The major change in this standard is the way intangible assets are recorded and the treatment of amortization. It states how goodwill and other intangible assets shall be treated after they have been initially recorded at acquisition. The standard abolishes the amortization of goodwill and other intangible assets and states that the value of these assets shall not decrease and those of total assets. Due to this change their might be fluctuations in the income with respect to the previous standard as the impairment losses would probably occur at irregular intervals and in different amounts (Financial Accounting Standards Board).
Previously in acquisitions the acquired firm or business was treated as a separate entity and the amount of goodwill was not properly treated. This standard combines the acquirer and acquired firm and goodwill is based on units which are called reporting units. Current practice for the treatment of intangible assets recognized limited life of these assets and a limit of 40 years was set. The new standard recognizes that intangible assets can have a limitless life and that these assets would be checked for impairment each year and the intangible assets that have a limited life shall be amortized according to their respective lives.
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