The goodwill comment period is extended for one last time, to 31 December

BVWire–UKIssue #21-1
December 1, 2020

This discussion began in earnest in 2015 as part of the discussion paper ‘Business Combinations—Disclosures, Goodwill and Impairment,’ and the current question about the treatment of goodwill has been the subject of extensive discussion by ICAEW, IVSC, and international groups. Now, the International Accounting Standards Board (IASB) has extended the comment period to 31 December.

The IASB started with the assumption that goodwill is not always recognised in a timely fashion and that disclosures required by the IFRS standards are insufficient or potentially confusing. Concern has also been expressed about the cost and risk of the current impairment testing model. Leaders of the business valuation and auditing professions have had a wide range of responses already, but most seem to argue that the current impairment model offers more benefits than a ‘wasting asset’ amortisation alternative.

However, most of the feedback IASB received so far has raised concerns with alternative models. Perhaps the most forceful response came from a very long comment letter the CFA Institute prepared and sent to the US FASB. Among other things, the comment letter suggests that amortising the trillions of pounds of goodwill on global balance sheets would dwarf the total value of corporate profits for several years.

Please let us know if you have any comments about this article or enhancements you would like to see.