Joint goodwill research paper by ASBJ and HKICPA

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24 Mar 2020

The Accounting Standards Board of Japan (ASBJ) and the Hong Kong Institute of Certified Public Accountants (HKICPA Staff) have jointly published a research paper 'Goodwill: Improvements to Subsequent Accounting and an Update of the Quantitative Study'.

The research paper presents recent results of quantitative studies on goodwill, updated from the ASBJ's 2016 quantitative study on goodwill. The standard-setters observe that it is likely that impairment losses on goodwill are recognised too late.

Based on this observation, the research paper discusses the subsequent accounting for acquired goodwill. It presents the conclusion that acquired goodwill should be amortised over time on a systematic basis, and the cash generating unit(s) to which acquired goodwill is attributed should be tested for impairment when there is an indication of impairment.

Last week, the IASB published a discussion paper on goodwill and impairment with the preliminary view that the Board should retain the impairment only approach because there is no compelling evidence that amortisation would significantly improve financial reporting.

Please click to access the research paper on the ASBJ website.

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