CERTYNEX IFRS ACADEMY

For the acquisition of Dorvenne, the Estriva group's consolidation file shows: identifiable net assets at fair value 5,200,000; consideration 6,000,000; goodwill 800,000. A note states that the deferred tax liability of 240,000 on the remeasurement of Dorvenne's assets 'will be charged to profit or loss at year-end'. Where is the error?

The consideration transferred should have been reduced by the deferred tax liability of 240,000.

The deferred tax liability should have reduced identifiable net assets: goodwill of 1,040,000, with no expense.

No deferred tax is due, the initial recognition exception also covering business combinations.

Goodwill should have been reduced by 240,000, to 560,000.