In connection with the post-implementation review of IFRS 3, the European Financial Reporting Advisory Group (EFRAG) has been conducting research into a number of potential amendments to the goodwill impairment test with a view to enhancing its application and effectiveness and reducing complexity. EFRAG has issued a discussion paper, “Goodwill Impairment Test: Can It Be Improved?”.

The scope of the publication is limited to impairment testing, and it does not seek to address broader topics such as identification and measurement of acquired intangible assets in a business combination. Nor does it address the extent to which these assets should be separated from or subsumed into goodwill. Ideas presented in the paper focus on how to allocate goodwill to cash-generating units (CGUs), when to determine the recoverable amount, and how to determine the recoverable amount.

EFRAG asks for comments on the advantages and disadvantages of the potential amendments presented in this context. The deadline for comments is December 31.