated goodwill is recognised if the directors expect future economic benefits

Explanation

IAS 36 requires goodwill to be tested for impairment at least annually and prohibits reversal of goodwill impairment losses. It is not amortised, and IAS 38 prohibits recognising internally generated goodwill.

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