IFRS reporting: intangible assets and acquisitions
Since the introduction of IFRS 3 ‘Business Combinations’, in 2004, acquiring companies have been required to report the fair values of intangible assets arising from an acquisition separately from the residual allocated to purchased goodwill. In 2009, the UK regulator, the Financial Reporting Council (FRC), performed a survey of the accounting for 20 significant acquisitions to review compliance with IFRS 3.
Shân Kennedy undertook this exercise on behalf of the FRC and, in this article, she reviews the survey results and ways in which companies could improve their accounting for acquisitions through effective use of the guidance available from different sources.
A copy of the FRC report entitled ‘FRC Study: Accounting for Acquisitions January 2010’ is available from the FRC website. Some of the key findings are listed below.