Global BV News: Video of panel on whether goodwill is a wasting asset

BVWireIssue #209-1
February 5, 2020

global business valuation
goodwill, goodwill impairment, impairment testing, intangible

Accounting rule makers across the globe are mulling the idea of upending the current goodwill impairment model and reverting back to one of amortization. A panel of international business valuation experts discussed this during the IVSC’s Annual General Meeting in Singapore. An interesting 54-minute video of the discussion is now available, and the panel includes Andreas Ohl (PwC), Kevin Prall (BDO), Eugene Hsiao (CFA Institute), Tatsumi Yamada (IVSC), and Wiley Pun (Savills).

The IVSC has put out two exceptional papers on this matter. The first paper concludes that goodwill is not a wasting asset, a conclusion supported by empirical evidence. The second paper concludes that, while the current impairment model provides “significant” information to users of financial statements, its performance as a leading indicator has been inconsistent, but reverting back to amortization would only make matters worse. The third and final paper is due out this spring and will include “practical solutions to enhance the information value of the goodwill impairment test.”

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