Magazine article Financial Management (UK)

IASB Issues Final Part of Standards Package

Magazine article Financial Management (UK)

IASB Issues Final Part of Standards Package

Article excerpt

In a burst of hyperactivity at the start of April, the International Accounting Standards Board (IASB) pushed out three new international standards and three amendments to existing IASs.

The six additions complete the package of international financial reporting standards that listed European companies will be required to use from January 2005. A period of calm will now follow as the IASB assesses the implications of the standards and identifies areas where it can work towards convergence.

The new and revised standards, and the key issues they raise, include:

* IFRS3 "Business combinations". This will prohibit merger accounting and mandate that all business combinations are accounted for using the purchase method. The likely costs of restructuring an acquired entity will have to be treated as post-combination expenses, unless the entity has a pre-existing liability for restructuring.

* IAS36 "Impairment of assets" and IAS38 "Intangible assets". These amendments are linked to IFRS3. Intangible items acquired in a business combination are required to be recognised as assets separately from goodwill. The UK practice of amortising goodwill and intangible assets with indefinite useful lives will be prohibited. Instead, they must be tested for impairment annually, or more frequently if events or changes in circumstances indicate a possible impairment.

* IFRS4 "Insurance contracts". This is a stop-gap standard designed to eater for the 2005 deadline. …

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