Accounting treatment of goodwill: yesterday, today and tomorrow

Abstract

The issue of goodwill has been debated in many countries throughout the world. Despite numerous efforts and the existence of accounting standards and exposure drafts issued by various professional bodies internationally, there is yet to be a universally accepted accounting treatment for goodwill. The opinion on this subject differs and changes frequently. The dichotomy of having to preserve prescribed recognition criteria on the one hand and the need to report useful information on the other has led to the many controversial issues debated on the subject of goodwill. This study centres around the international accounting treatment of goodwill in the past, present and future. This study reviewed some of the issues that surrounded the accounting for goodwill where it was found that goodwill accounting had faced many problems. Besides problems, this project also looks into the prospect of the accounting for goodwill in the cyberspace era and emergence of the knowledge-based economy. This study confirms that controversy remains internationally with no solution in sight in the foreseeable future internationally.

Mergers, taxation and accounting performance: Some evidence from Greece

“…Thus, the sample processing and examination in the study were Accounting data analysis with financial statements and ratios provide useful information regarding companies" merger decisions in general and more specifically on taxation issues (Auerbach and Reishus, 1987a;Landsman and Shackelford, 1995;Chatterjee and Meeks, 1996;Seetharaman et al, 2008;Becker and Fuest, 2011;Belz et al, 2013). All the ratios that were used are presented and analyzed in Table 1.…”

“…Hostile M&As or takeovers, where the target company express its disagreement to the M&A action, and attempt to defend itself through some precise actions from the eventual acquirer company. (Seetharaman et al, 2008;Iatridis and Rouvolis, 2010). The relevant IAS is the IFRS 3 -Business Combinations, which is designed to determine the accounting when an acquirer obtains control of a business (M&As).…”

How a knowledge-based approach might illuminate the notion of human capital and its measurement

“…Many presumed this was a failure of accounting, or of market perception, especially since the gap seems to have widened markedly in recent decades-to which Tobin's Nobel-winning work drew attention (Lindenberg & Ross, 1981). Accounting dismisses the matter rather arbitrarily by adding in a balancing item as the firm's 'goodwill' (Seetharaman, Balachandran, & Saravanan, 2004) thus overcoming the ambivalence of a market system that on the one hand prices the sum of the resources going into the firm at X and on the other the value of the integrated outcome at Y. Goodwill, portending profit and the return to the entrepreneur integrating these resources, is GZYKX.…”

Are Discount Rates In Disarray In The First Year Adoption Of International Financial Reporting Standards?

“…Goodwill has been the most controversial issue in many countries all over the world (Seetharaman et al, 2004) . One of the early definitions of goodwill can be found in the "A Counting House Dictionary", where goodwill is defined as a willingness of an owner of a business to relinquish the expectation of the business by transferring it for a consolidation to someone else.…”