Accounting Treatment of Goodwill in IFRS and US GAAP

Abstract

The article presents an overview of the new accounting treatment of goodwill regarding International Financial Reporting Standards and American Generally Accepted Accounting Principles. Goodwill acquired through a business combination is no longer amortized but tested for impairment. Despite the fact that the objective of the new International Financial Accounting Standard has been to move towards international convergence; significant differences between standards still exist. The article presents the main changes of the regulation in the last years and the key differences between the two accounting treatments. In spite of the new accounting approach there are still lots of discussions, which indicate that the field is still not properly regulated. Finally, the article offers possible directions for future research and reporting practice.

Analyst Characteristics and the Level of Critical Perception of Goodwill Accounting

“…Consequently, goodwill assets could have an indefinite lifespan under the new standards. While technical differences exist in the accounting treatment of goodwill between US GAAP and IFRS, the new rules share the same principles (Jerman and Manzin ).…”

Determinants of Goodwill Impairment Losses under IAS 36: The French Case

“…The goodwill is recorded on the balance sheet only when it is purchased in a business combination, and it is deduced as the excess of a business acquisition price over the fair value of a target firm"s net identifiable assets (Jerman & Manzin, 2008, Hamberg et al, 2011Stumpell, 2012). For many years, goodwill has been subject of international controversy and debates, related to its recognition as an asset and the treatment after its initial recognition, which is directly linked to income statement.…”

“…For many years, goodwill has been subject of international controversy and debates, related to its recognition as an asset and the treatment after its initial recognition, which is directly linked to income statement. As the number of corporate acquisitions worldwide was soaring all, investors, regulators and executives desired a more adequate way to identify measure and manage goodwill (Jerman & Manzin, 2008). Especially, critics about the amortization method for goodwill, intensified, because the amounts did not reflect the true value of goodwill and mislead investors and financial analysts about the true value of the firm (Lhaopadchan, 2010).…”

Η Λογιστική Αντιμετώπιση Των Άυλων Περιουσιακών Στοιχείων Και Της Υπεραξίας Βάσει Των Ελληνικών Γενικά Παραδεκτών Λογιστικών Αρχών (Γ.Π.Λ.Α.) Και Των Διεθνών Προτύπων Χρηματοοικονομικής Πληροφόρησης (Δ.Π.Χ.Π.)

“…Στην κατεύθυνση αυτή, η αξιοποίηση από την πλευρά τους των άυλων περιουσιακών τους στοιχείων, συνιστά εχέγγυο για την ευόδωση των επιχειρηματικών τους προσπαθειών. Στο ίδιο πλαίσιο θεώρησης, η υπεραξία, ανεπιφύλακτα αναγνωρίζεται ως ένα από τα σημαντικότερα άυλα περιουσιακά τους στοιχεία (Jerman and Manzin, 2008). Ο εννοιολογικός της προσδιορισμός και η λογιστική της αντιμετώπιση συγκαταλέγονται μεταξύ των πλέον αντιφατικών ζητημάτων της σύγχρονης λογιστικής θεωρίας και πρακτικής (Massoud and Raiborn, 2003).…”

“…Στην κατεύθυνση αυτή, η αξιοποίηση από την πλευρά τους των άυλων περιουσιακών τους στοιχείων, συνιστά εχέγγυο για την ευόδωση των επιχειρηματικών τους προσπαθειών. Στο πλαίσιο αυτό, η υπεραξία, ανεπιφύλακτα αναγνωρίζεται ως ένα από τα σημαντικότερα άυλα περιουσιακά τους στοιχεία (Jerman and Manzin, 2008).…”