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The purpose of this paper is to highlight the salient features of the new accounting standards on impairment of goodwill and their practical applications.

To ascertain the research gap, the existing literatures on the subject were critically reviewed and analysed. Objectives were set to identify the significant indicators of goodwill impairment. The areas covered include business combination and goodwill impairment, effects of new standards and current practices of goodwill impairment in the UK, etc.

Goodwill is a unique intangible asset in that its cost cannot be directly associated with any specifically identifiable item and is not separable from the company as a whole. Well planned strategies for preventing goodwill impairment with long‐term perspective would contribute fruitful results.

This study provides awareness to the readers about the strategies in dealing with goodwill impairment.

The purpose of this paper is to examine the value relevance of intangible assets, including goodwill and other types of intangibles in the pre- and post-adoption periods of International Financial Reporting Standards (IFRS). Most importantly, this paper investigates whether the value relevance of reported intangible assets is associated with their value reliability. Furthermore, this paper reports whether the adoption of IFRS improves the value relevance of intangible assets and alters the relationship between value relevance and reliability.

Both price and return models based on Ohlosn theory (1995) are employed to test the value relevance and value reliability of intangibles. Australian-listed firms with capitalised intangibles from 2001 to 2009 are selected in this study. The sample includes 6,650 firm-year observations.

The main result shows that capitalised intangible assets are value relevant in Australia, in both the pre- and post-adoption of IFRS periods. Value relevance is higher in firms with more reliable information on intangible assets. This study finds that the value relevance of intangibles has declined in the post-adoption period of IFRS. However, the positive relationship between the value relevance and the reliability of intangibles has remained unchanged in the post-adoption period.

The paper contributes a new measurement of value reliability of accounting information about intangibles. This paper is one of few studies on the relationship between value relevance and reliability of intangible assets. The results show that value relevance is positively associated with value reliability. This suggests that, when accounting standard setters assess whether the existing IFRS of intangibles should be improved in the future, they need to think not only in terms of whether the standard can provide more relevant information of intangibles to investors but also whether the standard can make the information of intangibles more reliable.

This paper examines accounting harmonisation and determinants explaining accounting measurement policy choice decisions by Asia‐Pacific listed manufacturing companies. Using Thomas' (1991) theoretical framework, four contingent variables (country of reporting, company size, profitability and debt leverage) are examined as possible determinants of firms' accounting choices concerning non‐current asset valuation measurement base, goodwill and depreciation. 130 listed manufacturing companies' annual reports were examined from Australia, Hong Kong, Indonesia, Malaysia, and Singapore. This study involves two phases. The first phase evaluates accounting harmonisation measurement indices in comparison with the extant literature. An important innovation is the operationalisation of Archer et. al. (1995) between‐country and within‐country C indices. Computed comparability indices indicated variations in the level of harmony across the five countries for all three accounting measurement practices. The second phase employed logistic regression to examine possible determinants of accounting policy choice decisions. Such a combined research approach should lead to a better understanding of de facto accounting harmonisation and practices.

Suggests that most managers (other than those in marketing) take the view that too much money is spent on marketing. Adumbrates that the accountant may be able to contribute to improved decision making in marketing with regard to expenditure as an investment outlay rather than current expenses. Stresses, herein, that the concern for accounting is with marketing assets and their intangibility. Discusses further assets, valuation and investment and portrays these with the aid of tables and figures. Sums up by saying that a strong case can be made for recognizing many examples of marketing outlay as investments in assets rather than current operating expenses, showing new light on attitudes towards marketing decision‐making and financial reporting.

Guidance Note 1 of the Red Book states that the valuation of an operational entity includes four components: the land and buildings; the trade fixtures and fittings; the trading potential, excluding personal goodwill; and the benefit of any transferable licenses and consents. Accounting changes in recent years have increasingly recognised the importance of intangible assets such as intellectual capital and goodwill. Similarly, recent tax changes demonstrate the government's acceptance of the importance of such items in achieving and maintaining business competitiveness. This paper has two key objectives: first, to analyse the application of the Red Book to trade‐related valuations, paying particular attention to the treatment of goodwill and second, to critically evaluate the accounting treatment of goodwill and in particular the application of Financial Reporting Standard 10. In order to understand the workings of the market, the corporate hotel sector was used as a case study. The key findings of the research are that valuers expressed considerable unease with the apportioning of market value between tangible assets and goodwill, there was no consensus on how (or if) goodwill could be measured reliably. Second, that the valuation methods adopted are, to a degree, naïve. While explicit changes are made to the cash‐flow projections, there is insufficient appreciation of the changing risk profile that might lead to an adjustment to the earnings multiplier. The accounting difficulties and inconsistencies concerning goodwill arise largely because of inadequate valuation methods. Recent tax changes also point to the need for a robust and defendable valuation methodology. Application of one such theoretically sound approach to valuing goodwill (the bridge model) is illustrated in this paper. While the research focused on the corporate hotel sector, the findings have wider implications for other sectors of the market where operational entities are valued with regard to their trading potential.

The purpose of this paper is to contemplate the degree to which Singaporean firms comply with the highly technical disclosure requirements required under International Accounting Standards (IAS) IAS 36 specific to goodwill impairment testing.

The adoption of IAS in Singapore from 1 July 2004 introduced a highly technical standard (financial reporting standards – FRS 36) which has challenged many preparers. While it is generally accepted that accounting compliance may be suboptimal in transition periods as preparers accommodate change, it is assumed compliance quality improves with the passage of time. This study examines compliance of the largest 168 Singaporean goodwill‐intensive firms over a three year period, 2005‐2007, to interrogate compliance quality post‐transition.

