Publication of final comment letter on the IASB's project Discussion Paper Business Combinations Disclosures, Goodwill and Impairment
Date: 03 February 2021
UKEB secretariat's response to IASB’s DP/2020/1 Business Combinations Disclosures, Goodwill and Impairment published
The UK Endorsement Board secretariat's response to the IASB's DP/2020/1 Business Combinations Disclosures, Goodwill and Impairment has been published.
The response:
- Proposes a mixed model for accounting for goodwill, in which an annual amortisation charge is supported by indicator-based impairment testing.
- Suggests possible methods for establishing the useful life of goodwill in the amortisation calculation.
- Supports moving to an indicator-only impairment model for goodwill only if -amortisation is reintroduced.
- Seeks further stakeholder input on anticipated cost savings of moving to an indicator-only impairment test for goodwill.
- Supports IASB's proposed simplifications to the impairment test and makes additional recommendations to reduce risks of shielding and management optimism.
- Supports the principle of improved disclosures on acquisitions but recommends IASB undertake illustrative examples and field-testing.