entity a acquired entity b but did not capitalise b s finance leases and internally 611086

Items not recognised under previous GAAP

Entity A acquired Entity B but did not capitalise B”s finance leases and internally generated customer lists under its previous GAAP.

Upon first-time adoption of IFRSs, Entity A recognises the finance leases in its opening IFRS statement of financial position using the amounts that Entity B would recognise in its opening IFRS statement of financial position. The resulting adjustment to the net assets at the date of transition is reflected in retained earnings; goodwill is not restated to reflect the net assets that would have been recognised at the date of acquisition. However, Entity A does not recognise the customer lists in its opening IFRS statement of financial position, because Entity B is not permitted to capitalise internally generated customer lists. Any value that might have been attributable to the customer lists would remain subsumed in goodwill in A”s opening IFRS statement of financial position.

Entity C acquired Entity D but did not recognise D”s brand name as a separate intangible asset under its previous GAAP.

Upon first-time adoption of IFRSs, Entity C will not recognise D”s brand name in its opening IFRS statement of financial position because Entity D would not have been permitted under IAS 38 to recognise it as an asset in its own individual statement of financial position. Again, any value that might have been attributable to the brand name would remain subsumed in goodwill in C”s opening IFRS statement of financial position.