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Assessing goodwill for impairment became more challenging during the COVID-19 pandemic because of significant changes in business operations and overall economic uncertainty. Considering goodwill impairment triggering events between reporting dates [...]

Two recent pronouncements by FASB--Accounting Standards Update (ASU) 2010-28 and 2011-08--have altered the accounting for goodwill subsequent to its initial measurement. Conceptually, goodwill is defined as the current value of [...]

Updated accounting standards raise the bar for not-for-profit healthcare organizations. No longer exclusive to for-profit entities, Accounting Standards Codification (ASC) 350 (Intangibles-Goodwill and Other) and ASC 360 (Property, Plant and [...]

The implications of the Statement of Financial Accounting Standards (FAS) No.142 Goodwill and Other Intangible Assets are discussed. The standard governs the way corporations report and account the goodwill in their financial statements.

The IASB recently published for public comment discussion paper DP/2020/1 on Business Combinations - Disclosures, Goodwill and Impairment. Comments can be submitted to the IASB until 15 September 2020. The [...]

How new accounting standards on the real estate industry affect the reporting of goodwill is discussed. The Financial Accounting Standards Board's newly launched Statement of Financial Accounting Standard No. 141 and No. 142 are examined including their effect on goodwill reporting.

With the collapse of Enron, all eyes are on corporate accounting practices. This heightened scrutiny of accounting and financial reporting by the public, the Congress, and regulatory agencies makes it [...]

Trends in reporting business goodwill, after Financial Accounting Standards Board No. 142 on intangible assets was issued, are examined for 87 of the Standard and Poor's 100 companies who disclosed goodwill. Trends are noted, and auditors are reminded of issues exposed by impairment testing and potential earnings manipulation.

The treatment of goodwill as an asset belonging to the shareholder(s) of a professional service corporation, rather than as an asset of the PSC itself, may open the way for the liquidation of such entities at a greatly reduced tax cost, allowing the owners to take advantage of newer limited liability entities for doing business. Special considerations include the presence of covenants not to compete, the treatment of accounts receivable, the possibility of collapsible corporation implications, and the consequences where the PSC is a partner.

The Accounting Standard Board's Financial Reporting Standard (FRS) No 11, 'Impairment of Fixed Assets and Goodwill' provides guidance on how to account for impairments of fixed assets and goodwill. The new standard seeks to ensure that financial statements reflect the value of fixed assets and goodwill at no more than their recoverable amount, that the measurement and recognition of any resulting impairment loss are undertaken in a consistent manner, and that financial statements disclose enough information to allow users to understand the significance of impairment on the reporting company's finances and performance. FRS No 11 governs all financial statements that are meant to provide a true and fair assessment of the financial position and profit or loss or a reporting entity for a certain period.

A study on the effect of international differences in goodwill accounting methods and tax rules and the Tax Reform Act of 1986 on offer premiums in foreign and domestic acquisitions of U.S. target companies from 1982-89 was made. The study shows that the act did not affect domestic offer premiums, though premiums for both groups as well as foreign acquisitions increased after it. The study shows no indication of a relation between offer premiums and accounting standards, but it does seem to affect company acquisition choice.

Financial Reporting Exposure Draft (FRED) 12 introduces principles that should be applied in accounting for goodwill and intangible assets. It varies little from the Accounting Standards Board's (ASB) 1995 Working Paper 'Goodwill and Intangible Assets. The only new proposals added to the Exposure Draft pertain to the presentation of positive goodwill, the treatment of negative goodwill and disclosure requirements. Other proposals included in FRED 12 concern the nature of goodwill and intangible assets, initial recognition, amortization, impairment reviews, and revaluations and restoration of past losses. The ASB invites accounting professionals and other interested parties to comment on the draft, particularly on such issues as impairment reviews, negative goodwill, disclosure requirements, and transitional arrangements.

Goodwill is the source of one of the longest running controversies in accounting. Articles have been written regarding the proper accounting for goodwill for over a century. However, with the [...]

