Research On Goodwill Impairment From Mergers Acquisitions Between Kingsun Optoelectronic And Longwen Education Advertising

For the M&A market,as the government promulgated more favorable policies,more mergers and acquisitions activities increase in the market.In the past years,prices of M&A activities far exceeds the fair value of identifiable net assets,which has led to a lot of goodwill.The goodwill increased year by year which shows the phenomenon of M&A booming and high premium.After the merger,many listed companies have disclosed their performance has been affected heavily from the depreciation of goodwill impairment losses.It seems to indicate that the risk of goodwill impairment in the M&A market will occur frequently.The huge goodwill leads to the unpredictable future performance which are generated from M&A activities.Therefore,faced with the problem,we should do further explore how to prevent the negative impact by the goodwill merger depreciation.The paper starts from the goodwill definition,the theoretical basis of goodwill,the current situation of goodwill accounting in M&A market,do more research on the process,the consequence and countermeasures of the goodwill impairment.This case study deeply analyzed the case of merger between Kingsun Optoelectronic and Longwen Education.Recommend the following aspects,the the merge and acquisition background,process and consequence,reveal the source of goodwill impairment risk,focusing on the impacts from the goodwill impairment.Analysis on the factors of goodwill pricing in the process of merger and acquisition,goodwill impairment test and evaluation,source of the goodwill impairment risk,impacts by the goodwill impairment.Through the analysis of the present situation,more M&A enterprises all face the risk of huge goodwill impairment,the author put forward some suggestions on the measures of goodwill accounting confirmation and subsequent measurement,reasonable application of adjustment mechanism,improve the regulations of goodwill,focusing the company quality,reducing the negative impact from the goodwill impairment.