The IASB standard (IFRS 3 Business Combinations) issued with respect to the treatment of negative goodwill requires that:
A) it must be recognized in income immediately as an extraordinary item.
B) it must be recognized in income immediately.
C) it can be deferred and amortized over a maximum of 40 years.
D) it must be reflected as an increase in Liabilities and a Reduction in Capital for the Parent Company.

Question

Quizplus · Accepted Answer

According to IFRS 3 Business Combinations, negative goodwill must be recognized in income immediately. It cannot be deferred or amortized over a period of time. Option A is incorrect because IFRS does not recognize the concept of extraordinary items. Option C is incorrect because negative goodwill cannot be deferred and amortized. Option D is incorrect because negative goodwill cannot be recognized as a liability or reduction in capital.

The IASB Standard (IFRS 3 Business Combinations) Issued with Respect