Goodwill and fair value adjustments

Learning objectives

• Translate the goodwill and fair value adjustments of a foreign operation at the closing rate.L2, L3
• Calculate, from the case data, the translated amount or the exchange difference relating to the concept “Goodwill and fair value adjustments as foreign operation items (47)”.L2, L3

Normative references

• IAS 21 §47Goodwill arising on the acquisition of a foreign operation and fair value adjustments to the carrying amounts of its assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation: they are expressed in its functional currency and translated at the closing rate in accordance with paras. 39 and 42 (cross-reference to para. 41A added by the November 2025 amendment, future requirement).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of that operation, expressed in its functional currency and translated at the closing rate.L2
• The Aubrac group acquired an American operation; the goodwill of {goodwill_usd} is expressed in its functional currency. It was translated at the opening date at 0.90 euro per 1 dollar; the closing rate is 0.95 euro. Calculate the goodwill translated at the closing date and the translation movement for the year.L3
• The Delcour group holds goodwill of {goodwill_gbp} on a British operation, translated at the opening date at 1.10 euros per 1 pound (330,000 euros). At the closing date the rate is 1.15 euros (345,000 euros), a movement of {translation_difference}. Case convention: the movement is taken to the translation reserve. Post the entry.L3