We comment on the IASB’s discussion paper on goodwill

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21 Dec, 2020

We have published our comment letter on the IASB’s discussion paper DP/2020/1 'Business Combinations — Disclosures, Goodwill and Impairment', which was published by the IASB on 19 March 2020.

In our response to the discussion paper, we support the Board’s initiative to assess whether information provided to investors on business combinations can be improved, including by setting clearer disclosure objectives. However, we are not convinced that the proposals in the discussion paper would result in disclosures that provide more useful information to users of the financial statements. We believe that additional work is required to understand more precisely what additional information is needed by investors and why it is needed, and what information is currently prepared by management to monitor the impact of business combinations.

Also, we do not support the preliminary view of the Board not to reintroduce amortisation of goodwill. Whilst we continue to recognise the conceptual merits of the impairment-only model, we note that there continues to be a perception that too little impairment is recognised too late. Finally, without the reintroduction of goodwill amortisation, we strongly diagree with the proposal to remove the requirement to perform a quantitative impairment test every year.

Download the full comment letter here.

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