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Author: Philipp Fahrni Publisher: ISBN: Category : Languages : en Pages :
Book Description
The impairment-only treatment of goodwill has been widely criticized due to its reliance on managerial judgment. The disclosure requirements of IAS 36 intend to bridge the communication gap between preparers and investors by mandating firms to publish valuable forward looking information in the notes to their financial statements. By examining the disclosure behavior of 76 publicly-traded firms from the DACH region, this study aims to research how the level of compliance changed from 2009 to 2014. A self-constructed disclosure index allowed to reliably measure the level of compliance with up to 28 disclosure items mandated by IAS 36. Whereas Austrian firms lagged behind their German and Swiss peers in 2009, disclosure scores across the three countries converged at a higher level in 2014. The findings suggest that the prioritization of IAS 36 by the enforcement authorities in 2013 led firms to improve their disclosures. Austrian firms in particular seem to be positively affected by a reform of the local enforcement system. Results from a multivariate regression analysis show that disclosure scores are positively associated with goodwill intensity, impairment intensity, firm risk and the number of CGUs. Negative associations are found for firm size and the ownership structure of a firm. Knowledge of these tendencies may aid auditor firms and enforcement agencies in future examinations. Meanwhile, preparers need to publish more specific and disaggregated information in order to further improve the quality of their disclosures. Findings of subpar compliance with cost-intensive items may be of use for standard setters when evaluating future changes in the disclosure requirements.
Author: Philipp Fahrni Publisher: ISBN: Category : Languages : en Pages :
Book Description
The impairment-only treatment of goodwill has been widely criticized due to its reliance on managerial judgment. The disclosure requirements of IAS 36 intend to bridge the communication gap between preparers and investors by mandating firms to publish valuable forward looking information in the notes to their financial statements. By examining the disclosure behavior of 76 publicly-traded firms from the DACH region, this study aims to research how the level of compliance changed from 2009 to 2014. A self-constructed disclosure index allowed to reliably measure the level of compliance with up to 28 disclosure items mandated by IAS 36. Whereas Austrian firms lagged behind their German and Swiss peers in 2009, disclosure scores across the three countries converged at a higher level in 2014. The findings suggest that the prioritization of IAS 36 by the enforcement authorities in 2013 led firms to improve their disclosures. Austrian firms in particular seem to be positively affected by a reform of the local enforcement system. Results from a multivariate regression analysis show that disclosure scores are positively associated with goodwill intensity, impairment intensity, firm risk and the number of CGUs. Negative associations are found for firm size and the ownership structure of a firm. Knowledge of these tendencies may aid auditor firms and enforcement agencies in future examinations. Meanwhile, preparers need to publish more specific and disaggregated information in order to further improve the quality of their disclosures. Findings of subpar compliance with cost-intensive items may be of use for standard setters when evaluating future changes in the disclosure requirements.
Author: AICPA Publisher: John Wiley & Sons ISBN: 1937352803 Category : Business & Economics Languages : en Pages : 176
Book Description
This new guide provides accounting and valuation guidance for impairment testing of goodwill. Specifically, it focuses on practice issues related to the qualitative assessment and the first step of the two-step test. This resource is a valuable tool for auditors, accountants and valuation specialists seeking an advanced understanding of the accounting, valuation, and disclosures related to goodwill impairment testing (including the qualitative assessment). It is also a vital resource for preparers of financial statements of public and private companies that follow FASB guidance on goodwill.
Author: Laurent Lazar Publisher: ISBN: Category : Languages : en Pages :
Book Description
Goodwill accounting standards, according to International Financial Reporting Standard 3 (IFRS 3) and International Accounting Standard 36 (IAS 36), oblige firms to describe the circumstances that form the basis of the annual impairment testing. We observe that managers' interpretation or application of the IFRS is associated with the information content disclosed in financial statements. The use of boilerplate instead of firm-specific information decreases the information quality. This study investigates the disclosure quality of goodwill impairment testing under the IFRS of German listed companies between 2010 and 2015. Our results provide evidence that firm performance and goodwill impairment losses are positively linked to the quality of goodwill impairment disclosure. Furthermore, the results show that the magnitude of reported goodwill is negatively associated with the disclosure quality. Our findings are robust to additional tests and make several contributions to further research, regulation, and practice.
Author: Tyrone M. Carlin Publisher: ISBN: Category : Languages : en Pages : 13
Book Description
The adoption of IFRS based reporting in Australia for all reporting periods commencing 1 January 2005 onwards resulted in substantial variations to prior accepted reporting practices. One area in which change was particularly profound was in the shift to an impairment testing based regime for goodwill accounting and reporting. The IFRS framework requires substantially greater levels of disclosure about the assumptions brought to bear in sustaining a valuation for goodwill. At face value, this should have resulted in improved transparency and the availability of higher levels of decision useful information. However, a review of disclosures relating to goodwill and its impairment by a sample of large Australian reporting entities in the first year after the transition to IFRS suggests substantial room for improvement. In particular, required disclosures were frequently omitted, or suggested that the technical requirements of the IFRS goodwill impairment testing process had not been complied with. Consequently, it is concluded that at present, it is in exceptional cases rather than a matter of generality that IFRS compliant disclosures sustain improved insights and support better decision making by financial statement users.
