IASB April 2007

The Board discussed whether to remove the existing exception to the temporary difference approach prohibiting the recognition of deferred tax liabilities on the initial recognition of goodwill. The Board decided to retain the exception.

The Board also discussed the treatment of acquired assets and assumed liabilities that have a tax base different from their initial carrying amount, both within and outside a business combination. The Board tentatively decided that the fair value of such assets and liabilities should be measured on initial recognition using the same assumptions about the tax base that would be made by other market participants. Thus, the application of the Boards’ previous decision to record a ‘purchase discount’ for the difference between that fair value and the consideration paid will relate only to tax base differences resulting from the assumption of the vendor’s tax base.