ASBJ Staff and HKICPA Staff Jointly Publish Research Paper, Goodwill: Improvements to Subsequent Accounting and an Update of the Quantitative Study

24  March 2020

The Staff of the Accounting Standards Board of Japan (ASBJ Staff) and the Staff of 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 subsequent accounting for goodwill has been a subject of debate for many years.  The objective of this Research Paper is to contribute relevant and timely analyses and arguments to the global research project, and to present the views of the ASBJ Staff and the HKICPA Staff (collectively, ‘the Staffs’).

This Research Paper shows recent results of quantitative studies on goodwill and presents the Staffs’ observation that it is likely that impairment losses on goodwill are not recognised in a timely fashion (this is known as the “too little, too late” issue). 

Based on this observation, this Research Paper discusses the subsequent accounting for acquired goodwill, and in particular whether amortisation should be reintroduced.  The Staffs think 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.  The Staffs explain this common view from their bilateral perspectives.

This Research Paper was submitted to the IASB for the purpose of discussion during the meeting of the Accounting Standards Advisory Forum scheduled in April 2020.

Goodwill: Improvements to Subsequent Accounting and an Update of the Quantitative Study