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Goodwill and Impairment [Research]

Next steps:

The International Accounting Standards Board (the Board) expects to issue a Discussion Paper or Exposure Draft at some date in the future (no date specified).

Last updated:

July 2018

Overview

The objective of this research project is to consider how to address the following three areas of focus identified in the Post-implementation Review (‘the PIR’) of IFRS 3 Business Combinations:

  1. whether changes should be made to the existing impairment test for goodwill and other non-current, non-financial assets;
  2. subsequent accounting for goodwill (including the relative merits of an impairment-only approach and an amortization and impairment approach); and
  3. the extent to which other intangible assets should be separated from goodwill.

The PIR identified mixed views, from both comment letters and targeted outreach, about the relevance and cost effectiveness of the existing requirements for the initial and subsequent measurement of goodwill. The PIR also identified the need for improvements to impairment testing for goodwill and other non-current, non-financial assets.

Some respondents were concerned that the current impairment model is not effective in identifying impaired performance of areas of the business (cash-generating units) to which goodwill has been allocated. In particular, the reporting of accounting impairments is perceived as slow relative to the related economic impairment.

In February 2015, the IASB discussed the issues arising from the PIR of IFRS 3 and decided that more work is needed to address the current requirements for goodwill and impairment. Consequently, the IASB added this project to its research program.

The IASB is also assessing how, and with whom, to develop this project, because of other standard-setters' interest in this area, and similarities with other jurisdiction' GAAP on this topic.

Other developments

May 2018

On May 25, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue a Discussion Paper or Exposure Draft at some date in the future (no date specified).

January 2018

On January 26, 2018, the IASB Staff updated this project to indicate that the IASB now expects to issue a Discussion Paper or Exposure Draft in the second half of 2018. 

November 2017

On November 16, 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue a Discussion Paper or Exposure Draft in the first half of 2018.

June 2017

In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue a Discussion Paper in the 1st half of 2018.

March 2017

On March 23, 2017, the IASB staff issued an updated Work Plan which indicates that the IASB expects to decide the project direction after September 2017.

December 2016

On December 15, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to decide the project direction after June 2017.

September 2016

On September 23, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to decide the project direction by March 31, 2017.

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