The Accounting Standards Board of Japan (ASBJ) has published its Research Paper No. 3, “Analyst Views on Financial Information Regarding Goodwill,” and an Agenda Paper, “Possible Approach for Addressing the ‘Too Little, Too Late’ Issue.” Both papers were presented in July at the meeting of the Accounting Standards Advisory Forum (ASAF) at the IASB's offices in London.

For the research paper, the ASBJ conducted in-depth interviews with 11 analysts in Japan with the aim of understanding their current views on goodwill and impairment more thoroughly. The paper notes the following findings:

• The method of analyses varied among analysts;

• The views on the subsequent accounting for goodwill (the amortization of goodwill) varied among analysts;

• Some analysts thought that information regarding the management’s estimate of the period for which expected future cash flows would increase due to the business combination was useful; and

• Many analysts thought that impairment losses on goodwill were recognized later than when they thought the deterioration in the value of goodwill had occurred.

The agenda paper is intended to be the basis for discussion of a proposed new optional approach that would require an entity to choose either the impairment-only model under current IAS 36 or the amortization and impairment model based on what the entity thinks is useful to discharge its accountability responsibilities. The ASBJ believes that this approach would offer an opportunity for preparers and investors to communicate more effectively.