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Goodwill Impairment
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Book Synopsis Accounting and Valuation Guide by : AICPA
Download or read book Accounting and Valuation Guide written by AICPA and published by John Wiley & Sons. This book was released on 2016-11-07 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: This new guide provides accounting and valuation guidance for impairment testing of goodwill. Specifically, it focuses on practice issues related to the qualitative assessment and the first step of the two-step test. This resource is a valuable tool for auditors, accountants and valuation specialists seeking an advanced understanding of the accounting, valuation, and disclosures related to goodwill impairment testing (including the qualitative assessment). It is also a vital resource for preparers of financial statements of public and private companies that follow FASB guidance on goodwill.
Book Synopsis Segment Reporting by : International Accounting Standards Committee
Download or read book Segment Reporting written by International Accounting Standards Committee and published by . This book was released on 1997 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Accounting for Goodwill and Other Intangible Assets by : Ervin L. Black
Download or read book Accounting for Goodwill and Other Intangible Assets written by Ervin L. Black and published by John Wiley & Sons. This book was released on 2018-10-09 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: Concepts, methods, and issues in calculating the fair value of intangibles Accounting for Goodwill and Other Intangible Assets is a guide to one of the most challenging aspects of business valuation. Not only must executives and valuation professionals understand the complicated set of rules and practices that pertain to intangibles, they must also be able to recognize when to apply them. Inside, readers will find these many complexities clarified. Additionally, this book assists professionals in overcoming the difficulties of intangible asset accounting, such as the lack of market quotes and the conflicts among various valuation methodologies. Even the rarest and most problematic situations are treated in detail in Accounting for Goodwill and Other Intangible Assets. For example, the authors analyze principles for identifying finite intangible assets and appropriately accounting for amortization expenses or impairment losses. Using the information in this book, the results of these calculations can also be reported with precision on financial statements. These topics are especially important for ensuring the success of any asset acquisition or business combination. In these special cases, the utmost accuracy is essential. This book provides: Rules for identifying and recognizing intangible assets in business combinations and asset acquisitions Guidance on the accurate valuation and carrying amount calculation of acquired and self-created intangibles Tips for overcoming the challenges unique to intangible assets, including impairment testing Clear instructions for disclosing intangible assets, goodwill, and amortization expenses Accounting for Goodwill and Other Intangible Assets is an indispensable reference for valuation students and specialists. Ervin L. Black and Mark L. Zyla provide thorough instructions for understanding, accounting for, and reporting this challenging asset class.
Book Synopsis Goodwill Impairment and Corporate Social Responsibility by :
Download or read book Goodwill Impairment and Corporate Social Responsibility written by and published by GRIN Verlag. This book was released on 2020-06-15 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Case Study from the year 2019 in the subject Business economics - Accounting and Taxes, grade: 2,3, University of Bremen, language: English, abstract: The issue goodwill impairment is controversially discussed in practice and in literature because goodwill or rather the amount of goodwill which has to be impaired primarily based on managerial assumptions and proprietary information and further the recognition and accurate measurement is not easy and thus often not free from error. Therefore the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) require firms to disclose specific information on how and why goodwill arises in business combinations. Goodwill accounting is intended to provide information on the financial consequences of mergers and acquisitions. It is therefore potentially very important for recipients of annual financial statements. Goodwill accounting in Europe is generally regulated in the International Financial Reporting Standard 3 (IFRS 3) Business Combinations and International Accounting Standard 36 (IAS 36) Impairment of Assets. Goodwill accounting in the US is regulated in Accounting Standards Codification 805 (ASC 805) Business Combinations (formally known as Statement of Financial Accounting Standards No. 141 (SFAS 141)) and ASC 350 Goodwill and other Intangible Assets (formally known as SFAS 142). Goodwill is defined as an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised. Besides goodwill impairment, Corporate Social Responsibility (CSR) activities has become another steadily increasing issue around the world and has gained significance in the view of public policy and management practice. CSR is often defined as “the social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point in time.” Especially the relationship between a firm ́s CSR and its firm performance, earnings quality and information asymmetry has been subject of accounting literature and research. If specific socially responsible actions tend to be negatively correlated with firm performance, managers could be cautious in this area. If, on the other hand, a positive association can be shown to exist, managers might be encouraged to enhance such activities.
