Ask an expert: FRS 102 and business combinations

Question

My client company currently applies UK GAAP in preparing its accounts. A few years ago it purchased the trade and assets of a competitor with a sizeable proportion of the acquisition cost allocated to goodwill. No other intangible assets were recognised on acquisition. It has decided to apply FRS 102 from the year ended 31 December 2015. Are there any issues that my client needs to consider in the run up to transition?

Answer

Existing UK GAAP will cease to apply to companies in respect of periods commencing on or after 1 January 2015. If your client chooses to adopt FRS 102 it will need to consider what prior year adjustments are required on transition.

In the case of business combinations (which includes trade and asset acquisitions) occurring...