Taylor (1992) argues that accounting policy choices in any year are not assessed independently of policy choices adopted in previous years. This independence assumption is a maintained hypothesis of Anderson and Zimmer (1992). Although Taylor acknowledges that our results remain robust to his suggested adjustments for non-independence, we argue in this reply that such adjustments are unnecessary because temporal independence of accounting policy choices is consistent with the implications of costly contracting between the firm and its claimholders. We develop the arguments that (1) accounting choices are temporally independent and our research design is therefore, appropriate (2) to the extent that there is an independence problem of the type proposed by Taylor (1992) it also applies to cross-sectional studies of accounting policy choice. (Reprinted by permission of the publisher.)

Regulations designed to achieve 'uniformity in practice' in Australian firms' reporting of goodwill were first adopted in 1985 with the introduction of AAS18. Because of the requirement to amortise purchased goodwill, a number of firms either did not comply or took evasive actions to mitigate the effects of the standard. This paper documents and explains the pre-regulation cross-sectional variation in accounting practices. Reactions to the set of regulations introduced between 1985 and 1989 are then described and explained through a longitudinal study of accounting policy choice. We develop hypotheses which explain why the goodwill accounting rules reversed relations between the accounting methods adopted by firms and both the earnings effect of compliance and the market value of the firm's goodwill. The results are confirmatory. (Reprinted by permission of the publisher.)

The study by Anderson and Zimmer /1992~ of goodwill accounting policies uses a pooled time series experimental design. This approach can add substantially to our understanding of accounting policy choices, but not in the manner used by Anderson and Zimmer. Where accounting policy choices are believed to be independent from one period to the next, then a time series approach can greatly enhance our ability to capture the influence on such policy choices of changing circumstances, more so than a simple cross-sectional test. Conversely, if accounting policy choices are not independent between periods, pooling over time can overstate significance levels of statistical tests. The nature of Anderson and Zimmer's data makes the impact indeterminate. However, even under an extreme assumption, pre-regulation evidence remains significant at conventional levels. (Reprinted by permission of the publisher.)

Foreign companies often have an advantage over US corporations in the area of takeovers in that they receive more favorable treatment of their accounting for intangibles, particularly goodwill, under the accounting regimes of their countries than US corporations enjoy under US accounting regulations. Most foreign countries allow goodwill from acquisitions to be charged against shareholders' equity, with no affect on earnings per share, while US accounting regulations require the expensing of goodwill against earnings. US corporations are disadvantaged when it comes to making an acquisition in that, under the Accounting Principles Board (APB) Opinion #17, they must make annual charges against earnings for 40 years of the calculated goodwill, which has a negative impact on earnings, while the corporations of many countries, including the UK, the Netherlands, and Japan, do not suffer such negative consequences which would tend to discourage an acquisition. It would be more appropriate to change APB Opinion #17 to allow the immediate write off of goodwill against shareholders' equity to make US corporations more competitive in the international acquisition market and make their balance sheets more meaningful.

The Accounting Standards Committees' February 1990 Exposure Draft (ED) 47: Accounting for Goodwill, is presented. The ED covers the accounting treatment for goodwill, including the nature and meaning of goodwill, the measurement of goodwill, the amortization of purchased goodwill, and time limits on the write-off of goodwill.

Recently, several multi-billion dollar companies announced big increases in this year's earnings. On the surface, these announcements could cause an investor to perceive a turn in our economic recession is [...]

The Financial Accounting Standards Board (the Board), is working on a project to issue one or more standards to supersede APB Opinions No. 16, 'Business Combinations,' and No. 17, 'Intangible Assets,' and recently posted a summary update of its efforts. The purpose of this paper is to briefly discuss the Board's tentative conclusions concerning the accounting for purchased goodwill, and to compare them to certain other concurrent efforts by standard-setters worldwide. (Reprinted by permission of the publisher.), Goodwill Determined to be an Asset The Board has tentatively concluded that purchased goodwill meets the definition of an asset in accordance with SFAC No. 6, Elements of Financial Statements. [...]