Author: Fredrik Nilsson Publisher: Springer ISBN: 3319137824 Category : Business & Economics Languages : en Pages : 148
Book Description
This book is about financial accounting and management control and how these two information systems are related as well as how their objectives conflict. At the most fundamental level, the objective of financial accounting is to provide owners and funders with comparable information on a company's value creation. The aim of management control, on the other hand, is to give the board, senior executives and employees unique information for strategy formulation and implementation. One often-mentioned negative effect is the risk of financial accounting affecting management control design and use, making it less relevant for decision-making at the company level. The book provides an analysis of the complex relationship between financial accounting and management control. The analysis is based on theoretical reasoning as well as several examples of how financial accounting standards affect not only the annual report but also the control system. An interesting, and perhaps unexpected conclusion is that management control seems to affect financial accounting almost as much as financial accounting affects management control. These complex relationships, which can influence the design and use of both financial accounting and management control, are discussed in detail in this book.
Author: Vincent Chen Publisher: ISBN: Category : Languages : en Pages : 50
Book Description
Recent increases in the occurrence and magnitude of goodwill impairment charges highlight the increasing importance of the role of the auditor in goodwill accounting. This study examines the association between disclosures about the fair value measurement of goodwill and audit fees. We find that goodwill-related disclosures are positively related to audit fees, consistent with the idea that auditors increase their audit efforts to mitigate potential reputational and litigation losses (“audit risk effect”). Additionally, our results indicate that the information asymmetry and investor scrutiny moderate the association between goodwill-related disclosures and audit fees. One possible explanation is that auditors take goodwill-related disclosures as a signal of truthful goodwill accounting and this “signaling effect” partially offsets the “audit risk effect” of goodwill-related disclosures when information asymmetry or investor scrutiny is perceived as high.
Author: Ervin L. Black Publisher: John Wiley & Sons ISBN: 1119157218 Category : Business & Economics Languages : en Pages : 244
Book Description
Concepts, methods, and issues in calculating the fair value of intangibles Accounting for Goodwill and Other Intangible Assets is a guide to one of the most challenging aspects of business valuation. Not only must executives and valuation professionals understand the complicated set of rules and practices that pertain to intangibles, they must also be able to recognize when to apply them. Inside, readers will find these many complexities clarified. Additionally, this book assists professionals in overcoming the difficulties of intangible asset accounting, such as the lack of market quotes and the conflicts among various valuation methodologies. Even the rarest and most problematic situations are treated in detail in Accounting for Goodwill and Other Intangible Assets. For example, the authors analyze principles for identifying finite intangible assets and appropriately accounting for amortization expenses or impairment losses. Using the information in this book, the results of these calculations can also be reported with precision on financial statements. These topics are especially important for ensuring the success of any asset acquisition or business combination. In these special cases, the utmost accuracy is essential. This book provides: Rules for identifying and recognizing intangible assets in business combinations and asset acquisitions Guidance on the accurate valuation and carrying amount calculation of acquired and self-created intangibles Tips for overcoming the challenges unique to intangible assets, including impairment testing Clear instructions for disclosing intangible assets, goodwill, and amortization expenses Accounting for Goodwill and Other Intangible Assets is an indispensable reference for valuation students and specialists. Ervin L. Black and Mark L. Zyla provide thorough instructions for understanding, accounting for, and reporting this challenging asset class.
Author: BPP Learning Media Publisher: BPP Learning Media ISBN: 1445369613 Category : Business & Economics Languages : en Pages : 505
Book Description
The examiner-reviewed P7 Practice and Revision Kit provides invaluable guidance on how to approach the exam. It contains past ACCA exam questions for you to try and a question plan to assist with your revision. Three mock examinations provide ample opportunity to practise questions and marking schemes show you how the examiner awards marks.
Author: Dung Manh Tran Publisher: ISBN: Category : Goodwill (Commerce) Languages : en Pages : 560
Book Description
This thesis focuses on goodwill impairment implemented and practised in the first three years after Hong Kong's adoption of the International Financial Reporting Standards (IFRS). Three issues - compliance, discount rate and audit quality with respect to goodwill impairment testing - are the focus of analytical and empirical attention. Understandably, one of the most controversial issues that has been discussed in financial reporting is goodwill. Goodwill impairment is argued to be one of the most difficult issues in practice. This thesis commences with a review of literature relating to goodwill with regard to its conceptualisation, techniques to avoid or alter its recognition, ways to measure and adjust it, and a description of key technical requirements of goodwill impairment in the context of Hong Kong. These issues are demonstrably reviewed in this thesis. This study focuses on filling the gap in knowledge of compliance, discount rate and audit quality in relation to goodwill impairment. To do so, detailed annual reports of listed firms collected from the Main Board of the Hong Kong Stock Exchange in the period from 2005 to 2007, were drawn upon. Employing analytical procedures and the Capital Asset Pricing Model (CAPM), the study provides persuasive evidence on the issues of compliance, discount rate and audit quality with respect to goodwill impairment. The thesis concludes that the rates of non-compliance and poor quality of disclosure pertaining to goodwill impairment conducted by Hong Kong firms reduced in the first three years after Hong Kong's adoption of IFRS. However, non-compliance levels and poor disclosure quality were still high. The sample firms had a tendency to understate discount rates in comparison with independently estimated discount rates in all three years of the investigation. In addition, audit quality among the Big 4 auditors is proved to be heterogeneous rather than homogeneous. The thesis concludes that a big gap exists between the standard requirements of goodwill impairment and practice. In the context of Hong Kong, this research demonstrates that the efficacy of this standard is low. It is therefore likely that the application of goodwill impairment in practice will continue to cause concern for policy makers and standard setters.
Author: Philipp Fahrni
Author: Philipp Fahrni
Author: AICPA
Author: Laurent Lazar
Author: Tyrone M. Carlin
Author: Fredrik Nilsson
Author: Vincent Chen
Author: Ervin L. Black
Author: BPP Learning Media
Author: Dung Manh Tran
Author: Ahmad Syubaili Mohamed