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Goodwill Impairment Test Disclosures Under Ias 36

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Goodwill Impairment Test Disclosures Under Ias 36

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Author : Marius Gros
language : en
Publisher:
Release Date : 2019

Goodwill Impairment Test Disclosures Under Ias 36 written by Marius Gros and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.

Prior research documented that higher disclosure quality reduces information asymmetry and cost of capital. Accordingly, firms have an incentive to comply with disclosure requirements and to provide voluntary disclosure. However, prior research on mandatory disclosures on goodwill impairment testing reveals low compliance among European firms. In this paper, we contribute to the literature and assist regulators, enforcers and standard setters by shedding light on the determinants of the observed low levels of compliance and voluntary disclosure. Consistent with economic theory, we reveal that firms determine the level of disclosure stra-tegically. We find firms with higher preparation and proprietary cost to show lower compli-ance and less voluntary disclosure while firms with higher growth opportunities provide better compliance and more voluntary disclosure. However, the strategic behavior is constrained by enforcement. Consequently, our results are more (less) pronounced within a weak (strong) enforcement environment.

Determinants Of Mandatory Goodwill Disclosure The Case Of Impairment Testing In Germany

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Author : Laurent Lazar
language : en
Publisher:
Release Date : 2018

Determinants Of Mandatory Goodwill Disclosure The Case Of Impairment Testing In Germany written by Laurent Lazar and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.

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.

Practice Of Disclosures Related To The Impairment Test Of Goodwill

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Author : Philipp Fahrni
language : en
Publisher:
Release Date : 2016

Practice Of Disclosures Related To The Impairment Test Of Goodwill written by Philipp Fahrni and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.

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.

Ifrs 5 Non Current Assets Held For Sale And Discontinued Operations

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Author : International Accounting Standards Board
language : en
Publisher:
Release Date : 2004

Ifrs 5 Non Current Assets Held For Sale And Discontinued Operations written by International Accounting Standards Board and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Assets (Accounting) categories.

Goodwill Impairment

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Author : Caner Akbaba
language : en
Publisher:
Release Date : 2015

Goodwill Impairment written by Caner Akbaba and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.

As it is well known that financial information is useful when it is relevant and represented faithfully what it purposes. In this regard, goodwill which represents both the future benefit expectation and the value attributed to the subsidiary by its parent company in fact, has to be relevant and faithfully reported in the financial statements of the parent company to help the investors and other participants to decide soundly. However, especially in Turkey despite the increase in mergers and acquisitions, compliance in reporting goodwill and impairment analysis was not studied sufficiently. At this point the issues “leaving goodwill write off only to the discretion of company management” and “reporting quality of goodwill and its impairment test” that need to be considered with a great deal in Turkey.As a result of historical evolution of accounting rules and practice, relatively advanced reporting standards on goodwill and impairment of goodwill were set up under IFRS and they are welcomed in most of the countries in the world. However, when we look at the Turkey case, there seems to be some problems in implementation of goodwill related reporting standards especially on impairment of goodwill. This study is limited with companies listed in Borsa Istanbul. Their annual reports that comply fully with IFRS stated between years 2008 and 2014 will be used. Financial figures presented in the annual reports will be compared with the mandatory disclosure requirements for IAS 36.

Goodwill Impairment Testing Under Ifrs Before And After The Financial Crisis

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Author : Alex Almici
language : en
Publisher:
Release Date : 2017

Goodwill Impairment Testing Under Ifrs Before And After The Financial Crisis written by Alex Almici and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.

The use of fair value in financial reporting has been a critical issue for some time. In the last five years, after the boom phase of company takeovers, with the financial crisis spreading to the general economy, impairment testing for goodwill has taken center stage and has become a hot topic.This paper investigates and compares the disclosure level of the goodwill impairment testing process during 2007-2011 in the major listed companies in the UK. The authors review the annual reports of 85 non-financial firms, ranked by market capitalization and total assets, that were listed on the London Stock Exchange and recognized goodwill as an asset; then, they examine all the information provided by the companies about the estimation of the “recoverable amount” using a DCF model according to IAS 36; based on the financial information given in the annual reports during 2007-2011, the core valuation techniques has been divided as follows: (1) identification of cash generating units; (2) scenario analysis and forecast of free cash flows; (3) estimation of “terminal value”; (4) cost of capital and g-rate calculation; (5) sensitivity analysis. Evidence shows a lack of disclosure on the key assumptions of the estimation model required by IAS 36, especially after the world economic and financial crisis (2009-2011).The findings should be of interest to underline some questions related to both the effectiveness of goodwill impairment tests under uncertainty and disagreement in economic and financial forecasting and the value-relevance of the specific information given in the annual accounts of non-financial listed companies in the UK.