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In consolidated financial statements goodwill represents a particular position which reflects the acquisitions carried out by a group. It represents in some groups a very significant asset item which sometimes amounts to almost all equity. Of course, it is important to understand how it is calculated and how it evolves in the basis of accounting.
Significant differences between IFRS (International Financial Reporting Standards) and French Accounting Standards
As summarized in the table below, the differences between French GAAP and IFRS (International Financial Reporting Standards) remain significant. This shows how the concept of goodwill remains debated and debatable, consider the main differences.
Accounting for acquisition costs
Focus on three aspects of the calculation of goodwill treated differently between IFRS (International Financial Reporting Standards) and French Accounting Standards
The costs attributable to the acquisition are either integrated in the cost of securities or expended according to GAAP which obviously affects the amount of goodwill. The accounting for these expenses as assets is justified in our view by a simple comparison with what is practiced on other asset classes which are incurred for the acquisition are always included in the cost of the asset. Moreover, when asked about the cost of an acquisition, the investment will always enjoyed incorporating the acquisition costs.
Ultimately, the acquisition costs are always loads, they will be recognized either immediately or through depreciation or lower bound on the gain on the sale.
Significant differences between IFRS (International Financial Reporting Standards) and French Accounting Standards
As summarized in the table below, the differences between French GAAP and IFRS (International Financial Reporting Standards) remain significant. This shows how the concept of goodwill remains debated and debatable, consider the main differences.
Accounting for acquisition costs
Focus on three aspects of the calculation of goodwill treated differently between IFRS (International Financial Reporting Standards) and French Accounting Standards
The costs attributable to the acquisition are either integrated in the cost of securities or expended according to GAAP which obviously affects the amount of goodwill. The accounting for these expenses as assets is justified in our view by a simple comparison with what is practiced on other asset classes which are incurred for the acquisition are always included in the cost of the asset. Moreover, when asked about the cost of an acquisition, the investment will always enjoyed incorporating the acquisition costs.
Ultimately, the acquisition costs are always loads, they will be recognized either immediately or through depreciation or lower bound on the gain on the sale.
