The standard's silences on costs and goodwill

Learning objectives

• Assess the policy choices available when the Standard does not specify how goodwill and accumulated other comprehensive income are allocated, or how transaction costs are accounted for.L3, L4

Normative references

• IFRS 10 §B96When the proportion of equity held by non-controlling interests changes, the entity adjusts the carrying amounts of the controlling and non-controlling interests to reflect the changes in their relative interests; any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the parent. The paragraph does not specify the reallocation of goodwill; for transaction costs, the Committee's agenda decision of July 2009 refers to the existing requirements on transactions with owners (recognition in equity).

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

1 question

• Orme SA acquires from third parties a fraction of the non-controlling interests in Pin SA, without losing control, and bears transaction costs. Pin has goodwill and accumulated other comprehensive income. Write a short note stating how to allocate the goodwill and the accumulated other comprehensive income between owners and third parties, and where to charge the costs, distinguishing case facts, rule and professional judgement.L4