IFRS FAQ

How does IFRS goodwill treatment differ from HGB?

Under IFRS, goodwill is not amortized — it is tested for impairment annually under IAS 36. Under HGB, goodwill is amortized on a scheduled basis over its useful economic life, with a 10-year default. IFRS entities carry goodwill at cost less accumulated impairment losses; HGB entities carry it at cost less accumulated amortization.

What happens to the FCTR when a foreign subsidiary is disposed of?

The cumulative FCTR balance relating to that entity is reclassified from OCI to profit or loss (IAS 21.48). This differs from HGB where the Eigenkapitaldifferenz stays within equity and is not recycled through profit or loss.

Is proportional consolidation permitted for joint ventures under IFRS?

No. IFRS 11 requires the equity method for joint ventures. Proportional consolidation is only permitted for joint operations — arrangements where the parties have direct rights to assets and direct obligations for liabilities. Under HGB, proportional consolidation for joint ventures remains valid (§310 HGB).

Is deferred tax on PPA mandatory under IFRS?

Yes. IAS 12 requires recognition of deferred taxes on all PPA temporary differences — including those related to goodwill in some circumstances. Unlike HGB §306 Satz 3, there is no carve-out specifically for the goodwill difference under IFRS.