Does IFRS allow/require amortization of goodwill?

Yes or no will suffice, thanks.

i am asking because this schweser explanation is throwing me off, as they seem to be implying that amortization is allowed: Which of the following methods is a valid method of accounting for goodwill? A) Subject to a monthly impairment test. B) Amortized over a specified period of time. C) Fully deducted against equity immediately. Your answer: A was incorrect. The correct answer was C) Fully deducted against equity immediately. The impairment test is annual, not monthly. Both remaining methods are possible, including not amortizing goodwill if it can be reasonably shown that goodwill has not lost its value (i.e. revenue-generating ability).

i thought goodwill amortization was not allowed under any rule whatsoever…

depends if it is intangible or tangible asset. if its like a patient then it is tested annually for impairment. if its like goodwill for machinary then you can depreciate. I think… not 100% sure

this is a poor question and poor explanation by Schweser. IFRS split goodwill into two buckets – tangible and intangible. The Tanigible part is amortizable over a certain time period, the intangible part is not amortizable and is subject to annual impairment testing. The question above implies goodwill as being intangible, therefore, the “best” answer is C, as both A and B are “less likely” to be correct. Please remember that the test is designed for you to find the “best” answer out of the choices given, not necessarily the “absolute correct” answer, as there are certain situations where a better answer can be found (however it is not in the choices given). Hope that helps.

CFAI vol. 2, pp. 42-3: “The goodwill is not amortized under either IFRS or U.S. GAAP, but it is tested for impairment at least annually.” “IFRS 36 retains a one-step approach and requires the comparison of the carrying amount of the cash-generating unit to which goodwill has been allocated to the recoverable amount. If the carrying amount of the unit exceeds the recoverable amount of the unit, the entity recognizes an impairment loss on the profit and loss statement.” Where’s the discussion about amortizing tangible goodwill??

It doesn’t exist. Next!

Sorry, I don’t have the book with me, but here is an explanation from this source: “Intangibles can no longer be attributed to goodwill, but the acquired intangible assets which are identifiable and have infinite life must be recognized in the balance sheet and be amortized over their estimated useful life. Acquired identifiable assets in a business combination are valued at their fair values. The remaining value after the identification of all tangible and intangible assets is than assigned to goodwill”.

Okay, so basically goodwill can’t be amortized, but you can separate out a chunk of acquired assets as intangibles and amortize them as if they were any other asset…

u amortize the writeup of tangibles (i.e equipment) when u acquire a firm.