How does IFRS differ from UK GAAP about goodwill in associates/joint ventures?

Goodwill recognition is a significant aspect of accounting for acquisitions and can vary significantly between different frameworks. In the context of IFRS and UK GAAP, the correct understanding revolves around the treatment of goodwill arising from investments in associates and joint ventures.

Under IFRS, goodwill is recognized at the time of acquisition of an associate or joint venture, reflecting the excess of the purchase price over the fair value of the net identifiable assets acquired. This is consistent with the principles set out in IFRS 3 (Business Combinations), which mandates that goodwill be recognized as an asset and not amortized but tested for impairment on an annual basis.

In contrast, UK GAAP has historically been more restrictive. While the new FRS 102 allows for the recognition of goodwill on acquisitions, goodwill associated with associates and joint ventures does not typically follow the same treatment in prior UK GAAP frameworks. Instead, it often requires a more conservative approach, where goodwill may be less straightforwardly recognized or is subject to different amortization rules, depending on the specific guidance related to the entity's structure.

Therefore, the assertion that goodwill is recognized by IFRS while UK GAAP does not acknowledge it aligns accurately with the core principles of both frameworks regarding how goodwill is treated in the context