Business Combinations – Disclosures, Goodwill and Impairment (Possible Amendments to IFRS 3 and IAS 36) [Research]
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Next steps: |
The IASB plans to issue an Exposure Draft (no date specified) |
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Last updated: |
March 2023 |
Overview
In 2016, the objective of this research project was to consider how to address the following three areas of focus identified in the Post-implementation Review (‘the PIR’) of IFRS 3 Business Combinations:
- whether changes should be made to the existing impairment test for goodwill and other non-current, non-financial assets;
- subsequent accounting for goodwill (including the relative merits of an impairment-only approach and an amortization and impairment approach); and
- 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 was 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.
In December 2022, the IASB decided to change the name of the project from Goodwill and Impairment to Business Combinations—Disclosures, Goodwill and Impairment.
On December 13, 2022, the IASB met to discuss its project on Goodwill and Impairment. The IASB had previously set out preliminary views on this topic in the Discussion Paper Business Combinations—Disclosures, Goodwill and Impairment.
The IASB discussed moving the project to the standard-setting work plan. It also discussed:
- the identifiable intangible assets acquired in a business combination;
- the presentation of total equity excluding goodwill; and
- the exploration of topics suggested by respondents that were not included in the project’s Discussion Paper.
The IASB decided:
- to add the project to the standard-setting work plan;
- to continue to use the expertise of advisory bodies instead of creating a consultative group for this project; and
- to use the project title “Business Combinations—Disclosures, Goodwill and Impairment”.
The project involves possible amendments to IFRS 3 and IAS 36.
Other developments
December 2022
In December 2022, the IASB decided to change the name of the project from Goodwill and Impairment to Business Combinations—Disclosures, Goodwill and Impairment.
At its meeting on December 13, 2022, the IASB decided to add this standard-setting project to its agenda.
September 2022
On September 26, 2022, the IASB staff updated the work plan to indicate that the Board plans to decide the project direction in November 2022.
June 2022
On June 27, 2022, the IASB staff updated the work plan to indicate that the Board plans to decide the project direction in Q4/2022.
December 2021
On December 17, 2021, the IASB staff updated the work plan to indicate that the IASB plans to decide the project direction in H2/2022.
November 2021
On November 23, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to decide the project direction in Q2/2022.
October 2021
On October 29, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to decide the project direction in Q1/2022.
September 2021
On September 27, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to decide the project direction in the first half of 2022.
July 2021
On July 23, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to decide the project direction in September 2021.
May 2021
On May 28, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to decide the project direction in Q3/2021.
April 2021
On April 30, 2021, IASB staff updated the Work Plan to indicate that the Board plans to review the Discussion Paper Feedback in May 2021.
March 2021
On March 26, 2021, IASB staff updated the Work Plan to indicate that the Board plans to review the Discussion Paper Feedback in April 2021.
January 2021
On January 29, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to review the Discussion Paper Feedback in March 2021.
September 2020
On September 28, 2020, IASB staff updated the Work Plan to indicate that the Board plans to review the Discussion Paper Feedback in Q1/2021.
April 2020
On April 17, 2020, IASB staff updated the Work Plan to indicate that the Board plans to review the Exposure Draft feedback in the 1st half of 2021. The comment period on the Exposure Draft was also extended by the IASB to December 31, 2020.
March 2020
On March 21, 2020, the IASB staff updated the work plan to indicate that the Board plans to discuss the feedback on its Discussion Paper in the second half of 2020.
On March 19, 2020, the IASB published a comprehensive discussion paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment. The IASB's related project aims at improving the information companies provide to investors, at a reasonable cost, about the businesses those companies buy and would help to hold management to account for its decisions to acquire those businesses. In this context, the IASB is investigating possible improvements to IFRS 3, Business Combinations and IAS 36, Impairment of Assets. The comment period on the discussion paper ends on September 15, 2020.
February 2020
On February 28, 2020, the IASB staff updated the work plan to indicate that the IASB plans to issue a Discussion Paper in March 2020.
December 2019
On December 13, 2019, the IASB staff updated the Work Plan to indicate that the IASB plans to issue a Discussion Paper in February 2020.
Octobre 2019
On October 1, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue a Discussion Paper in Q1/2020.
July 2019
On July 29, 2019, the IASB® staff updated the work plan to indicate that the Board expects issue a Discussion Paper in Q4/2019.
January 2019
On January 25, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue a Discussion Paper in the second half of 2019.
December 2018
On December 14, 2018, the IASB® staff updated the work plan to indicate that the Board expects to issue a Discussion Paper or Exposure Draft in the second half of 2019.
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.