Book Synopsis Valuation for Financial Reporting by : Michael J. Mard
Download or read book Valuation for Financial Reporting written by Michael J. Mard and published by John Wiley & Sons. This book was released on 2007-10-19 with total page 237 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essential procedures for the measurement and reporting of fair value in Financial statements Trusted specialists Michael Mard, James Hitchner, and Steven Hyden present reliable and thorough guidelines, case studies, implementation aids, and sample reports for managers, auditors, and valuators who must comply with the Financial Accounting Standards Board Statement of Financial Accounting Standards Nos. 141, Business Combinations; 142, Goodwill and Other Intangible Assets; 144, Accounting for the Impairment or Disposal of Long-Lived Assets; and the new 157, Fair Value Measurements. This important guide: * Explains the new valuation aspects now required by SFAS No. 157 * Presents the new definition of fair value and certain empirical research * Distinguishes fair value from fair market value * Provides a case study that measures the fair values of intangible assets and goodwill under SFAS Nos. 141 and 157 * Includes a detailed case study that tests the impairment of goodwill and long-lived assets and measures the financial impact of such impairment under SFAS Nos. 142 and 144 * Cross-references and reconciles the valuation industry's reporting standards among all of the valuation organizations * Includes two sample valuation reports, one of which is a new USPAP- compliant PowerPoint? presentation format * Includes implementation aids for controlling the gathering of data necessary for analyses and for guiding the valuation work program
Book Synopsis Goodwill Impairment by : Thorsten Sellhorn
Download or read book Goodwill Impairment written by Thorsten Sellhorn and published by Peter Lang Pub Incorporated. This book was released on 2004 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 2001, goodwill amortization in the US was eliminated in favor of an impairment-only approach, which, according to critics, gives managers vast discretion and opportunities for earnings management. Prior research suggests that discretionary asset write-offs are associated with economic factors and managers_ financial reporting objectives. Based on a systematic literature review, this study investigates for a comprehensive sample of US firms the determinants of goodwill write-off behavior. Regression analysis shows that write-off behavior is significantly explained by firms_ economic properties. Only in large, high-profile firms, incentives appear to be significant determinants. These findings suggest that the impairment-only approach does capture goodwill impairment at least to some extent.
Book Synopsis Facts and Issues About Goodwill Impairment Losses in SFAS No. 142 Adoption Year by : Kang Cheng
Download or read book Facts and Issues About Goodwill Impairment Losses in SFAS No. 142 Adoption Year written by Kang Cheng and published by . This book was released on 2008 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: For most companies, fiscal year 2002 was the adoption year for Statement of Financial Accounting Standard (SFAS) No. 141: Business Combinations and No. 142: Goodwill and Other Intangible Assets. This article analyzes financial statements reported under the new rules and reaches the following conclusions: 1). In the adoption year, the impacts on reported earnings can be deep, but uneven across firms; some companies show dramatic negative impacts while most companies show mild positive impacts. 2). Measurement and disclosure of goodwill's fair value, and the basis for impairment losses, when necessary, becomes more technical and more demanding on statement users. 3). Goodwill fair value impairment losses take place across industries and do not seem to be related to industry economic performance. Overall, under the new rules, goodwill as an asset on the accounting book is more challenging and less predictable.
