Dissent of Geoffrey Whittington from IAS 38 issued in March 2004

DO1 Professor Whittington dissents from the issue of this Standard because it does not explicitly require the probability recognition criterion in paragraph 21(a) to be applied to intangible assets acquired in a business combination, notwithstanding that it applies to all other intangible assets.

DO2 The reason given for this (paragraphs 33 and BC17) is that fair value is the required measurement on acquisition of an intangible asset as part of a business combination, and fair value incorporates probability assessments. Professor Whittington does not believe that the Framework [References to the Framework in this Dissent are to the IASC’s Framework for the Preparation and Presentation of Financial Statements, adopted by the Board in 2001 and in effect when the Standard was revised.] precludes having a prior recognition test based on probability, even when subsequent recognition is at fair value. Moreover, the application of probability may be different for recognition purposes: for example, it may be the ‘more likely than not’ criterion used in IAS 37 Provisions, Contingent Liabilities and Contingent Assets, rather than the ‘expected value’ approach used in the measurement of fair value.