The paper reports distinctly poor compliance systemically over the three years across many facets of goodwill impairment testing disclosures including cash‐generating unit (CGU) definition and goodwill allocation, and key input variables used in estimating CGU recoverable amounts.

The results raise questions about the quality of accounting information among goodwill‐intensive firms in Singapore and the robustness of regulatory oversight institutions operating within Singapore.

The paper illustrates a novel approach to examining the issue of accounting quality under IFRS by examining compliance quality through large sample time‐series analysis focusing on note‐form disclosures.

This study aims to examine whether managers use discretion in determining transitional goodwill impairment loss (initial impairment loss or IIL) upon the adoption of SFAS no. 142, Goodwill and Other Intangible Assets, and whether and how the market reacts to the impairment loss and to the absence of goodwill amortization.

Various empirical models are applied to a sample of 870 firms that completed the IIL test.

It is found that more highly leveraged firms (firms that have undergone a recent management change) report lower (greater) goodwill impairment. Stock return is not associated with a boost in earnings caused by elimination of goodwill amortization, but it is negatively associated with an unexpected IIL, with the association being stronger for highly leveraged firms. Subsequently, analysts revise earnings forecasts for upcoming quarters downward in response to the unexpected IIL.

Possibility of measurement errors in proxies is a caveat.

The findings are consistent with the strategic reduction of the goodwill impairment by management to avoid the violation of debt covenants and with the notion that new managers take a big bath so they can report higher earnings in the future. The market tests imply that unexpected IIL provides value‐relevant information about a negative view of the future profit‐making potential of the firm or an adverse impact on its debt contracts. No association with elimination of goodwill amortization can be interpreted as the market's anticipation or the lack of information content in goodwill amortization.

This research helps better understand the importance of managers' incentives in determining IIL as well as the stock market effect of the announcement of the IIL and the exclusion of goodwill amortization.

The purpose of this paper is to examine the assessment process for goodwill impairment. The paper evaluates compliance with goodwill impairment tests required under the Statement of Financial Accounting Standard 142 and International Accounting Standard 36, highlighting challenges encountered in complying with these standards. The paper explores areas in which improvements might be made in both goodwill‐impairment compliance and disclosures and identifies areas for future research.

The method is exploratory in nature. A combination of data collection, analysis, and interpretation is employed.

The research highlights a number of features of the impairment testing and measurement process that make implementation a challenge. Triggering events are many and vary greatly in significance and severity. Different valuation models are used and there is little conformity in the selection of discount rates. In some cases, though not consistently, control premiums are used to enhance the indicated market values of reporting units. Some firms may even deny the need for an indicated impairment charge. In all of the cases examined, the paper notes the need for judgmental estimates and the possibility that these estimates might be managed to alter or avoid goodwill impairments, limiting the comparability of results across firms.

The findings will provide feedback to standard setters and practicing professionals in an effort to improve practice. For investors and creditors, the results should prove helpful in evaluating the likelihood of goodwill impairments. For researchers, the paper identifies certain questions that may provide fruitful avenues for further investigation.

The findings are based on an examination of a large sample of current filings of public companies that has yet to be performed. The observed richness and variation in the practices employed and disclosures provided both broaden and deepen our understanding of goodwill impairment accounting.

The aim of this paper is to study the rhetoric of goodwill impairment, more specifically rhetoric, as it is constructed in the form of accounts (i.e. statements that explain unanticipated or untoward behavior). The authors argue that goodwill impairment is not only a technical matter but also a rhetorical practice by means of which external scrutiny is responded to.

The data corpus consists of explanations provided by corporations regarding impairment of goodwill. Data were collected from annual reports from companies quoted on NASDAQ OMX Stockholm, Sweden. The impairment explanations were analyzed according to a taxonomy of account types. The explanations were subjected to close reading to discern the potential rhetorical functions of the different accounts.

Seven account types are identified and discussed, namely, excuse, justification, refocusing, concession, mystification, silence and wordification.

There is a need for further research that explores the process of authorship (i.e. writing, editing, negotiating and revising) through which the texts of financial communication are produced.

The findings have implications for the future formulations of standards regarding qualitative explanations in financial reporting in general and explanations of goodwill impairment in particular.

The paper contributes to the knowledge about the use of natural language and rhetoric in financial communication.

The purpose of this paper is to understand whether managerial behavior in impairing goodwill arising from M & As has changed after the adoption of IAS/IFRS, searching for evidences of earnings management (EM) practices. Thus, our goal is to provide a response to the following research questions. Are goodwill impairments used by listed firms’ managers to manipulate earnings? If so, what kind of EM practice is mostly used?

In this paper the authors tested the following hypothesis: H1. In the year of the deal’s closure and in the following four years, the management detects impairment of goodwill in difformity with the previous Italian regulations and related accounting practices. Moreover, the authors tried to determine, for each considered firms, potential symptoms of typical DEM practices widely debated in the financial accounting literature (income smoothing, income minimization, income minimization, or big bath accounting).

Our analysis does not prove evidence of certain EM practices, but it highlights very clearly that, after the adoption of IAS/IFRS, managers’ behavior has deeply changed. Moreover, the analysis shows that there is no univocal choice in favor of a specific EM practice and that every firm pursues its own “strategy.”

Considering the importance of the topic from both the perspectives of managerial (with regard to M & As valuation processes) and financial accounting (with regard to intangibles valuation fulfilled by applying the impairment test instead of the amortization), this work aims to provide a multi-dimensional contribution to the current debate.