Book Synopsis The Banking Industry Guide: Key Insights for Investment Professionals by : Ryan C. Fuhrmann
Download or read book The Banking Industry Guide: Key Insights for Investment Professionals written by Ryan C. Fuhrmann and published by CFA Institute. This book was released on 2017 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Valuation for Financial Reporting by : Michael J. Mard
Download or read book Valuation for Financial Reporting written by Michael J. Mard and published by John Wiley & Sons. This book was released on 2002-11-22 with total page 194 pages. Available in PDF, EPUB and Kindle. Book excerpt: Valuation for Financial Reporting: Intangible Assets, Goodwill, and Impairment Analysis provides guidance and insight in the identification and measurement of intangible assets and goodwill pursuant to the Financial Accounting Standards Board Statements of Financial Accounting Standards (SFAS) No. 141, Business Combinations and (SFAS) No. 142 Goodwill and Other Intangible Assets. The new rules are sweeping and complex. Valuation for Financial Reporting will bring clarity to CFOs, auditors, valuation professionals, and CPAs by explaining the valuation aspects of the new financial reporting requirements, including how to identify the characteristics of goodwill and intangible assets, determine if impairment has occurred, and employ specific methods to assess the financial impact of such impairment. While numerous articles and commentaries on the subject have appeared dating back to the time the FASB began considering the issue, Valuation for Financial Reporting is the first to provide "real world" examples of the valuation techniques and methodologies required to perform a purchase price allocation under SFAS No. 141 and an impairment study under SFAS No. 142. Valuation for Financial Reporting will help lift the veil of mystery surrounding these two important pronouncements and provide a practical guide for their implementation. This book: * Shows the CPA and client how to apply the new SFAS 141 rules that pertain to all companies involved in an acquisition (buyer or seller) by analyzing and valuing the tangible and intangible assets acquired. * Teaches the CPA and client how to apply the new SFAS 142 rules that pertain to all companies that recognize and measure intangible assets and goodwill which may now be impaired * Presents detailed case studies and examples on how to apply and implement SFAS 141 and SFAS 142 * Provides a "How To" on the identification and measurement of intangible assets. * Includes a checklist for controlling the gathering of data necessary for the analyses and another checklist guiding the work program for methodologies * Offers guidance and examples for financial reporting purposes.
Book Synopsis Double Accounting for Goodwill by : Martin Bloom
Download or read book Double Accounting for Goodwill written by Martin Bloom and published by Routledge. This book was released on 2013-05-13 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt: Goodwill, sometimes purchased but often more significantly internally generated, is the major constituent of the value of many listed companies. Accounting aims to provide users of financial statements with useful information, and more than fifty current International Financial Reporting Standards prescribe accounting disclosure requirements in minute detail. However, these Standards dismiss internally generated goodwill with a single brief provision that it is not to be brought to account at all. The impairment regime now laid down for dealing with purchased goodwill contains severe flaws, while previous methods have also been found to be unsatisfactory. This book traces the history of the goodwill accounting controversy in detail and demonstrates that it has been a prime example of an issue ‘conceived in a way that it is in principle unsolvable’. It explores the problem of recognising the importance of goodwill as a whole and finding a way of presenting meaningful information regarding it in the context of the financial statements. The author’s proposed solution builds upon research undertaken and uses a Market Capitalization Statement, based on a modification of nineteenth century ‘double accounting’ in a modern context. Examples show that the proposed Market Capitalization Statement has the potential to provide significant information not currently available form conventional financial statements, which in turn are freed to present clearer information.
Book Synopsis Goodwill Impairment by : Andreas Simon
Download or read book Goodwill Impairment written by Andreas Simon and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Toshiba Corp., the 140-year-old electronics conglomerate that has its hand in everything from installing power lines to supplying iPhone parts, has been embroiled in an accounting scandal since May 2015. The company's chief executive officer (CEO) announced his resignation in July 2015, and two previous CEOs who retained company posts are also resigning. You work as an analyst for an investment firm that owns a position in Toshiba Corp. stock. You have been given the task to better understand the appropriateness of Toshiba's accounting treatments surrounding the scandal and make a recommendation whether your firm should continue to hold Toshiba Corp. stock. At this point public knowledge is that Toshiba has made several large acquisitions over the last few years. Some of these acquisitions, however, have been challenged and may not have the desired potential for Toshiba. You wonder if Toshiba could be facing impairments on some of their acquisitions and what impact these impairments would have on Toshiba's financial results. In your analysis you will have to research United States-Generally Accepted Accounting Principles accounting standards on goodwill impairment, calculate potential future goodwill write-downs, and give a stock investment recommendation.
