CERTYNEX IFRS ACADEMY

To obtain a loan, Tandor has its business valued by an independent firm. The report attributes 3,500,000 of the value to the customer base, organisation and reputation of the business, without identifying any separate asset. The banker suggests showing this amount in the statement of financial position. What accounting treatment do you adopt?

Recognise 3,500,000 as an intangible asset, as the independent valuation is reliable.

Recognise nothing, as this amount corresponds to internally generated goodwill.

Recognise 3,500,000 as goodwill and amortise it over the term of the loan granted by the bank.

Recognise 3,500,000 as goodwill, with a corresponding revaluation reserve in equity.