Who Care About the Goodwill Essay

7710 Words 31 Pages
IFRS

Who cares about goodwill impairment?
A collection of stakeholder views
April 2014 kpmg.com/ifrs

Contents
01 02 03 04 06 08 10 12 14 16 17 18 20 21
Time to engage Exploring the issues Key themes The academic research Is goodwill impairment testing relevant? Is goodwill impairment testing effective? What are the difficulties? Do we need all of these disclosures? What are some of the alternatives? We have three unanswered questions A call to action Appendix 1: The interviewees Appendix 2: References and notes Acknowledgements

© 2014 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.

Who cares about goodwill impairment? | 1

TIME TO ENGAGE

On 30 January 2014, the IASB launched the public
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I thank all of our interviewees for their participation and their candour. Here we present our impressions from those interviews, which we hope will encourage and help you to gather your thoughts and respond to the IASB’s Request for Information.

Mark Vaessen Global IFRS Leader, KPMG International Standards Group

© 2014 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.

2 | Who cares about goodwill impairment?

EXPLORING THE ISSUES

We’ve all heard a lot in recent years about the contribution of goodwill impairment testing in financial reporting to the efficient operation of capital markets. Against a backdrop of weakened economic conditions and their effects on the value underlying goodwill on the balance sheet, impairment testing is increasingly becoming a focus for regulators. But at the same time, we do not get the same sense of the importance of goodwill impairment testing from analysts and other market commentators, or even from preparers themselves. Faced with these diverse views, we decided to seek a better understanding of the differing perspectives on the value of impairment testing in financial reporting for capital markets.

TODAY’S IFRS MODEL
Goodwill acquired in a business combination is capitalised as an asset. It is subject to mandatory annual impairment testing and is not amortised. Any impairment loss is measured

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