Blog - Page 4 of 17 - Creative Finance

Revenues and expenses form the basis for determining a company's financial performance. Proper recognition of revenue is crucial for accurate accounting and reporting.

The Tax Administration of the Republic of Serbia has issued a notice regarding the submission of tax returns for calculated contributions to mandatory social security for founders or members of companies, using form PP OD-O, submitted ex officio.

Existing rules related to the flat-rate taxation system remain in force, including the prohibition on increasing taxes by more than 10%.

Goodwill is one of those elements in financial reporting that often raises additional questions — and for good reason. It represents a unique type of intangible asset, and the way it is recognized and measured depends on the nature of the transaction and the applicable accounting standards. Let’s break down the key points.

Initial Recognition of Goodwill

The recognition of goodwill differs depending on whether it arises from:

1. a statutory change (such as a merger), resulting in individual financial statements of the acquirer, or
2. an acquisition of an ownership interest in a subsidiary, which requires the preparation of consolidated financial statements.

1. Goodwill in the Individual Financial Statements of the Acquirer

When goodwill arises as a result of a business combination involving a statutory change (e.g., a merger), it is recognized at its acquisition cost.

This cost represents the difference between the business combination transaction price and the acquirer’s share in the net fair value of identifiable assets, liabilities, and contingent liabilities.
A key requirement is that the acquirer gains control over one or more businesses.

2. Goodwill in Consolidated Financial Statements

When a parent company acquires an ownership interest in a subsidiary, the transaction meets the definition of a business combination in accordance with IFRS 3.

In this case, goodwill is recognized only in consolidated financial statements, measured as the difference between:

• the proportional value of the subsidiary’s net assets, and
• the parent company’s share in its equity.

Subsequent Measurement of Goodwill

After initial recognition, the subsequent treatment of goodwill depends on whether the company applies:

• full IFRS, or
• IFRS for SMEs or national rules for micro and other legal entities.

Entities Applying Full IFRS

Under IFRS 3, goodwill is not amortized.

Instead, the entity is required to perform an annual impairment test, or more frequently if there are indicators of impairment, in accordance with IAS 36.

In other words, the value of goodwill may decrease — but it can never be increased.

Entities Applying IFRS for SMEs or National Rules for Micro and Other Entities

These entities must apply both amortization and impairment testing.

Amortization is determined based on goodwill’s estimated useful life.
If this cannot be reliably determined, the standard prescribes a useful life of ten years, meaning goodwill must be fully amortized within that period.

Conclusion

Subsequent measurement of goodwill is always based on its acquisition cost, but the further accounting treatment depends on the reporting framework:

• Full IFRS → impairment only, no amortization.
• IFRS for SMEs / national rules for micro and other entities → amortization + impairment.

In all cases, the value of goodwill can only decrease — reflecting its specific nature and the importance of proper financial reporting.

Since 2003, two main types of leasing have been available in Serbia — financial and operational — which differ significantly in legal, accounting, and tax treatment.

All entities that previously recorded beneficial owners under prior regulations must update their data no later than December 1, 2025, i.e., within 60 days from the law’s entry into force.

If you, as a resident of the Republic of Serbia, plan to conclude a framework loan agreement with a non-resident (foreign creditor), it is essential to know that you are obliged to report this credit transaction to the National Bank of Serbia (NBS).

Are you already running a business in Serbia but are dissatisfied with your current accounting services? Switch to us—it's easy, safe, and cost-effective.

This option allows taxpayers to avoid monetary penalties, as long as they act in a timely and proper manner.

During the preparation of financial statements, certain errors may occur that affect the fair presentation of the assets, liabilities, capital, company results, as well as taxable profit or loss in the tax balance.