Business combinations and acquired intangible assets

Produced by Tolley in association with

Corporation Tax

Guidance

Introduction to business combinations

One of the areas which causes most complexity in relation to deferred tax accounting under IFRS is accounting for business combinations and deferred tax liabilities recognised in respect of acquired intangible assets.

The principle of accounting for business combinations under IFRS is that a fair value should be assigned to each item on the balance sheet. The fair value is based on what the acquiring entity paid for the business it has acquired and typically this will be more than the value of the assets shown on the acquired entity’s balance sheet.

Normally simply revaluing assets and liabilities for accounts purposes does not cause any tax consequence and therefore a temporary difference arises between the carrying value in

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Malcolm Greenbaum

Director and Principal Trainer at Greenbaum Training and Consultancy Limited

Malcolm is a UK Chartered Accountant and Chartered Tax Advisor winning the John Wood Medal in the November 1995 CIOT sitting for the best paper on business taxation. He was previously Director of Finance and Taxation Programmes at BPP Professional Education and has delivered IFRS, US GAAP, UK Tax and VAT training (at all levels from an introduction to the complexities of IAS 39) to a multitude of organisations world-wide since 1992. Malcolm has particular experience in delivering bespoke training programmes to multi-nationals in the financial services, transport and energy sectors as well as delivering UK tax and VAT update programmes to accounting and law firms. He is passionate about training and his enthusiasm ensures that the participants enjoy the learning experience whilst gaining knowledge through their engagement in the sessions and through encouraging them to ask questions and discuss practical issues they may have. Malcolm also provides consultancy services to companies and accounting firms, including provision of VAT advice, reviewing accounting policy manuals and advising on accounting treatments of various transactions. In his spare time, Malcolm enjoys flying having gained a Private Pilot's Licence in 2014.

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