Download or read book Fair Value Accounting written by Wen Chen and published by . This book was released on 2019 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether fair value accounting applied to goodwill impairment leads to unintended consequences. Under the fair-value-based goodwill impairment test, a firm's market value is often used as an important reference point for determining whether goodwill is impaired. A below-one market-to-book ratio is considered a reasonable indicator of impairment by external auditors and security lawyers; however, this indicator could be distorted when prices deviate from fundamentals. In fact, mechanical reliance on the market indicator could result in firms being pressured into recording goodwill impairment upon a temporary market value decline, even when the impairment is unsubstantiated by economic fundamentals. Using a comprehensive sample of goodwill impairments, we identify impairment charges of over 14% of our sample as likely market-driven and not backed by fundamentals; this percentage nearly triples in 2008, in the midst of the recent financial crisis. Validating our identification of market-driven impairments, we show that the impairment loss of these firms is significantly associated with a return reversal in the subsequent year, and the reversal is more pronounced for firms facing high litigation pressure. Additional tests indicate that investors do not differentiate between market-driven and other impairments upon the initial loss announcement. Further, we find that firms with market-driven impairments experience an increase in information asymmetry in the subsequent year and “time” share repurchases and insider purchases to benefit from the delay in the market's reversal of the temporary undervaluation. Overall, our findings shed light on the negative consequences associated with the imperfect implementation of fair value accounting.
Book Synopsis Goodwill Impairment by : Milena Brütting
Download or read book Goodwill Impairment written by Milena Brütting and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Goodwill has been in the focus of interest of academics and practitioners for many years now. Research interest has been fuelled by its discretionary nature, the large amounts of its write- downs combined with adverse impact potential on financial statements and loopholes in accounting regulations. This thesis includes three empirical essays on the causes and impact of goodwill impairment write-downs. Its overall objective is to provide a more insightful and comprehensive understanding of the goodwill impairment process. The first empirical essay explores the role of goodwill write-downs in .the rating assessment process. It aims to uncover rating agencies' perception of goodwill using an accounting predictive model on ex post basis and comparing accounting treatments of goodwill as currently or recently applicable under UK GAAP. Results suggest that raters ignore goodwill and its write-downs in their annual rating analyses. While this evidence is consistent with pre- FRS 10 business reality in the UK, it raises questions about the efficiency of impairment regulations on national and international level. The second empirical essay investigates managerial choices related to goodwill impairment in the UK. Findings suggest that while managers are likely to base the decision whether to impair goodwill on financial performance indicators, they might adjust the amount of the impairment charge at their discretion for reporting purposes. The third empirical essay investigates two of the drivers of financial performance (industrial regulation and competition) and their relation to goodwill using a case study approach. The evidence suggests that these two phenomena could provide an early warning indicator to regulators, auditors and financial statement users about goodwill impairment potential of the individual firm or an industry sector. Furthermore, the room for managerial discretion provided by the discount rates in the impairment calculation is explored. Results show that discount rates can be adjusted using commonly accepted parameters in practice to justify a wide range of discount rates and, consequently, a variety of impairment opportunities at the discretion of management.
Book Synopsis Fair Value Measurements by : Mark L. Zyla
Download or read book Fair Value Measurements written by Mark L. Zyla and published by John Wiley & Sons. This book was released on 2009-12-04 with total page 410 pages. Available in PDF, EPUB and Kindle. Book excerpt: A hands-on volume for financial executives with guidance on the fair value measurement process In today's dynamic and volatile markets, whether buying or selling, what corporate officers need to know is the worth of an asset today, a task that for many has become complex and at times confusing. Fair Value Measurements: Practical Guidance and Implementation demystifies this topic, offering you a nuts-and-bolts guide of the most recent developments in preparing financial statements using fair value measurements. This straightforward book covers the best practices on measuring fair value in a business combination and how to subsequently test the value of these assets for impairment. Filters complicated insider concepts into easy-to-understand information on the valuation specialist's function Discusses the many new FASB pronouncements involving fair value Instantly familiarizes you on the ins and outs of fair value financial disclosure Well-written, conversational in tone, and filled with valuable insights, Fair Value Measurements: Practical Guidance and Implementation lifts the veil of confusion from the substantial and growing requirements for fair value disclosures.
