The Investigation Of Acquisition Goodwill

The accounting measures of Goodwill is a popular topic in the capital market,because of the recognition of internally generated goodwill is not allowed by accounting principle,goodwill could only be recognized in the case of acquisition and merger.Within the background of global economic integration,the activity of acquisition and merger appears constantly,as with the prevailing of corporate reorganization,there is an increasing number of the proportion of goodwill in the total asset,however,goodwill is one type of asset which is most difficult for firms to recognize and to deal with,therefor it is important to measure goodwill with precision in order to reflect its intrinsic nature.Not only within the academic community,but also within practice field,there appears to be much controversy as regard to accounting treatment and measurement of goodwill,within the research of accounting theory the exploration of different approaches to goodwill,in order to truly reflect the essence of goodwill which is a most invisible and non-identifiable.Accounting standard committee over world is also seeking methods to measure the value of goodwill,through the setting of accounting standards to guide firms in reporting and disclosing the relevant information of goodwill,in turn to provide accurate and reliable accounting information to firms and the outside.The thesis is based on the case of Kee Ever Bright Decorative Technology Co.acquiring Yuhan Photoelectric Technology Co.,referring to the accounting measures and processes,take care of deficiencies included in current measures,in order to improve the accounting measures of goodwill.The thesis contains five part over all: The first part have a introduction of research background and purpose,through the induction of the research findings within domestic and outside overseas,countries over the world are concentrate on the topic of the nature of goodwill and its follow-up measurement,and then draw to research orientation of the thesis;The second part looking at the changes of accounting principles,it is find that the changes are around the follow-up accounting treatment of goodwill,from the systematical amortization method to the annually impairment test.The dispute is always around the follow-up accounting treatment both among the theory field and practice field,either the amortization method or the impairment test has their advantages and disadvantages.The third part have a review of the case of Kee Ever Bright Decorative Technology Co.acquiring Yuhan Photoelectric Technology Co.,describing the background of acquisition and,the initial value recognised of purchased goodwill and the occurrence of subsequent impairment;The fourth part is the analysis of the basis for the initial recognition of goodwill,and then to compare the different method to account the goodwill by using impairment,amortization,and amortization combined with impairment,as a result of that the value of goodwill at the initial measurement is high,the subsequent measurement by means of impairment test would lead to the volatility of company earnings,which reflect that the accounting measurement of goodwill would have some economic consequences;Based on the results of case analysis,the fifth part have a summery of the whole thesis,and some recommendations are produced for goodwill accounting measurement,it is suggest that the initial measurement of goodwill should follow the principle of prudence and,the amortization alongside with impairment test could be used together as the method of subsequent measurement,which is aimed to make the measurement of goodwill to a rational and sensible level.