In determining whether GAAP has been properly applied, it is
possible to have regard to any consolidated accounts drawn up in
respect of the group of which the taxpayer company is a member. The
provisions specifically permit reference to be made to any view
taken of the useful life or economic value of an asset where that
view lies behind the treatment in the consolidated accounts.
The consolidated accounts, to which reference can be made for
this purpose, need not have been prepared under GAAP. It is
therefore possible to have regard to the view taken of the useful
life or economic value of an asset reflected in the consolidated
accounts of a foreign owned group even though they have to be
prepared under the accounting practices of the group’s home
jurisdiction.
But the treatment of intangible assets in overseas
consolidated accounts prepared under foreign law cannot be taken
into consideration where the treatment substantially diverges from
that under GAAP. An example of such a divergence would be a
practice of not writing off goodwill to the profit and loss account
over its expected useful life because it has to be amortised over a
set period instead. In these circumstances the amortisation rate
used in the overseas consolidated accounts would not affect the
rate at which assets were written down for the purposes of Schedule
29.
