CERTYNEX IFRS ACADEMY

The Hollivane group acquired Jorvella in January 20X4 (twelve-month measurement period, case data). In September 20X6, the recovery in Jorvella's profits makes recoverable acquired losses not recognised until then: benefit 320,000. Hollivane debited the deferred tax asset and credited Jorvella's goodwill by 320,000. Where is the error?

The other side: outside the measurement period, the acquired benefit is deferred tax income in profit or loss.

The principle: an acquired benefit not recognised at the acquisition date can never be recognised later, in goodwill or in profit or loss.

The amount: only half of the benefit could reduce goodwill.

The account: the benefit should have been taken directly to equity.