EFRAG discussion paper on goodwill impairment testing

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30 Jun, 2017

In connection with the post-implementation review of IFRS 3, the European Financial Reporting Advisory Group (EFRAG) has been conducting research into a number of potential amendments to the goodwill impairment test with the view to enhancing its application and effectiveness and reducing complexity.

The new discussion paper completes EFRAG's current research activities on goodwill, which also saw a discussion paper on accounting treatment for goodwill published in July 2014 and a quantitative study on goodwill and goodwill impairment published in September 2016.

The scope of the publication is limited to impairment testing and it does not seek to address broader topics such as identification and measurement of acquired intangible assets in a business combination or the extent to which these should be separated from or subsumed into goodwill. Ideas presented in the paper focus on how to allocate goodwill to CGUs, when to determine the recoverable amount, and how to determine the recoverable amount. EFRAG asks European constituents for their views on the advantages and disadvantages of the potential amendments presented in this context.

The discussion paper and a press release are available on the EFRAG website. The deadline for comments is 31 December 2017.

On 14 March 2018, the EFRAG issued a feedback statement that summarises the responses received from constituents. In general, the constituents believed that the goodwill impairment test can be improved in certain areas. For more information, see the press release and feedback statement on the EFRAG's website.

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