Book Synopsis Navigating Accounting Challenges by : Owen Darion
Download or read book Navigating Accounting Challenges written by Owen Darion and published by . This book was released on 2023-10-12 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: I'm unable to provide a specific case study from a particular location, including Hong Kong. However, I can offer a general overview of a case study on goodwill impairment without specifying any location: In the case study, "Navigating Accounting Challenges: A Deep Dive into Goodwill Impairment," the focus is on a multinational corporation facing complexities related to goodwill accounting, with universal applicability across various global contexts. The study delves into the challenges companies encounter when assessing the impairment of goodwill, a critical financial accounting task that directly influences financial statements and stakeholders' perceptions. The case study outlines the intricate process of evaluating goodwill impairment, considering both qualitative and quantitative factors. It explores the specific methodologies and financial metrics involved, including market value, cash flows, and future growth prospects. Furthermore, it discusses the importance of understanding the unique economic and market conditions in which the company operates, emphasizing the need for a nuanced approach in diverse business environments. Additionally, the study examines the implications of goodwill impairment on financial reporting, investor confidence, and strategic decision-making. It highlights the significance of transparent communication with stakeholders, regulatory compliance, and the role of accounting standards in ensuring accurate and reliable financial information. Through this case study, readers gain insights into the complexities of goodwill impairment assessment, providing a foundation for understanding similar challenges faced by businesses globally. It underscores the importance of robust accounting practices, meticulous analysis, and informed decision-making processes, offering valuable lessons applicable across international accounting contexts.
Book Synopsis The New Guideline for Goodwill Impairment by : Nancy Jewel Swanson
Download or read book The New Guideline for Goodwill Impairment written by Nancy Jewel Swanson and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Goodwill, for financial accounting purposes, is an intangible asset on the balance sheet that represents the excess of the amount paid for an acquired entity over the net fair value of the assets acquired. The Financial Accounting Standards Board has recently issued a new mandate. This new guideline eliminates annual amortization of goodwill and requires annual valuation for potential goodwill impairment and consequent writedown. Determining the amount of impairment requires management estimation, thus, allowing managerial discretion in developing the impairment amounts. Managerial discretion may then be used to manage earnings. Earnings management occurs when managers exercise their professional judgment in financial reporting to manipulate earnings. Prior literature documents that managers have strong motivations to manage earnings. Managers sometimes respond to these motivations by managing earnings to exceed key earnings thresholds. The new goodwill guideline might be used as an earnings management tool. Thus, this dissertation examines whether earnings management results from the judgmental latitude allowed in estimating goodwill when earnings will otherwise just miss key earnings benchmarks. Specifically, this study tests goodwill impairment writedowns in a cross-sectional distributional analysis for the year 2002, the first year following the effective date of the new goodwill standards. The sample is taken from the financial information of publicly traded companies tracked in the Compustat and CRSP databases. To identify firms that are likely to have managed earnings to exceed key benchmarks, earnings per share, both before and after goodwill impairment writedowns, is compared with two thresholds established in prior research. The first is a positive earnings per share and the second is the prior year's earnings per share. Results from applying both tobit and logistic regression models suggest that managers are exploiting their discretion in recognizing goodwill impairments to manage earnings. Thus, this project contributes to the earnings management literature in that it highlights the exploitation of increased judgmental latitude for earnings management purposes.
Book Synopsis The Analysis and Use of Financial Statements by : Gerald I. White
Download or read book The Analysis and Use of Financial Statements written by Gerald I. White and published by John Wiley & Sons. This book was released on 2002-12-30 with total page 786 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting Standards (US and International) have been updated to reflect the latest pronouncements. * An increased international focus with more coverage of IASC and non-US GAAPs and more non-US examples.
