CERTYNEX IFRS ACADEMY

In the business combination carried out by Marquelle, goodwill computed before deferred tax amounts to 300,000 and is not tax deductible. The accountant recognised a deferred tax liability of 75,000 (25% rate) and increased goodwill to 375,000. Where is the error?

The liability should have been recognised as deferred tax expense for the year, not as an increase in goodwill.

The liability should have been computed on 375,000.

A deferred tax asset of 75,000 should have been recognised.

No deferred tax liability should have been recognised: goodwill stays at 300,000.