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IFRS3 (revised) requires that goodwill should not be amortised but reviewed for impairment annually. Is this a good approach, or should goodwill amortisation be reintroduced?
The English football pundit Gary Lineker once said, ‘Football is a simple game. Twenty-two men chase a ball for 90 minutes and in the end, the Germans win.’
Yet for a simple game, football generates more debate and ideas than many other topics in society. It can be simple and enjoyable, but it really is a game of opinions. Part of the fun is in the discussion.
Whilst accounting standards may not lead to the same level of heated debate as the relative merits of José Mourinho versus Pep Guardiola, there are certain topics that can get the juices flowing. They may not get the airtime of some of the more high-profile business controversies, but they cause great discussion amongst those of us who are unashamed to have favourite accounting standards.
One such topic is the accounting treatment for goodwill. Ever since the introduction of IFRS 3, Business Combinations, it has been a source of constant debate and opinion. Following the post-implementation review (PIR) of the converged IFRS 3, the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) in the US both have projects focusing on goodwill and intangible assets recognised in a business combination.
This is one of the research projects that the IASB will look to develop in 2017. The IASB has issued two staff papers to demonstrate progress, focusing on two main areas.
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