Harmonizing treatment of intangibles may make it difficult to maintain consistency in the conceptual framework of Australian accounting. As part of the move toward international harmonization, the Australian Accounting Standards Board is to issue exposure drafts and standards for intangible assets and goodwill in 1998. The International Accounting Standards Committee (IASC) replaced E50 Intangible Assets in Aug. 1997, offering two exposure drafts, E60 Intangible Assets and E61 Business Combinations. E60 proposes accounting standards for intangibles and E61 proposes changes to accounting standards for goodwill to make them compatible with those for intangibles.

The International Accounting Standards Committee (IASC) has issued a revised version of IAS 22. This new standard, which covers the amortization of goodwill in acquisitions, comes into effect after Jan. 1, 1995. Under the terms of the new IASC standard, the useful life of goodwill is presumed to be longer than five years, a significant change considering that the old rules of the IASC permitted amortization over a 40-year period. Other highlights of IAS 22 are discussed, along with their accounting implications.

How to account for brand names in financial statements? As with accounting for goodwill, various countries' opinions on the *subject differ. The differences show up in their rules governing brand [...]

Byline: David Jetuah Companies in goodwill hole David Jetuah Companies are continuing to bury the worth of acquisitions in goodwill, depriving investors of vital information as the global financial crisis [...]

Byline: David Jetuah Intangibles full of holes in practice David Jetuah Companies are not following the IFRS 3 business combinations standards to the letter and may be paying over the [...]

IFRS 3, business combinations, was issued on March 31 2004, with associated revisions on IAS 36, asset impairment, and IAS 38, intangible assets. Traditionally, local accounting standards in most European [...]

When International Financial Reporting Standards are introduced later this year, the way goodwill is dealt with on the balance sheet will be very different, says Isobel Sharp. And while this [...]

An analysis of SFAS No. 141 and No. 142 show how financial managers can use the new accounting principles to best advantage. Throughout the 28-year history of the Financial Accounting [...]

Q: I have been reading a lot about a new rule change in accounting, scheduled to take effect Jan. 1, that does away with amortization of goodwill acquired in acquisitions. […]

The Financial Accounting Standards Board has sunk to a new low in its latest proposal on accounting for business combinations (released Jan. 24, 2001). On Feb. 23, 1999, FASB issued [...]

In May, FASB announced it was close to replacing long-standing guidance with new statements that would require companies to change their accounting for goodwill and intangible assets acquired in business [...]

The Financial Accounting Standards Board (FASB) in January tentatively decided to eliminate the pooling-of-interests (pooling) method of accounting for business combinations. All business combinations would be accounted for under a [...]

As it fine-tuned its statement on Business Combinations A and Intangible Assets, did the Financial Accounting Standards Board buckle under political pressure from the likes of U.S. Senate Banking Committee [...]

The pages of Accounting Today and other financial media have reported how the Financial Accounting Standards Board has responded to its critics by proposing that the goodwill from combinations be […]

NORWALK, CONN.-- The comment period on the Financial Accounting Standards Board exposure draft on accounting for goodwill in business combinations has ended. Over 200 comment letters have come in, and […]

COMPANIES ARE EAGER TO MEASURE THEIR INTANGIBLES. THEY JUST AREN'T KEEN ON SHARING THEIR RESULTS. Hold the hosannas for Edmund Jenkins and the Financial Accounting Standards Board. Yes, the accounting [...]

A proposed accounting change would make many corporate marriages more immediately accretive to earnings. Will more executives head to the altar? In a stark reversal of position, the Financial Accounting [...]

Do accounting regulators ever change their minds because of pressure from management, Congress or top federal officials? Those with long memories may remember that Congress overruled accountants about the treatment […]

Shareholders could pay dearly for illusory growth How can you fool most investors most of the time? One method that works particularly well is to create growth in sales and [...]

The FASB has tentatively decided that goodwill recorded on corporate balance sheets, arising from acquisitions completed prior to the date the Board issues its final statement on business combinations, should [...]