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How is goodwill different from other intangible assets?

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How is goodwill different from other intangible assets? An asset, which has no physical existence such as corporate intellectual properties (patents, trademarks, business methodologies and copyrights), trademarks, patents, software, goodwill and brand recognition are known to be an “Intangible asset”. So goodwill is and is not an intangible asset. Goodwill is a residual, unidentifiable, not separable asset. Intangibles are not that but…. How is goodwill different from other intangible assets

Separate identifiable intangible assets acquired

That is because identifiable intangible assets acquired in a business combination are recognised separately from goodwill [IFRS 3 B31]. An intangible asset is ‘identifiable’ if it arises from contractual or other legal rights or if it is separable [IAS 38 12]. Under … Read more

IFRS 16 Right to direct the use of the identified asset

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[IFRS 16 B24] IFRS 16 Right to direct the use of the identified asset 

Requiring a customer to have the right to direct the use of an identified asset is a change from IFRIC 4. A contract may have met IFRIC 4’s control criterion if, for example, the customer obtained substantially all of the output of an underlying asset and met certain price-per-unit-of-output criteria even though the customer did not have the right to direct the use of the identified asset as contemplated by IFRS 16. Under IFRS 16, such arrangements would no longer be considered leases.

A customer has the right to direct the use of an identified asset throughout the period of use Read more

IFRS 16 Leases and joint arrangements

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IFRS 16 Leases and joint arrangements – Entities often enter into joint arrangements with other entities for certain activities (e.g., exploration of oil and gas fields, development of pharmaceutical products).

A contract for the use of an asset by a joint arrangement might be entered into in a number of different ways, including:

  1. Directly by the joint arrangement, if the joint arrangement has its own legal identity IFRS 16 Leases and joint arrangements
  2. By each of the parties to the joint arrangement (i.e., the lead operator and the other parties, commonly referred to as the non-operators) individually signing the same arrangementIFRS 16 Leases and joint arrangements
  3. By one or more of the parties to the joint arrangement on behalf of the joint
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IFRS 13 Asset accumulation method

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IFRS 13 Asset accumulation method – The asset accumulation method and the adjusted net asset method are both generally accepted business valuation methods of the asset-based business valuation approach.

The asset accumulation method is well suited for business and security valuations performed for transaction, taxation, and controversy purposes. All business valuation approaches and methods can indicate the defined value of the subject business entity. IFRS 13 Asset accumulation method

In addition, the asset accumulation method also helps to explain the concluded value—by specifically identifying the value impact of each category of the subject entity assets and liabilities.

IFRS 13 Asset accumulation methodThis informational content of the asset accumulation method is particularly useful in a transaction, taxation, or controversy context when … Read more

IFRS 16 Right to use

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IFRS 16 Right to use – throughout the period of use the lessee has to meet the following two rights: IFRS 16 Right to use

  1. the right to obtain substantially all of the economic benefits from the use of the identified asset, and IFRS 16 Right to use
  2. the right to direct the use of the identified asset. IFRS 16 Right to use


To start simple….. IFRS 16 Right to use

  1. By having exclusive use of the asset over the period of the lease, by having use of its output or by sub-letting the asset, the right to obtain substantially all of the economic benefits from the use of the identified asset has been met, and IFRS
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IFRS 16 into the details

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Recognition of a lease IFRS 16 into the details

To start for the first time a reporting entity has to review all contracts to see whether a specific contract is a lease only or contains a lease component.

Looking at the definition of a lease the reporting entity has to assess whether, throughout the period of use, the lessee has met the following two rights:

  1. the right to obtain substantially all of the economic benefits from the use of the identified asset, and IFRS 16 into the details
  2. the right to direct the use of the identified asset.

There may be a difference between the period of the contract and the period of right to direct the use, the contract contains Read more

Lease of a ship

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The case: Lease of a ship

Customer enters into a contract with Supplier for the use of a specified ship for a five-year period. The ship is explicitly specified in the contract and Supplier does not have substitution rights.

Customer decides what cargo will be transported, and whether, when and to which ports the ship will sail, throughout the five-year period of use, subject to restrictions specified in the contract. Those restrictions prevent Customer from sailing the ship into waters at a high risk of piracy or carrying hazardous materials as cargo.

Supplier operates and maintains the ship and is responsible for the safe passage of the cargo on board the ship.

Customer is prohibited from hiring

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Contract with a ship owner

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Contract with a ship owner is an example of not a lease of a ship and see below for the opposite a lease of a ship, the difference will give you a lesson!!!!

The case: Contract with a ship owner

Customer enters into a contract with a ship owner (Supplier) for the transportation of cargo from Rotterdam to Sydney on a specified ship. The ship is explicitly specified in the contract and Supplier does not have substitution rights. The cargo will occupy substantially all of the capacity of the ship. The contract specifies the cargo to be transported on the ship and the dates of pickup and delivery.

Contract with a ship owner

Supplier operates and maintains the ship and is responsible

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Lease of retail space

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Lease of retail space – When is a lease a lease and capitalised in the balance sheet and when is a contract a rental contract not a lease and expensed through profit or loss and disclosed as off-balance sheet commitments. Want to assess a no lease, look here and below a case is provided of a lease. Lease of retail space Lease of retail space

The case: Lease of retail space Lease of retail space

Customer enters into a contract with a property owner (Supplier) to use Retail Unit A for a five-year period. Retail Unit A is part of a larger retail space with many retail units.

Customer is granted the right to use Retail Unit

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Lease and No lease Fibre-optic cable

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Lease and No lease Fibre-optic cable – What case is a lease and what case is not a lease? Key to the answers of this question is whether the identified right to use is a distinct good or service. It shows that wording in a contract is of major importance to qualify or disqualify for  IFRS 16 Leases. Or depending on want your preference is the contract wording has to be assessed.

The case 1: Lease  – Fibre-optic cable

Customer enters into a 15-year contract with a utilities company (Supplier) for the right to use three specified, physically distinct dark fibres within a larger cable connecting Hong Kong to Tokyo. Customer makes the decisions about the use
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